Three years from now when I look back on finishing our basement, I’m probably going to say it was a financial mistake. What was originally going to be a $9,000 project has easily cost us at least $13,000 if not more. The careful planning and budgeting we set up before starting this project is all out the window and now we’re left with just days before the baby arrives and we’re as good as broke. It’s disheartening to work so hard at getting out of debt only to be undermined by one or two poor decisions along the way.
When you’re distracted by other events, it’s easy to let little receipts build up into a huge problem. I just looked at our credit card and out of the blue it screamed “$3,700 Due!” After tapping part of our emergency savings to help cover the piling bills and taking a family loan from my parents, it looks like I’m going to have to sign up for a new credit card (don’t worry, it’s only my 2nd card) and execute a 0% balance transfer to help our family’s cash flow problems.
Paying the balance transfer fee of 3% and spreading my payments out over 11 months will help us keep from tapping more of our savings to finish the project on time. After doing some research, I decided on the Discover® More Card!* since they have a 0% APR promotion for balance transfers and Discover is offering a bonus $50 cash back on the More card.
I’m a little disappointed that we’re adding more debt right after we finished paying off two other debts, but that’s how it goes sometimes. I won’t be using this card – at least until the transfer is paid off – so I’m not worried about racking up extra debt on this new credit. My basement office has to be completed before the baby arrives if I’m going to be working from home and we need to move the stuff that’s stacked in our dining room back down to the storage area. Fortunately, the extra earnings from the blog and the extra cash we freed up by paying off the other debts will cover this “loss”. I guess I need to add a couple more debt bars to my Financial Health list, huh?
When you’re busy and all your attention is focused on one or two major events, it helps to keep a mind on your money and a lock on your wallet. Those “little” Lowe’s trips add up quickly. We’re in for some major hurting, but it won’t break us. We just need to get smart again and handle our money properly while we work ourselves back out of debt again.
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Thirteen Thousand dollars?!? As part of a community group last year, I managed the renovation of a 1500 square foot meeting hall (stripped to the studs, insulation new walls, ceiling, lighting, carpet and some furnishings) for less than $15,000. That must be quite the home office!
DAvid
That’s for the entire basement (about 800-900 square feet) and includes labor. I’m not doing the work myself. There are a few upgrades, such as embedded video cables to where the projector will eventually reside and a whole-house wired network. When you’re talking about multiple rooms (where there were no rooms before), trim, doors, lighting, and such, it adds up quickly. Heck, paint alone has cost $200!
The finished product is going to be gorgeous, but it was definitely much more than we should have undertaken at this stage of our lives.
As much emphasis as pf bloggers place on saving money, home renovations are not the place where your main priority should be saving money. Nothing beats having an amazing basement for you and family/friends to hang out and relax. Also look at the bright side, one day when you are ready to sell your home (in a better economy of course) your property value will be a lot higher than that of people in your area.
Stu,
While it’s true that you don’t want to go cheap when doing renovations, it’s a bad idea to spend money that you don’t have. When you’re working to get out of debt (as we are), adding more debt is counter-productive. Hopefully the extras we threw in with the basement will help me quickly repay it through increased earning potential.