Affordable home improvements: Advice from a frugal living expert

Affordable home improvements: Advice from a frugal living expert

You imagine your dream kitchen and snap your fingers. One month later, your drab kitchen becomes the cooking space your taste buds have always wanted.

If only life were that easy.

In a world of unlimited dreams but concrete budgets, the best way to achieve your dream home is through a series of affordable home improvements. Nailing the financial parts of your projects will help you get on a sustainable path toward the house you want–and deserve.

To learn more about affordable home improvements, we sat down with Brian Martucci, a first-time homeowner and personal finance writer. Brian has written posts on home improvement projects that reduce homeownership costs, and frequently discusses the importance of living as frugally as possible.

Below is a summary of our discussion on affordable home improvements:

Hearth: Let’s start with the basics. Tell us how you became so knowledgeable about good value home improvements.

BM: I moved into my first home about 2 years ago. I love the place, but it definitely needed work. The house is a fixer upper that’s over a century old. I didn’t have the money to just hire a pro to take care of everything, so I had to teach myself a lot about affordable home improvements.

Hearth: You’re a big proponent of the frugal mindset. How does this apply to a home improvement project?

BM: The frugal mindset means keeping your project’s costs as low as possible without cutting corners. You also want to select projects that maximize your future cash flow.

Hearth: How?

BM: Low flow fixtures, modern appliances, and other cost-cutting improvements can reduce your utility bills or water usage–saving you money and offsetting some of your costs. You keep more money in the bank over the long-term.

Hearth: How have you paid for these projects?

BM: I’ve used a combination of cash and 0% APR credit cards.  

Hearth: Aren’t credit cards risky?

BM:  The core principle of doing well with a 0% credit card is not carrying a balance every month. Otherwise, my interest payments could go into the double digits. Even in the current low rate environment, many credit cards charge 15% APR minimum on past-due balances. If your credit is less than perfect, your rate could be even higher. I’ve also only used a credit card for small projects.

Hearth: Would you use one for a large project?

BM: Probably not. Even if you do have the luxury of being able to take out a card with a high credit limit, if you put everything on your card, you’re really short-changing yourself with respect to your debt-to-income ratio and taking away any breathing room you’d have for an emergency.

Hearth: Many people say a home equity line of credit (HELOC) is similar to a credit card, except with lower rates. Would you use a HELOC for a larger project?

BM: It depends on the project. There’s no denying that the lower rates and flexibility to borrow against your line of credit when needed are nice. But there’s a downside.

Hearth: Which is?

BM: A HELOC, like a credit card, reduces your incentive to pin down your budget as early as possible–which is key to an affordable home improvement project. Because HELOCs can get you money whenever you need, you may find yourself using the HELOC as a crutch to avoid figuring out early how much you can spend. Instead, you want to craft a detailed budget upfront and stick to it.

Hearth: Do lump-sum loans, whether a home equity loan or a personal loan, solve this problem?

BM: Yes. What you lose in flexibility, you gain in an increased incentive to plan ahead for your project. This could ultimately reduce your costs.

Hearth: We’ve talked about a couple of different financing options for your affordable home improvement. What happens if you pick the wrong one?

BM: Not every homeowner thinks ahead to retirement, but it’s important to realize that every choice you make has a cumulative effect. Picking the best option now can help your position down the road, and the reverse is true as well. You always want to make sure you’re setting yourself up to hit your long-term financial goals.

Hearth: So you’ve picked the right financing option and your project is done. What are you feeling?

BM: I always go for the feeling of a “job well done”. The project looks clean and I kept my costs down.

Hearth: Thanks for these helpful insights into affordable home improvements. You can see more of Brian’s content on his MoneyCrashers profile.