Budgeting Needs and Wants

Establishing a budget is an important first step for every home remodeling or expansion project.  With the current credit crisis and poor economic outlook, we've been particularly careful with budgeting.  Beyond simply determining what we can afford and what our fiscal pain threshold is, we've also been looking into alternative means of financing.  We researched some of the homes in our neighborhood to get a sense of the types of upgrades people have done and the relative change in price.  We figure that knowing the kinds of price ranges the neighborhood supports helps us to determine an additional upper bound on the budget in case we need to sell the house soon after the project is complete.  Home price estimations are readily available on zillow.com but we've also kept up with our realtor to find out how the market has been doing and checked out some open houses to have a better sense of how much local home buyers are getting for their money.

Once we determined our budget, we needed to decide how best to make use of it.  As one might expect, our wish list was not nearly as limited as our budget.  So, in order that our conversations with architects and contractors be realistic, we prepared a list of needs and wants.  Actually, it was more like 5 columns in a spreadsheet but the idea is the same.  We started by listing out what we like about the property, what we don't like about the property, what we need to have, what we want to have and what would be nice to have in the addition and remodel.  The spreadsheet really helped us to organize and prioritize our goals and later helped us to consider the trade-offs inherent in the various design options suggested by our architect.

We tried to be very specific with our needs and wants, not just noting that we want a green, modern 3 bedroom, 2 bath house with a 2 car garage.  We started collecting pictures of houses, rooms and furnishings we especially liked or disliked to help clarify and express our tastes.  The most important information, however, was probably the lists of what we like and don't like about the property as it stands.  Because we intend to reuse the existing structure for both economic and ecological reasons, the project inevitably became oriented on accentuating the good while mitigating the bad.