09 September 2008

I want this kitchen! This is truly may dream kitchen!. Now it's time for a reality check: the budget. Sure, it's not as fun as contemplating countertop choices, but giving careful consideration to budgeting can keep a project from turning into a financial nightmare.

SET A BUDGET

It spends about $82,000 according to Remodeling Magazine's 2005 for kitchen remodeling. But, it not an exact number, you may spend more or less depending on a several factors.
  1. Conduct a thorough and honest examination of your finances to reveal how much you can afford to spend. The National Association of the Remodeling Industry (NARI) offers a worksheet that makes this easy to do. With that number in hand ask yourself, "How long do I plan to stay in my home?"
  2. If a person is going to stay in a home for five years or less then the improvements should be viewed as improvements on investment. If you're going to be there for a longer period of time, you want to look at what's going to make you and your family the most comfortable.
  3. No matter how long you plan to stay, give careful consideration to what the remodel will do to the value of your house, and then compare it with others in the neighborhood.
HOW TO SPEND?
How you spend your money is a matter of personal discretion. To keep costs down, evaluate how important extra goodies, such as interior fittings on cabinets and intricate crown moldings, are to the overall look and function of a kitchen. A cost-saving alternative may exist, or you may be able to do without the item entirely.
Also, when budgeting, don't forget a line item for labor costs, which usually end up around a third of a project's total budget.

BUDGET FOR THE UNEXPECTED
Always leave a little wiggle room in the budget for the unexpected. There are all sorts of budget-busting surprises lurking behind the walls and floors of homes especially if it's an older residence. Last minute changes, known as change orders, cost time and bust budgets, too. You might elect to upgrade your choice of countertop halfway through the project. Though you can't predict the unknown, you can prepare for it financially. Set 10% of whatever number has been budgeted for labor costs.

HOW TO PAY?
There are many ways to foot the bill for a kitchen remodel. Home equity loan is one of the most popular because it's tax deductible. Other options include refinancing, no-equity loans, FHA loans, personal loans, loans from retirement plans or borrowing against a life insurance policy. Make sure to shop around for the best rate.

KEEP TRACK
Once the project begins, track actual spending on a computer spreadsheet or a simple piece of paper, and compare it often to budgeted amounts.

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