Debt-Free Renovation: Steps for Success
The reckoning has begun. Our kitchen is well on its way to completion – just the floors need to be done – and the bills have started to roll in. I was telling the accountant at work about the renovation, and she said, “So, now you’ve already got the debt to worry about!” And what did I say? “No, actually, it’s already paid for.”
This made me feel good. And this goes back to the very beginning, and how we got to this place.
Start saving early. We knew from the moment that we took ownership of our place that we had to replace the kitchen – it was just that bad. But we also knew that we were not prepared to go into debt to make it happen. Our ING Direct Home Renos account was started! Two years later, we had the money necessary to make the dream a reality.
Automatic Savings: the only way to go. In order to reach our goal, we took advantage of weekly automatic withdrawals from our chequing account, which helped to slowly but surely build up the cash we needed. I know this advice is reiterated on all sorts of personal finance blogs – pay yourself first, etc. – but I had to mention it just one more time. (Seriously, just Google that phrase, and you’ll see what I mean.)
Expect to run over budget. Having done a good amount of research, I had a pretty good idea of how much everything would cost. However, I didn’t expect the electrician to cost over $500, for example. In the end, it looks like we’ll come in under budget, but having a buffer sure doesn’t hurt!
Take advantage of credit card perks. Although we already had the cash, we still used our credit cards to pay for the Ikea cabinets, Sears appliances, and big Home Depot purchases. Totalling about $6,000, we earned several hundred Airmiles. We’ll probably use the accumulated miles to get some small kitchen appliances, or to do a bit of travelling.
Pay off the balance – but don’t pay right away. Our credit cards are due mid-month. We left the money in our high-ish interest savings account until the end of previous month, earned our interest, and then paid of the bills. No debt to worry about! No interest payments!
Otherwise, pay cash (in the form of a cheque) – and make sure it doesn’t bounce! All of the contractors required payment by cheque upon completion. Every one of them cashed it the very next day. I moved money from ING a few days ahead of each contractor’s arrival, so we knew there was enough in the chequing account to cover each payment.
Start planning for the next goal(s). With renovations wrapping up, it would be very easy to stop those automatic savings deposits, and have more disposable income. Instead, I’ve set up a bunch of goal-specific savings accounts (one for a trip planned for the fall, another for the Emergency Fund we’re still in the process of building), and will redirect the funds appropriately.
We love our kitchen, by the way. It has seriously changed our lives. It opened up the whole condo, and made cooking a joy. We actually want to be in the kitchen, which encourages us to eat in even more save more money! Saving up for this really was a most worthwhile investment!
Photo credit: stock.xchng.