This post originally appeared on LearnVest, where smart people learn to manage their money and live their richest lives.
A year ago, the ceiling in Fiyel Levent’s bathroom caved in, which was just the beginning of the problems with her apartment’s unfortunate commode.
A giant claw-foot tub happens to sit in the middle of the tiny five-by-seven foot space, making a tight squeeze all that much tighter. To make matters worse, it’s the couple’s only bathroom. “We’re going to gut it,” says Levent, who lives in a two-bedroom apartment in Queens. “It’s very impractical. The tub takes up the entire room.”
But, as she and her husband have discovered, tackling a home improvement project is a major endeavor, and renovating even a small space can come with an oversize price tag. Figuring out where to begin can be as overwhelming as the work itself. Any homeowner who’s planning to take on that avocado green kitchen should probably invest in a good calculator first.
When considering renovations, which should you tackle first, and how do you know if you have enough money in the coffers to tackle it? “Bad wallpaper is not an emergency,” says Ellen Derrick, a certified financial planner™ with LearnVest Planning Services. “Saving up and paying cash for the work needed is the more reasonable route—and this means saving up for the project outside of your emergency fund.”
Before you start picking out Kohler appliances, take a cold, hard look at your latest bank statements and your monthly take-home pay, and figure out how long it will take you to save enough to pay off the project outright, advises Derrick—and that’s just what Levent and her husband ultimately did. If you’re embarking on a major remodel that will require financing, consider a home equity loan or line of credit. But be sure that you can afford the increased monthly payments before you sign on the dotted line—and make sure the investment will add value to your home.