How to Tune Out “Reno Wants” and Avoid DebtMay 12, 2018
Ah, springtime for homeowners! The scent of new grass and flowers surround you. Birds are chattering and squirrels are running marathons across your lawn…and there’s a giant reno garbage bin on your front lawn? For many Canadian homeowners, spring kicks off renovation season, which often signals the beginning of more debt.
If you’re contemplating a home renovation this year, here are a few things to think about to save yourself financial grief and additional debt down the road.
Is your renovation a want or a need?
This isn’t a new concept to most consumers, but reno season can get the best of people at times. It can be easy to convince yourself that all that work — and cost — is necessary.
Our 2017 poll found that over half of Canadian homeowners had plans to go ahead with a reno, and the costs were often above and beyond what they had saved. Unfortunately, borrowing for a renovation can quickly lead to needing help with your debt.
This year is a new opportunity to take a critical eye to your to do list. See what you can cross off before you even begin.
The need to put off your wants might be even more pressing this year.
Housing prices continue to hold or climb, new mortgage stress rules are in place, and more interest rate hikes are expected in 2018.
Also, everyday expenses just keep going up. Groceries, fuel, utilities, and medical costs tend to be non-negotiable parts of life.
If you’re looking to buy (and reno!) a new property, renegotiate or renew a mortgage, or you’re already pinched financially, these rising costs could mean financial trouble — especially if you take on debt for a reno you might not really need right now.
Check out Penelope Graham’s blog explaining the rise of living cost in parts of Ontario at her site, Zoocasa.
Minimalism vs reno-ism
Every person needs to find their own comfort zone: how much debt is too much? If you’re like many Canadian families and your budget is tight, we encourage you to avoid adding to your debt for a renovation.
Of course, sometimes renovations are prompted by emergencies.
If your toilet has stopped working, your deck boards are rotten, or your wiring doesn’t meet building codes, you might not be able to avoid that home repair or reno.
In this case, try to not to let costs get away from you. Adopt a “reno minimalist” frame of mind: fix what needs to be fixed and do your best to avoid taking on debt.
If your reno isn’t emergent, be honest with yourself about your ability to tackle the costs.
A marble countertop, hand-painted tiles, or a new skylight might be the cherry on top, but high-end finishes are more likely to put bust your budget and create debt.
Instead, create a goal savings plan and pay for your future reno in full. The personal (and financial) reward of paying cash for something significant like a new kitchen or backyard deck can be extremely fulfilling.
While you’re saving for your project, try to keep a minimalism mind-set.
Focus on frugal living, pay down debt and add to your emergency fund. Putting off a reno (or downsizing your budget) doesn’t mean you won’t see positive change. But instead of new flooring or landscaping, the changes will be increased financial security and freedom.
Read about some straight-forward strategies for adopting a minimalist lifestyle from Wallet Squirrel.