Consumer Debt & Renovations: Is Now Really The Right Time?May 17, 2018
Now that the warmer weather is finally here, are you considering a home renovation? Have you thought about what effect that reno will have on your consumer debt?
While home renovations can help to increase the value of your property, it’s really important to consider whether a renovation is really the right move. Here are a few factors to consider:
Start by checking in with your debt.
Before picking out paint colours and shopping for new tile, it’s definitely a good idea to take stock of your consumer debt. Review the basics for each of your debts: how much you owe, how long you expect to carry the debt, and how much interest you’ll pay. Sounds like a tough task? Don’t worry, you can use an online debt calculator like this one to help make it easier.
Next, consider how any recent increases will affect you.
For the first time in a long time, interest rates have increased — three increases since July 2017. And more increases are expected this year. As we all know, the cost of living is also not getting any cheaper. Before embarking on any renovation, ask yourself two important questions:
Will any of these increases affect my ability to comfortably afford the cost of my home renovation?
Will the additional home reno costs hamper my ability to pay off my debt and pay my bills?
It’s also a good idea to consider that renovation costs almost always come with some hidden increases. According to financial blogger Clare from Young and Thrifty, home renovation costs are rarely what they seem. In fact, your renovation costs will likely be 25 per cent higher than originally anticipated – another important consideration to keep in mind.
Finally, think about your goals.
Are you working on paying off or reducing your student debt? Are you focused on building your emergency savings fund? Whatever the case, setting and sticking to your financial goals is essential in order to find financial balance and make your money dreams and priorities happen. As such, it’s important that your home renovations don’t overshadow your other financial goals.
If you’ve decided that now isn’t the right time to add to your consumer debt to pay for a renovation, don’t worry. Think about setting a savings goal for your future renovation now. When you are ready to renovate, you’ll be less likely to add to your debt.