Financially Planning for a Project
It's interesting but not surprising that one of the most common issues people run into with remodeling is financial. Projects never seem to cost what we plan and large repairs always seem to be needed at the worst of times.
How Can You Avoid Financial Pitfalls During a Remodel?
1. Keep an Emergency Fund: Dave Ramsey suggests a 3 to 6 month reserve of funds in case of a tragedy such as a loss of job, natural disaster or sickens keeps you from working for a prolonged period of time. I rely heavily on this model, but even if you think this is a bit overboard, you should still have a few thousand dollars set aside in case you end up having to replace a furnace or a water heater or patch a roof. After all, it’s a terrible feeling to have to make monthly payments as a reminder of something you didn't want to pay for in the first place.
2. Estimate Your Project Cost: This may seem like common sense, but I’ve seen countless projects started without the owners really knowing what it would take to complete the job. Luke 14:28 For which one of you, when he wants to build a tower, does not first sit down and calculate the cost to see if he has enough to complete it. This was great advice 2,000 years ago and it is great advice today. I have several great sets of forms for estimating projects. Need some help with the step by step? I have tutorials on my website for this too.
3. Plan Your Personal Finances With Your Project In Mind: The best way to go into a project is with the confidence that you have your personal finances handled and knowing that your remodel is just another part of the big picture. I provide a FREE personal finance planning workbook to help get you there. If you really need help, I highly suggest checking out Dave Ramsey’s offerings. If you don’t like his style, then find someone who you do like.
4. Get a Second Opinion: Once you have your financial plan for your remodel project in place, run it past someone you trust. This can be your spouse, a friend or a boss or co-worker. I highly suggest looking for those either more highly trained in this area than you or someone with a few more years under their belt. This ensures that they are looking at it from a different point of view than you.
5. Be Confident Enough to Not Move Forward: If you don’t have all the information you need or something just isn’t adding up, be confident in the fact that you did your research and your research is telling you not to move forward right now. Rushing into a project will only make it that much more difficult if you do hit an unforeseen snag.
6. Do What is Best for You: We all have our own set of standards and guidelines for financial decisions. Whether it is cash, a personal loan, a second mortgage or credit cards, make sure that your financial decisions are yours and that they are not formed by others. It’s good to get input from those around you but don’t be pressured to do something you are not comfortable with. You are the one who has to deal with the final results so make sure they work for you.
How Do You Usually Pay for Remodel or Repair Projects?