Inspiration for my own kitchen remodel
My Kitchen Sucks -Episode No. 04
Setting Your Project Budget
Hey guys, Welcome back to My Kitchen Sucks – the place where you get to follow me as I struggle through my very own home kitchen renovation project. This is Episode No. 04. Today, we are talking about our project budget. This happens to be the one topic where most people get stuck (money has a way of derailing projects!) So, I hope this episode helps you think about your own project budget from a different perspective and gives you the confidence to keep moving forward.
In previous episodes, we have spoken about our dreams, defined our goals and established priorities, now it’s time to focus on costs. This is where it gets tough. We’ve been doing a lot of dreaming up until now. It’s time to face some cold hard facts.
So, what does it cost to go from this kitchen, one that really sucks, to our dream inspirational kitchen? For most of us, this is almost an impossible question to answer. We just don’t know how to price a kitchen renovation project. Let’s start with what we do know.
There are three realities when it comes to project budgets.
Reality No. 01 – Projects cost money! But it’s not our job to know how much things cost.
Reality No. 02 – We have a limit to what we are willing to spend! We can help to define this by asking ourselves the right questions.
Reality No. 03 – The cost to build our dream project is rarely equal to what we are willing to spend! (Spoiler alert, it’s usually more.) But, with a good team in place, and if we are willing to make some compromises, we can reach our project goals and meet our project budget.
Setting the Price
At this early point in the project, it is our job to define what we are willing to spend. This is really the only thing in our control right now. Until we get the design complete, we cannot price, with any real confidence, what the project will cost. We can only establish how much we are willing and able to spend. We create the parameters for how we have to play the game. We set the rules of engagement.
To identify how much we are willing to spend on our project, we asked ourselves 5 questions – let’s take a look at these questions and how my wife and I answered them.
Question #1 – How much cash or credit do we have available?
We have some cash available and access to a line of credit. This money is liquid and easy to obtain. However, we know we must pay for another kid to go to college and we wish to keep some cash in reserve for other long-term maintenance items. Our goal is to use the cash we have (or will have) and not dip into the line of credit.
Question #2 – How long do we plan to stay?
Our home is becoming a little too much for us to handle. We will be empty nesters starting next year, but we wish to remain in this home until our youngest child graduates college. Let’s assume we will be ready to move somewhere in the next 5-8 years. So, how much are we willing to spend depends somewhat on the time we will be able to enjoy the returns. Longer time periods = more money, shorter periods = less.
Question #3 – Will the project add real value to the price of our home?
We do not think that our new kitchen will add to the sales value in 5-7 years. It’s been a down residential market for years and we do not expect that to change significantly. But, we are confident that a new kitchen will make the sale of the home much easier because as we have established many times before, this existing kitchen sucks!
Question #4 – Does the ultimate value of our home match our neighborhood?
Our neighborhood is rather eclectic with many varying types of homes. Our mid-century rambling ranch, along with the 2-acre property with pool is most likely at the high end of the neighborhood value – so any work we do will push that even higher. This tells us to keep the investment down because we know we may not see any king of return when we go to sell in a few years.
Question #5– Is there any value in happiness?
We have been suffering in this kitchen for many years. A change to the kitchen will not only work better for us, but will increase our enjoyment and love for the home. Who knows, if we do this right, we may want to stay even longer. We know that there is real value in being happy in our own home. Less stress, more joy = more happiness. While it is hard to place a real dollar number to the “Happiness Factor,” we know that it is real and it will influence how much we are willing to spend.
So, with all of this information in hand, my wife and I (through long and tough discussions) both agree that we are willing to spend between 60-70K for this project. We do not expect to get any of this back in our ultimate sales price, but we value the joy that the new kitchen will bring.
This number then becomes our project budget – the final piece of the puzzle to fit in with our dreams and goals.
Now, it’s time to start design and see if we can create a project that exceeds our dreams while still maintaining our budget. That will take some hard work and compromise, but we are ready for the challenge.
Join me next time as we dive into some tips and tricks to help keep our design on track with our budget. I talked with some real experts and they were more than happy to share their suggestions. We will see you soon here, at Your Modern Cottage!