Smart Ways to Remodel Your Home
MADELEINE BRAND, host:
For many of us, spring is time to spruce up our homes, and that could mean a home remodeling project, adding a bathroom, a deck or redoing the kitchen. Harvard University's Joint Center for Housing Studies reports that Americans spent close to $150 billion on home remodeling last year, so how do you fix up your house without wrecking your bank account? Our personal finance expert, Michelle Singletary, spoke with my colleague, Alex Chadwick.
ALEX CHADWICK, host:
Michelle, welcome, and what financial matters should homeowners consider before a remodeling project other than having your sanity checked?
Ms. MICHELLE SINGLETARY (Financial Expert): That's right. I've gone through many, and you definitely need a sanity check and some patience from Job. You know what? Begin with a plan. List everything you need, and then everything you want, and then just get what you can afford. It sounds so simple, but people will say; oh, I want to redo my kitchen. They don't have any idea of how much it costs or what's in their budget. They just start looking at cabinets, and next thing you know, it's $10,000.00, $20,000.00, $30,000.00, and they've only got $10,000.00.
So your really do need to begin with a budget, and do that before you start looking because if you look first, you're going to look for stuff that you may not be able to afford.
CHADWICK: Are you talking about contractor projects or do-it-yourself projects or both?
Ms. SINGLETARY: Both; I mean, I tell you, I've seen do-it-yourselfers, who've spend far more than they would have ever spend if they had just hired a contractor because they don't know what materials cost; they get the wrong materials, and then they make errors with them or start to use them, and it's wrong. They've got drill holes in them and things like that.
You need to start with a plan.
CHADWICK: Now, if you have done home improvements, I know you know the answer to this question; what are the ones that increase the value of your home?
Ms. SINGLETARY: You know what? Redoing your kitchen-if you have an older house, updating that kitchen will definitely increase the value of your home; adding a bathroom, adding a deck. Those are sort of the major things. If you're just going to do a home improvement because you want to increase the value of your home, look at the homes around your neighborhood. You want to spend on features that are standard in your neighborhood.
You don't want to put something on if none of the other homes in your area have decks that may not, in fact, decrease the value of your home.
CHADWICK: You don't need a $2,000.00 weather vane if they're not on every other house on the block?
Ms. SINGLETARY: That's right.
CHADWICK: And avoiding going broke and all of this; sort of the insanity question?
Ms. SINGLETARY: You know, I tell you, it's just something about home improvement that people just go crazy. They get into these home improvement stores, and they just lose their mind. You have got to start with a budget, and I can't tell you how many loan officers, people who have gone and gotten home equity loans and such and blew through the line of credit because they didn't plan; they didn't budget, and then, even after that, the project is not done.
CHADWICK: Are these improvements deductible on your taxes at some point?
Ms. SINGLETARY: They're not deductible on your tax return. What happens is the improvements that you make, if they're permanent improvements like adding a deck, adding a bathroom, adding a room, will be added to the cost basis of your house to determine the gain, so the more you spend on those kind of permanent home improvements; it will help you in the long-term when you sell the home.
CHADWICK: Michelle Singletary, our regular guest for conversations about personal finance. Her latest book is Your Money and Your Man: How You and Prince Charming Can Spend Well, Live Rich, and Redecorate Forever.
Well, I was just adding that last part. Thanks, Michelle.
Ms. SINGLETARY: Thank you.
BRAND: And I thank Alex Chadwick for that interview. A note to our listeners. If you have money questions for Michelle, please send them in. Go to our web site, NPR.org, and click on the Contact Us link. It's on the top of every page. Be sure to include the name Michelle in your subject line.
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