Home Improvement 101: Doing it Debt-Free


Many homeowners seeking to add value to their homes will take out a traditional loan to fund their projects. In fact, home improvement loans account for a substantial portion of American debt each year.

But, why?

Why take on debt unnecessarily?

Why not use cash?

Why not save until you have enough in your bank account to fund your project?

Why not delay an extra six months until you can afford to pay for your project upfront?

Absent a true emergency, like a collapsed roof, most home improvement projects can wait. There is simply no reason to borrow money to remodel a kitchen or landscape a yard – something purely cosmetic and frankly, nonessential.

But at the same time, these projects are fun, add to our enjoyment of our homes, and in some cases, can even increase our property value. Nonetheless, most American incomes can’t easily afford a $60,000 home renovation, so what’s the solution?

Fortunately, there are ample ways to tackle those home improvement projects debt-free. Not only will these options allow you to rest easy in knowing you’ve accomplished them with nothing more than your savings savvy, patience, and discipline, but you’ll enjoy the upgrades in your home for years to come.

Figure out what you want to do

The first step in any home renovation project is to pinpoint exactly what you want to achieve. If you aren’t happy with your kitchen, for instance, identify exactly what it is you don’t like. It is the colors? Would a fresh coat of paint do the trick, or does the situation call for a countertop and cabinet upgrade? Would fresh new appliances help, or are you hoping to add recessed lighting? Is the layout okay, or do you need to demo a few walls?

Only once you’ve determined exactly what needs to be done can you start crunching numbers.

Price it Out

Say you’ve decided to tackle cabinets and countertops. Shop around to get a grasp on the average cost of replacing countertops and cabinets for homes in your price range. Keep in mind that these numbers can vary wildly. For instance, custom-built cabinetry will cost more than wholesale products, and the final numbers for marble countertops will be exponentially more than granite. Figure out what makes sense for your home and settle on a reasonable budget.

Cut it Down

Once you have a number, explore ways to cut it down. For instance, see if your cabinet wholesaler can sell you slightly blemished cabinets, which will run cheaper. If you visit a granite warehouse, ask to see the cheaper versions of stone rather than automatically letting a sales representative lead you to the most expensive slabs. Better yet, check a Habitat for Humanity Restore to see if they carry any models that you like.

Start Saving

Once you 1) know what you want and 2) have identified a number (or range of numbers) for your budget, open a separate savings account to fund your project. Each month, contribute a certain percentage to your savings account, and be sure to earmark certain windfalls – like gifts or bonuses – to your project so you can tackle it sooner! By doing so, you won’t need to borrow – or drain your savings – to complete your project.

Cut Corners

There are certain situations in which you don’t want to cut corners – for instance, if you’re making structural changes to your home. But for cosmetic upgrades, there are ways to save money by DIY-ing all or part of a project, hiring a less skilled contractor to do the work, or using a less expensive product. In the kitchen example, you could opt to hand-tile your backsplash instead of paying a skilled worker several thousand dollars to do it for you. Or, if you’re painting your walls, you can choose a slightly downgraded paint brand rather than the higher-end Sherwin Williams.

[ Read more about Money Management Skills ]

Once You’re Done, Stop

One of the dangers of home renovation projects is that they create a “domino” effect: Once you refresh one room, you suddenly start to see the flaws in others. Before starting your project, agree that you will tackle one room, one project, or one portion of your home at a time, and once you’re done, you’re done! If the brand new kitchen suddenly makes the outdated living room look cringeworthy, commit to simply switching some furniture around and adding some fresh paint in the meantime before engaging in another full-scale renovation project that will cost you more than you can afford to spend.

The key to executing a financially responsible home renovation project is patience. Putting your project temporarily on hold will allow you the time to save more, to avoid going into debt for a nonessential endeavor, and to avoid costly or rash mistakes. While you can and should be able to enjoy your home to the fullest, commit to doing so in a way that is financially freeing, not burdensome.