This post is sponsored by YNAB

The other day on Instagram, we sent out a call for questions regarding the financials around renovating. There were so many amazing questions, so we tried to grab those most frequently asked (and juicy!) ones, so we can answer them here. We’ve learned so much over the last 12 years about budgeting for projects and hope to shed some light on this topic. Design, time, space, manpower, a plan; all things needed for your renovation/remodeling. But let’s be honest, probably the aspect of renovating that scares people most is the money. Reading through your questions, I realized there’s a lot of mystery around it. Can I afford to renovate?! How can I get there?! But something I realized over the last decade plus, is that just like buying a house or having a baby or ….laying tile for the first time, it feels intimidating UNTIL YOU DO IT.

A big part of renovating is budgeting. In fact, I would feel 100% confident in saying we are able to renovate BECAUSE WE BUDGET.  So we’re going to pull back the curtain a bit, share our approach to our budget, as well as answer many of the questions sent in on Instagram from all of you.

Of course we won’t pretend we don’t then get the partners and sponsorships — we fully recognize that benefit and perk of our job — but any money saved by those things stays in our project account and goes toward our next project. For us, that means more consistent projects and keeps us and our team employed, but the principle of having the money first, has been the biggest contributor over time to our expanding project budget.

Another major piece is having a process/system for tracking your money. And not in a restrictive way – that’s the wrong mindset. In a freeing way. “We get to spend this much money on our family vacation!” “This money is going toward the bathroom!” This is for my monthly decor budget!” It’s exciting and fun to make plans for your hard-earned dollars. We’ve talked about You Need A Budget (YNAB) in the past. And since our first introduction to them, we’ve used their system as one of the tools in our toolbox for budgeting and planning out our dollars.

There are four main rules that YNAB teaches, and these are things we are so on board with:

1. Give Every Dollar a Job
Budgeting doesn’t give you more money. It gives your money more purpose.

2. Embrace Your True Expenses
Figure out what you really spend and treat those infrequent expenses (like twice-a-year car insurance or replacing your laptop every two years) like monthly expenses in your monthly budget. When the time comes to pay them, you ain’t sweatin’ it.

3. Roll With the Punches
Accept that things change and your budget needs to be flexible. You won’t spend the same amount on all categories every month, so be prepared to move money around. Moving money around doesn’t mean you are budgeting wrong; it’s a sure sign you’re engaged, and what could be more right?! We talk more about how this one came into play BIG time this year with our exterior renovation below.

4. Age Your Money
Break the paycheck-to-paycheck cycle by aiming to reach the point of using the money you earned last month to pay this month’s expenses. This is the part that is most freeing, and when you really begin to love it. This is what has allowed us to renovate more and more. We have rolled over our money and aged it for over a decade!

YNAB is offering some pretty great things to all of you, so be sure to check all that out at the bottom of the post.

Now let’s get to YOUR questions for us:

1. How do you prioritize what projects to do first?

“Wants vs. Needs” may sound oversimplified, but when we’ve been deciding where our money goes, some luxuries have had to be postponed (or cut entirely)–like our kitchen renovation this year. When we discovered that our entire exterior was covered in mold, that became the priority and renovating the kitchen went on the back burner as we focused on more aesthetic upgrades inside while our exterior took the majority of our renovation budget for the year.

If there’s nothing that needs immediate attention, you get to pick! And my advice? If your need is something not entirely fun to spend money on (those unseen things like HVAC), try to squeeze a gallon of paint in to makeover a room that way–it’s a morale booster!

2. How do you decide the phases?

One way we stretch our budget is by renovating in phases. Renovating in phases is a great way to improve a space in the short term, as you plan and budget for the long term. The first thing is to live in a space long enough to know what you don’t like about it. Let it sit, let things bother you until they get to a point where you can pinpoint them. Then set your budget for the phase 1, and list out how many of those you can tackle with your phase 1 budget. For our current kitchen, the style and layout were major pain points. Layout is expensive to change, so that was put on hold and we just made it look better for our phase 1 kitchen makeover until we save up for a gut job. Most of the other rooms in our home are also in their phase 1, not that we plan to rip them all out and start over in the future, but we definitely want to add to them down the line. Wall trim, window treatments, accessories, furniture, lighting! Personally, something I discovered about myself is I really like to get all spaces to a certain level so we’re more reflected in our surroundings and then go back around and level them all up again instead of pouring all of our resources (money) into one room, we spread the wealth (literally.)

3. Is it better to save for a room one at a time and do them as you go? Or do more at once?

I don’t think there’s a “better” or “worse” on this – it’s really what you have time, money, and manpower for. There are people that buy a house, live in a rental for 6 months while it’s completely renovated! They do it all up front! We have also taken the approach of the long term renovation spacing it out over many years. We hope to have all of our major structural changes out of the way by the end of 2021 (2.5 years after moving into our house) but we’ll spend many years after that, continually improving on spaces and adding those details that make them special and “finished.” It’s easier on our bank accounts, even if it’s not quite as convenient. One of our first projects in this house was Greta’s room, and we added an extra bed. We have used that extra bed countless times as we’ve shuffled people around while rooms are being redone. Slow and steady may also be better for mental health (decision paralysis and design fatigue are REAL and can hurt the vision for your renovation), but it’s good to think about how spaces will relate to each other too. Renovating isn’t a race. It’s not a sprint OR a marathon. It’s a real house and this is your real life. Don’t’ forget to live it in between all the dust.

4. How do you chose where to splurge and where to save?

Choose what’s important to you–and it’s not always the biggest thing that makes the biggest impact! In past kitchen renovations, we have loved saving by using IKEA cabinetry (because we’ve genuinely been impressed with how they hold up), and you can “splurge” on the hardware that goes on front, which will immediately make them look more expensive. A cabinet splurge is thousands of dollars, where a hardware splurge is maybe a couple hundred. In the balance of things, that gives your renovating budget a lot more “oomph.”

Our exterior renovation has been such a large scale that sometimes we have literally had to think “will it look $15,000 better?!” Sometimes the answer is yes, sometimes the answer is no and sometimes it’s something we can swing back around to do in the future. We chose to restore two large doors that were here instead of replacing them. We’re excited to paint our columns instead of replacing them. But in the case of our balcony railing, we chose to spend extra to get tempered glass in between the design we wanted instead of a steel grid.

5. How much extra do you need for unexpected costs?

I suppose if anyone knew that, the costs wouldn’t be unexpected, haha. But we generally budget for 30%. That might seem high, but from our experience there are always more things that come up than one would think. Whether you change the plan because a better idea comes along, or you open a wall and find a pipe that needs to be moved. You’ll never regret having more money set aside than ends up being necessary and we always roll over the extra into the next project! We’ve been rolling over our home renovation budget for over a decade now and it really helps keep the projects going.

6. Has renovating your home been more expensive than a new build?

I suppose that depends on what you want from your new build. We wanted a large lot, fully landscaped with mature trees and entertaining space, etc.. To get all of that with a new build, would have probably put building and renovating costs about on par–but when you factor in the time it takes to build and renovating being our job–it would have made zero sense for us. We make a living renovating! We purchased our home for $799K and the lot and land was everything we dreamed of. We knew we could renovate the house and make it our dream house without pricing out of our neighborhood. (Our next door neighbor’s house is currently on the market for $1.4M). Also, with building, we likely would have had to concede on location and end up further away from things or in an undeveloped area with little to no mature trees. Where it’s hard to know how the costs would have compared, we’ve openly admitted that this house has ended up being far more expensive to renovate than we planned. But we’re still enamored with it.

7. Do you have to pay contractors all up front?

No! A percentage down is pretty standard, but I would never advise to pay a contractor all up front–they are less motivated to work after that. Ha! In the case of our extended renovation, we receive an itemized invoice about every 5 weeks for the work done over that time. We look it over and there have been times where we push back on some items that haven’t been completed yet–lingering electrical or HVAC work. And our contractor has been very fair about making sure the work is actually done before we pay for it. (And usually–the subcontractor shows up pretty quick when we say we aren’t going to pay any more on that line item until they show up.)

8. Do you firmly stick to your budget or is it okay to go over?

We don’t go over budget on any project – but we do sometimes have to “adjust” the budget, haha. The main thing is, if you want to put more money toward your project, decide where that money is going to come from. It has to come from somewhere! If you have another part of your budget you can pull from in a responsible way, do it! In our case, we pulled the money we had saved for the kitchen and a future cabin and put it toward the exterior–since it was an emergency expense.

We were also lucky that this HUGE unforeseen expense came at a year when suddenly we no longer needed a vacation budget. Our entertaining budget got shifted. Our summer fun budget and even some of our CLOTHING budget moved got re-allocated as we were all staying home due to Covid-19. It’s never okay to go over your budget, aka, spend more than you have–but it IS okay, to shift your budgets. That’s the wonderful WONDERFUL gift of budgeting!

9. Is it worth renovating if it’s not your forever home?

Is there such thing as a “forever” home? Sometimes a home we look at as “forever” ends up being 10, 15, 20 years. We’ve referred to this home as our “forever” home, but who really knows the future? Our thoughts have been, if you know you’re going to be there for at least awhile, find ways to improve it. We lived in our first home for 2 years, improved it on a budget and were able to sell if for a profit! But even 2 years is a long time to deal with matted carpet or a door that swings the wrong way and covers the light switches or the “daylight” fixture with built-in LED light strips that turns your hallway that harsh, bright blue hue. If you pour love into your home, it will love you back. Love doesn’t always equate a kitchen gut job. Sometimes it just means some fresh paint, window treatments, lighting and decor!

10. Do you ever worry the money you put into a home you wouldn’t get back in re-sell?

We are not in the business of flipping houses so I don’t concern myself with resale. We focus more on Joy Score projects (The “Joy Score” measures value in a whole new way, determining which renovations make people the happiest. More money in your pocket notwithstanding, some renovations may put an even bigger smile on your face. I’m FOR projects that will bring you the most joy while LIVING in your home. Isn’t that what it’s all about?) We’re not improving our house for someone else – we’re improving it for us! If it’s within the budget we’re comfortable with (that we absolutely take into account our neighborhood when deciding), we’re going for it.

11. How many bids did you get before hiring a contractor?

We met with probably 3 contractors. They all gave about the same ballpark, so we went with the one who was most excited about our ideas.

12. How do you know when a bid is too high? Is it okay to negotiate?

The best way to know is to get multiple bids. You can try to talk with them about costs, but a lot of it is time and material. They don’t control what the material costs, and they need to pay their employees. If your bids come back higher than you’re comfortable, you may need to prioritize some aspects of the renovation or consider doing a “phase 1” while you continue to save or nix a part of the project.

13. Do you buy the material yourself or do the contractors do that?

Mostly the contractors buy material, but there are some things we would order just to make sure it came in time or because we had a contact or it was part of a partnership. Contractors usually have several projects they’re managing, and ordering product unfortunately gets overlooked at times. If you jump in and offer to order things, you might be surprised at how happily they accept the offer. However, keep in mind that many times contractors have special relationships with suppliers and can get you the best price, so check on that and see if they can extend their discount to you before offering to do the ordering!

14. How do you manage project creep?

You may be asking the wrong people on this one, haha (looking at you, complete exterior renovation). The thing we do is we revisit our budget and see what we can make happen. When we feel we want to make a change or add on to the project scope, if we can make the budget work, we do it. In tighter times, we opt for a phase 1 or live with some imperfections in other areas (we lived without baseboards on the main floor of our last house for about a year). During this exterior renovation, one of the biggest project creep questions that came up was–does this mean it’s time to replace the rest of the windows?! We were planning on changing a few out every couple months over the next year, but suddenly being faced with re-facing our entire exterior–it made sense to replace the windows at the same time. This meant the master bathroom renovation HAD to happen now (which we had on the dock anyway), but were there any other places we wanted to move windows? The little girls’ bathroom needed a larger window (and we’re doing an aesthetic phase 1 renovation) as a result, but the kitchen window–we just weren’t ready! We knew we were going to add more windows in the kitchen, but we had to draw the line there. We are living with one lone old window in the kitchen and an old side door until next year, when we’ll re-work the area. We couldn’t afford to add the kitchen renovation to the project and we didn’t want to live with a kitchen in shambles for a year either.

15. What is your budget for your exterior?

Our budget for the exterior of our home started at $200K. We’ve made some adjustments since then and will likely end up around $250K.

16. Are you and Chris always on the same page?

It might surprise you that we rarely start on the same page, but do always end up there. We don’t start on a project until we both agree on the vision for the outcome and the budget to get there.

17. What percentage has been sponsored? How much have you paid out of pocket?

This is a question a lot of people have, but there isn’t really a straight-forward way to answer it because sponsorships are a big part of our business and one of the ways that we make money, which is then used for renovations. So that’s more of a paycheck. For instance, sometimes we are gifted items, but sometimes we buy the items and then are paid to share about it. And because of our platform, we’re definitely able to extend our budget through connections to brands that want to work with us. We are required by law to disclose this information, so it’s never going to be a mystery whether or not we got something due to our influence. If we didn’t say we did, we didn’t.

The payments and money part aside, what we’re really talking about is what percentage of money do we save by having product sent to us. It’s tricky to calculate, but we estimate we average 20% of a project’s overall cost is offset by comped product for us (some projects are a higher percentage, some are zero). See above for out-of-pocket costs.

18. What costs ended up being bigger than you anticipated?

The things you don’t see always end up surprising you. Electrical, plumbing, foundation, mold remediation, HVAC – all the stuff that makes a house livable costs the most. Making it pretty (assuming everything else is in place) is actually very affordable. Trim, rugs, furniture. Lots of deals out there. But adding lights, moving plumbing, replacing your furnace – brutal. I’m also consistently surprised how much DEMO costs!! That’s a great way to save if you can–do the demo yourself.

19. What is a realistic percentage of income to budget for renovations?

Unfortunately there’s no universal answer for this. Only you know all your expenses, your home situation and your vision, so only you can give your dollars their purpose. But! Even when we were living on a $11 an hour while pregnant with our first child, we budgeted $25/month for home improvements. If it’s important to you, and you want to make it happen–give yourself the freedom to do so! Now, because this is also our job, a much larger than average percentage of our income is allocated to renovating.

20. How do you know how much to save for a renovation?

You have to do your research. We make a mood board, select products, gather their costs, and estimate labor (if there are things we need to hire out). Then we add 20-30% for unexpected items.

21. Is it okay to take out a loan for a renovation?

I don’t think that’s a question anyone else can answer for you, but I would post a few questions:
– What will be accomplished with the renovation?
– What will the monthly loan payments do to other aspects of your budget long term?
– Is there a phase 1 renovation you can do to improve how you feel about the space first while you save up?
– Is the loan less than or equal to the value you will add to your home?

Only one time we did. While renovating our last house, we took out a $10,000 home equity loan to help supplement our kitchen renovation budget. We knew that the added value was there in our home and we paid it back swiftly. I don’t regret it, but I’m grateful to have been strict with our budgeting now long enough to have a large renovation budget in place.

22. How do you balance family life with small children and major renovations?

Have places you can “retreat” to. We haven’t always been the best at this, but in this house we tried doing the bedrooms first so our daughters had a place they could go that was clean (at least as clean as a 3, 6 and 10 year old keep it). We also spend time outside in the evenings, and eat dinner together, and read books before bed, and do homework. Regular life has to happen, but we do all the regular things together.

23. Did you have to sacrifice other things in life to renovate?

Of course! But it’s all about preference and priority really. Anything anyone does requires sacrificing something else, because time is limited, money is limited, resources are limited. Sacrifice is a great thing – it means you have options and you get to choose! It’s about what you value, and once you know that, the “sacrifices” don’t feel like sacrifices at all. I don’t have any designer purses or clothes or fancy shoes. Our children go to a great public school, we don’t have cable, and we eat at home 90% of our meals. But we just LOVE to pour love into our house. Everyone has their thing that they prioritize and whether you realize it or not, you are sacrificing something else to afford that thing. But again, that’s the beauty of a budget–you get to pick WHERE your money goes and HOW MUCH of it goes there.

So now it’s your turn! Get budgeting! Right now, YNAB is offering a 34-day trial, no credit card info required. They also have so many free videos and educational content you can digest right now. On average, new budgeters save $600 in their first two months, and $6000 in their first year. Do it! We’ve been using the program for years and can honestly say we are able to renovate BECAUSE WE BUDGET. Get started, and take control of your money, instead of the other way around. I think you’ll be blown away at how fast you see the changes come.