She Works Hard For the Money - Part 2

Hello and welcome to another episode and today we are covering part 2 of our discussion on the cost of design projects. In part one, which if you haven’t listened to you should definitely check out - we covered the basic costs of things like furniture and building materials, why prices can fluctuate so much, and what drives the construction prices that create that sticker shock feeling.

Today you are going to get an understanding of value, different typing of budgeting strategies, how to work on a shoe string budget, what items will give you the most for your dollar, and what items tend to break the bank.

Value is defined as a relative worth, utility, or importance. One of the most important steps you can take before you begin your project, is to define your goals. This could be as simple as creating a comfortable space to work in, a kitchen that is great for entertaining, or it could be a deeper and more conceptual focus, such as creating a home that celebrates your family in a certain way. Clearly identifying, listing, and continuing to reference your goals throughout the project is an integral part of being able to determine the value of any single element or decision. If it supports your goal, it has high value - if it doesn’t, its value is lower. So for instance - if your goal is to create a home that celebrates the neighborhood and region you live in, and you find a locally made piece of furniture that you love, that’s a high value item - and because it’s aligned with your goal, you might feel okay spending more money on that item then a piece from a national chain. If you also find an area rug that you love, but it’s made in another country, you may feel less motivated to spend any significant portion of your budget on that item because it doesn’t align with your goal of having locally made pieces.

But there’s also the sense of value from utility  - if you want to move a column in your home so you can have one big open space, and that is a big part of the vision for your home, that’s going to be a high ticket item, that isn’t necessarily something you will show off to people, but the utility of that decision allows you to achieve your goal.

It can be difficult to develop a budget when you don’t have your goals and values identified. Before you start, you may want to ask yourself what you want this project to achieve, who will need to absolutely love the end result (and who won’t need to), and establish a few rules and guidelines for the look and feel that you want to achieve. You can try crafting a little bit of a persona for your space - you may want it to feel nostalgic for a time period you’re fond of, or go super modern because you’re a huge technology fan, or celebrate the city or town you live in. If you find yourself referring to a specific place over and over again in your design inspiration, like a hotel you’ve visited or a friend’s house that’s recently been redone, try and pint point what it is about the place that you are so drawn to - sometimes these attractions are subconscious, but working to bring our motivators to the surface will help them to act as guiding principles for all our decisions, budget especially.

Once you have your goals and values defined, you can begin to outline a budget. There are few ways to do this, some more effective than others. 

The most common method I see folks who are doing things themselves is what I call the Mason Jar Budget. This is using the amount of money you feel comfortable dedicating or whatever you have saved up, and working backwards. Meaning, I have a thousands dollars, I want to redo my bedroom. This is certainly workable approach, but the problem that can arise with this strategy, is  that the dollar amount in your budget is a reflection of your access to money at that point in time, rather than an informed accounting of true costs for what you want to achieve. You can take a thousands dollars to Ikea and go wild, but you may have visions of specific Non-Ikea styles or a different quality of design. So, it can help to do some research before settling on a number - not necessarily because you will need to spend  more or less, but because you can clarify what any particular price will give you in return. You may keep that one thousand dollar budget and decide to spend it all on a new mattress because that’s what aligns best with your goals and values. You might even find out you can spend less money than you were thinking… research pays.

The second approach to budgeting is Dream Menu Budget. This entails starting with what you want, rather than what you can afford right now. When you list out everything you want to do to complete your design, and attach a well researched dollar value to each of these tasks or items, you’ll of course have a grand total. If that grand total does not align with your current access to funding, you can parcel out the project into what we call phases. So let’s say you’ve listed everything out, and it’s going to cost you $5k to do everything you want. You still only have one thousand dollars. You can select a few items from your list that you want to start with the total one thousand, and mark the remaining items for a time later in the future when you will have more funds to direct towards your home. A little now, a little later. You’ll still get everything you want, it just requires patience.

Sometimes though, you don’t know 100% the exact things you want to do to your home, but you want to develop some ballpark figures to help you understand what realm of cost you should be considering. That’s when percentages come in very handy and you can use what I call the Algebra Budgeting Method. I love talking about money in terms of percentages because it translates very universally. For instance it’s a pretty common philosophy amongst financial planners that you shouldn’t spend more than 30% of your monthly income on housing whether that’s rent or a mortgage. Even though monthly income varies wildly depending on the person - applying that 30% is something everyone can do. As a base line, the median US household income in 2019 was $68,703, based on census data and the average home value in the United States is $269,039 according to Zillow. I’ll reference back to these averages, just to have a number to tie back to, but because we are speaking in percentages, you can apply the math to your own situation.

So from the average American income, home renovations can be anywhere from 5% of your annual income to 200% of your annual income, but the budgeting metric you really want to pay attention to is based on the value of your home, that is - if you’re a home owner. If you’re a renter you’ll be looking mostly at furniture solutions and I’ll come back to that in a minute.

So, if you take your home’s market value and apply some standard percentages to that number, you can determine the budget that will make your renovation work best specifically as an investment in terms of upgrading your home’s value. That’s the main advantage of using the Algebra Method. You can of course spend more or less than that number to achieve what you want, but these percentages help you understand cost in terms of return on investment if you’re considering how your renovations will help your homes resale valued. It’s also a great metric to just help you get to a good ballpark figure when you’re kind of not sure where to start.  So for instance a kitchen budget should be around 15% of your home’s current value. So going back to the average house value of $269,039 that’s just over $40k. A Bathroom would be budgets at 7%, which would be slightly under $19K. Living rooms and bedrooms you can set aside 10% or $26,900.

One helpful rule with this method is that no single room’s renovation should take up more than 15% of your home’s value, at least not for aesthetic reasons. If you’re looking at items like structural work, heating and cooling upgrades, new windows, roof work - those would all have their own separate costs to them, usually between 2-5% of the home’s value.

All that being said, these percentages are providing an estimate and not a true cost based on your unique space and goals. The last and most accurate method for budgeting is the Quote Method, which is when you calling 3-5 contractors for estimates.This method works best when you have as much detailed information regarding your project as possible. Being able to give the contractors square footages or each room, a list of all new items, any existing items that will need to be removed or protected during construction - all this will help them provide you with a more accurate number. You will likely see variation between the numbers you get from each contractor, that’s pretty normal - and you can do an exercise called leveling which reviews each price to see if they are all accounting for the same things, and ask for revisions if anything was left out.

So all of these methods are really focused on home owners who are looking to do full renovations. But you know I’m always thinking about renters and even home owners who may just want to change some furniture, maybe add some new curtains, paint a wall, and call it a day.  For that type of project I recommend using the Area Budget Method. You’ll need to know the square footage of every room you want to decorate, which you can do by measuring the width and length of each room and multiply those two numbers together. Then, similar to the algebra method, you’ll use a dollar per square foot multiplier to determine your budget. In most of my clients projects, we use $30/ per square foot, but depending on the quality and complexity of what you want to achieve, that multipler can be anywhere from $25-$45. So a typical living room is around 200 sf, which would yield a furniture and decor budget of $5k -$9k. This is also assuming all new furniture, you certainly get these number lower if you need.

I love working with shoe string budgets, and I do believe anything is possible when you’re willing to put in the time, effort, and care. I talked a lot about the benefits of second hand furniture in the episode Play It Again, but it bares repeating. There are so many resources for low cost and free furniture that can help you furnish a room including taking unwanted pieces of your friends and family’s hands, thrift stores, consignment shops, Craigslist, Facebook marketplace, Freecycle.com, yard sales, estate sales, moving sales, Flea Markets, you can even look at pieces people put out on the curb for trash pick up if you’re willing to put in some true elbow grease. There are so many ways to rehab shabby furniture - paint being the most straight forward and I go through this process in detail in the episode Skincare for your Furniture.

Another big way you can upgrade your space when working with a limited budget, is to take advantage of design principals like relief, alignment, and moments of surprise that don’t require buying a single thing. To Start, activities such as sorting through you belongings, creating three piles for items you want to keep, donate, and recycle. This decluttering process won’t affect your bottom line but it will help you to feel like you’ve gained space and also gained a better sense of pride about your home. This process should also be implemented for your existing furniture. It’s not uncommon to have pieces that we don’t love, that aren’t useful, that don’t have any emotional significance to us, and yet they just sit there and almost become blind spots in our minds. Maybe we start using them to hold laundry or mail, and things just start piling up on top of them, but the best thing we can do is actually clear them our of our homes and our lives and create more space and new opportunities for a piece that we do actually love. 

Also - the act of organizing the belongings we do keep can go a long way as well. I am certainly not a professional organizer, but there are so many really great resources out there for organizing, like Marie Kondo, The Home Edit, Neat House Sweet Home, A Full Bowl of Lemons, The Neat Method - the list goes on and on, organizing is so popular right now. The resources are everywhere from blogs to books to tv shows. Getting an organized kitchen counter is in  many ways just as valuable as getting a new countertop. A lot of times if I’m watching home improvement shows - the biggest problem people have is too much stuff and no organization - and even though that isn’t exactly interior design, it still is part of interior decorating and has such a big impact on the impression your space gives, even if that impression is just your own.

So you’ve decluttered and organized and now what? One of my absolute favorite tricks to make a space feel brand new, like it’s been given a head to toe makeover - is to replan the layout. Furniture layout possibilities are endless, and the way your furniture is placed in a room can totally change how the space feels. If you really want to shake things up - here are few major game changers I love using with client.s #1 Flip two rooms completely - Are your living room and dining room similar in size? You could be a good candidate for flipping rooms - meaning the dining room goes where the living room is and the living room goes where the dining room is. This is especially good in smaller spaces where proximity to the kitchen isn’t that big of an issue with either location. This can work for offices and guest bedrooms as well and the great thing about it is that it feels like a totally different house. It can help you appreciate the daylight that comes into each space in a different way and it will change how you flow from one room to another. It can be a little scary sometimes and the biggest sticking point I hear is that the cable for the television is locked into a location but cables can be moved and with all the streaming apps available today I think cable TV becoming less and less common. If your layout doesn’t lend itself to flipping rooms, you may want to consider flipping the furniture 90 degrees. This concept can cause absolute panic and chaos for some as we all seem to think there is only one place that a sofa works - but I assure you, there are options.Try playing around with where pieces could go - you can mask off the footprint of each piece of furniture with painters tape before you actually move everything to get a better sense of how the space will feel. 

Now let’s talk about getting the most out of what you spend. This is when you don’t exactly have a shoestring budget, but you still want to make sure what you are spending your money on is of high value to you. As I mentioned before, much of this hinges on your individual goals, however there are some elements that have bigger noticeable impacts that others. I talked about this a little in the episode called the Final Countdown, although most of these strategies were more on the light touch decoration side, so I wanted to add on to this concept with renovation moves that will give you big results.

So First, by far and away is lighting - Updating the lighting in your home is one of those things that’s like getting a really good hair coloring - everyone notices something looks great and new, but no one can figure out what it is. And I’m not just talk about switching out that old chandelier from 1996 - I mean having a strategic architecturally incorporated, dimmable lighting system that highlights things like artwork, the new tile you spent hours deciding on, the brick on your fire place and the elegant curtains you adore. If you can get a lighting consultant to help you or a designer or architect whose speciality is lighting, this will really help to ensure your space has the extra special something that is so hard to put your figure on - the je ne sais quoi is all in the lighting.

Next, any layout change you make is going to have a super huge impact on how your space feels. Removing a wall, adding a wall - creating a double height space if you have a two stories -whatever it is that your dreaming of doing, it will be worth it. One thing that’s so great about removing walls and creating an open plan is that it not only combines the two rooms, but it doubles the amount of natural daylight and views your perceive when you’re in the space - this is a big win, anyway you slice it.

And the final easy way to make a major impact on your space  - da da da - color change . Now, don’t forgot - everything I mean everything has a color, so yes you can certainly change the paint color of your walls, but try and think beyond this as well. This could be deciding to stain your wood floors super dark or bleaching them to a beach white, painting your ceiling an accent color, or committing to that white sofa you’ve always wanted. Shifting the color in your space will help it have that wow factor that everyone craves in a before and after. If your space is darker, switch to a lighter tone. If you the space is fairly neutral, commit to a bold color palette. These changes are cosmetic and superficial, but boy will you feel like you’re living in a whole new world.

The very last thing I wanted to tell you about is some standard big ticket items to watch out for. These are things that may seem like not that big of a deal if you haven’t renovated before, but they always have a higher cost associated with them. Knowing what moves will automatically result in a four to five digit price tags can help you plan around not doing these things or if you do chose to do them, to factor in their cost ahead of time so you can keep your budget balanced.

Let’s talk about plumbing. There was a time in my career when I was obsessed with becoming a plumber - it’s solid career path with an unrelenting demand. A new faucet can be a fairly easy upgrade that you can even do yourself if like to, but when it comes to moving plumbing fixtures - as in - putting your kitchen sink on the opposite side of the room, expanding your bathroom and reorienting the shower - this is where a plumber must be involved in order to reconfigure the pipes inside that wall. Even the seemingly smallest adjustments can have major ripple effects and in terms of how the internal workings of the plumbing system are effected, and this type of decision always has a significant cost tied to it. Can it be worth it? Absolutely - if you have the means to rearrange sink locations this can make major improvements to the flow of a space. If you want to upgrade a space and keep your spending slim, try to keep all the existing plumbing fixture locations, and just replace the fixtures themselves.

Similar to plumbing there is electrical work. Electricity is pretty amazing when you think about it, and including an electrician on a project is a critical move when you’re adding or removing lights, relocating light switches and outlets, and moving major appliances like stoves and refrigerators. But, because all of these moves require a trained specialist - you can expect there to be a higher cost associated when wiring work is involved.

I’ve mentioned this before but anytime there are elements of the structure of your home that need repair, modification, or replacement, this is something that takes a big bite out of your budget. This includes foundation work, repairing water damage, moving or removing columns or loading bearing walls. And of course anything related to your heating, cooling, and ventilation systems will - so updating your air conditioning, replacing an old furnace - al of these moves will cost you but keep in mind - there is always high value with these items because you are changing major components of the basic integrity of your home.

We did it you guys! Budget  talk is so critical, the most important thing you can do is keep the dialogue going around your goals and what you want to achieve. I hope you find this episode helpful - I can’t wait to talk to you again soon - in the meantime take amazing care of yourself, stay grounded - and keep dreaming big dreams.