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How to Renovate Your Home Without Going Into Debt

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After the coldest winter in decades, my house was worse for wear. The frigid temperatures caused my flagstone front porch steps to crumble and my retaining wall to collapse.

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After the coldest winter in decades, my house was worse for wear. The frigid temperatures caused my flagstone front porch steps to crumble and my retaining wall to collapse. While a lot of homeowners would have paid for the renovations by adding them to their mortgage, I was able to pay without going into debt. Here’s how:Establish an Emergency Fund
When I woke up one morning and found two inches of water in my basement kitchen, I knew I was going to have to spend a pretty penny on home renovations. Fortunately, I already had an emergency fund with $15,000 set aside.

It’s generally recommended you put aside enough emergency funds equal to three to six months’ living expenses. Having that much money set aside may seem a little on the high side, but as a single first-time homebuyer I wanted to err on the side of caution. When I purchased my house in August 2012, I decided to stash $15,000 aside in a high-interest savings account for a rainy day. And boy, am I glad I did.

Find a Good Contractor
My house repair bills started to pile up in January, smack-dab in the middle of winter. I had no idea how much a new front porch and retaining wall would cost, so I started phoning around for estimates. I called five contractors for estimates and received amounts ranging from $3,500 to $18,000 for the same job.

When selecting a contractor, take the time to meet them in person, ask for references and check for complaints online at the Better Business Bureau. Remember, the lowest estimate often isn’t the best. You want to avoid fly-by-night contractors who will take your money and run.

Fast-Track Your Savings
It was January, and the work couldn’t start until early May when the weather was warmer. On top of a new retaining wall and front porch, I decided to get a sidewalk and new eavestroughs. That increased my renovation bill to nearly $25,000, leaving me $10,000 short. That gave me four months to sock away enough money to make up the difference.
I worked my fingers to the bone by working 20 hours extra a week for four months and managed to save an extra $6,000 — that left me $4,000 short. My parents were nice enough to lend me $2,000, and I was able to earn an extra $2,000 by working overtime and part-time during the weekends for two months while the renovations took place.

Repairs and Maintenances
When you own a home, you should have money set aside for repairs and maintenance. You never know when your roof could start to leak or your chimney could come crashing down. Experts say you should be prepared to spend an average of 3 to 5 percent of the value of your home on maintenance and repairs each year. For example, if your home is valued at $425,000, you should set aside up to $21,250 each year.

Homeownership isn’t for everyone. If you’re not prepared to put money aside in an emergency fund, you might be better suited for a condo or an apartment. With my first major renovation under my belt, today I truly feel like a homeowner!

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