Renovation Step 4 – I’m Over Budget! Now what??

By: Kate HambletDecember 31, 2017

I recently wrote a post covering the basics of establishing a renovation budget.  I mentioned that it is best to start a budget early in the process before any materials have been purchased and any work has been performed.  Doing so will give you peace of mind that you can afford all the work you plan to do before you start the job.  But what happens if you budget out your project (before any work has been done) and the cost of the renovation is much higher than you planned on spending for the renovation?  Coming to this realization might lead to feelings of disappointment and hopelessness.  But it really doesn’t have to!  The biggest thing to keep in mind when this happens is that your project can still be done, it just might have to be tweaked a bit.  I have had to do A LOT of tweaking to the design of our house over the past few months as we came across new surprises and design challenges, so let me walk you through our house and budget tweaks.

Renovation Purpose Statement

Step 2 of my renovation posts talked about determining your renovation purpose.  You can read the post here if you need a refresher.  This purpose statement is the key to getting out of the over-budget funk and getting back on track to complete a satisfying renovation.  Here is my renovation purpose statement:

“Above all else, I want to live in a home that lets us be the healthiest version of ourselves.  I want our house to be a calm retreat to come home to everyday with living spaces filled with natural light and a place for all our belongings to be stored.  I want a kitchen that reignites my joy of cooking and makes prepping for the week easy.  Our home needs to keep us warm in the winter and cool in the summer without having massive energy bills.  And knowing our track record for moving, we need to keep in mind the resale value of the home.”


Tweaking the Floor Plan

Our original plan for the home renovation was to add a master bedroom addition.  We planned on financing the addition with a home renovation loan.  This type of loan is similar to a mortgage, and at the end of the project the cost of the loan gets wrapped up into our mortgage so we would only have one payment.  The catch with this type of loan is that the lender will only loan out money that they know will be recouped in the resale value of the home.  So if a house that is currently worth $200,000 gets approved for a renovation loan of $100,000, the new value of the home after renovations must be at least $300,000.

Our plans for a renovation loan got derailed once we found the mold growing in our walls.  The cost to fix the mold problem was going to be expensive, but it wouldn’t add any value to the home.  Therefore, a lender would not give us money to fix the problem since they wouldn’t be able to recoup the cost in the home’s resale value.  Because of this, we had to scrap the idea of doing an addition.  We didn’t have a second option of finding enough funding to cover the cost of such a large project, and we didn’t want to take on such a massive amount of debt that we couldn’t recoup in the resale value either.

After many deep breaths, I went back to my purpose statement and got myself back on track.  My main goal is to have a healthy and safe house that provides basic conveniences for easy living.  I didn’t need a new master bedroom and bathroom to achieve that goal.  Instead, what I needed was to relocate our existing main bathroom so that it is in a convenient location and has a functional layout for the 3 occupants of the house.  This meant that we would move the bathroom from the first floor to the second floor to be closer to the bedrooms.  Since we don’t have much space upstairs, there isn’t room to add a wonderfully spacious 5-piece bathroom.  After a few attempts to try and squeeze one in, I went back to my purpose statement again and realized that I don’t need a 5-piece bath.  (A 5-piece bath includes a separate tub and shower.)  A tub/shower combo unit works just as well and meets all our bathing needs.

The way I added more function to the bathroom was to create one room for the sink and another room for the toilet and the tub.  Now someone can be brushing their teeth without having to walk in on someone else that is using the shower.  It is also creating a healthier bathroom since the toilet is not in the same room as the sink.  The ideal location for a toilet is in its own water closet (its own little room) to keep toilet germs away from the sink and tub – the two fixtures we use to clean ourselves.  But I couldn’t make this happen space-wise, so a good balance was to at least separate the toilet from the sink.  The result is a cost-effective solution that meets all my renovation goals.


Budget – Round 2

Once we wrapped our heads around the fact that we would not be doing an addition, I created a new budget based on renovating the house that would still meet our needs.  The renovation included a new kitchen, moving the main bathroom upstairs as previously mentioned, moving the laundry and a powder room to the main level, adding all new windows, new siding, new insulation, and finishing the basement for a future bedroom.

Since we lost the ability to do the renovation loan, the amount of money available to use for a renovation has been cut in half.  So I needed to try to squeeze all of the renovation items into a much smaller budget, and it did not work.  If we wanted to do all the things we had originally planned for minus the addition, we were over our available funds by 25%.  This meant that more tweaking needed to be done!


More Tweaks

The first (and hardest, might I add) place we decided to cut costs was on our new siding.  The house must be resided, so unfortunately that is not a cost we can push out to a later date.  I had my heart set on thermally modified wood siding, but the material alone is three times more expensive than an economical siding like fiber cement or engineered wood siding.  Labor costs are also higher for this type of siding.  After a few tears, I did a lot more research and came up with a solution that I could feel good about and that would lower our costs.  We decided to use a product called engineered wood siding.  You can read all about it here and here.  Just like with the bathroom work around, we didn’t give up when we realized we couldn’t afford the siding of our choice, we just made a few tweaks.

Though the siding change did help our budget quite a bit, we still had more cuts to make.  The next place we went to were the windows.  I had grand plans to have large, beautiful windows on the south face of the house that would be sheltered by new overhangs. My renovation goals are to open up the house and bring more light into the spaces, especially the living room.  As it turns out, a couple of five foot by four foot windows will bring in plenty of light for modestly sized living areas.  We didn’t need grand, oversized windows.  And now that we are reducing the size of the windows, we don’t need special overhangs to block out the hot summer sun.  The living room is still going to be filled with a beautiful amount of light year-round with our new south facing windows.  My renovation goal of living spaces filled with natural light is still being achieved.

Our last major tweak (is that an oxymoron?) involves the wall insulation.  Since we have mold in our current wall insulation, we need to remove and replace all the insulation in our walls.  The best practice would be to add rigid insulation to the outside of the house, behind the new siding.  This creates a lovely blanket of insulation around the entire house.  I knew this was going to blow our budget, so I didn’t really have my heart set on it.  I figured out the cost, determined it was more than we could spend, and moved on to our next option.

Our next option was to add rigid insulation to the inside of the exterior walls.  This would be similar to the first option but slightly less expensive since there are less environmental factors and we aren’t trying to attach siding to it.  Plus we could do the labor ourselves.  After running the numbers, this option was also pretty pricey.  We settled on adding a 2×3 stud to our existing 2×4 studs to make a bigger exterior wall cavity, allowing for more insulation within the walls.  We will fill the cavity with mineral wool batt insulation that has an R-value of 23.  Again, we considered the balance between affordability and best practices.  The new insulation will be double what the house currently has, plus it will be better air-sealed, so our heating and cooling loads will be significantly reduced.


And Now For My PSA

One place that I refuse to make tweaks to are on material and building practices that are poor choices for the environment or human health and comfort.  I recently heard a great analogy about large houses that use poor quality materials and building practices.  They were referred to as a Hollywood movie set of a house, meaning the grand house looks like a house, but it’s full of fake/ cheap things that will easily break or cause health or environmental issues.  Plus, there’s no real substance to them.  This is the biggest balance of them all when it comes to making your tweaks.  I believe that human health and comfort should not be compromised to achieve more things out of a renovation.  There are a lot of places where I could have significantly lowered building costs by using the cheapest product on the market (mostly containing plastic, formaldehyde and flame retardants) and we might have been able to afford the addition after all.  But since my goals were to create a healthy home (which is hopefully a goal on everyone’s list), using poor quality materials and building practices were not options.

There are always multiple ways of achieving your goals.  I know firsthand how disheartening it can be to realize that the dream you had for your home isn’t feasible.  But this isn’t the time to give up.  Stay positive, and have some fun coming up with new solutions to meet your home renovation needs.  Refer to your purpose statement regularly to be reminded of the goals.  It is quite easy to convince yourself that you need something very specific (like a 5-piece bathroom or a fancy siding material) because of an image you saw on Pinterest.  Going back to your purpose statement will bring you back into reality and make you see what it is you really need to achieve the beautiful and functional home of your dreams.

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