It’s all part of the Canadian dream — outdoor living, sitting by the pool, hiding from the mosquitos in your screened-in porch or watching the hockey playoffs on your big screen in the “man cave.” The only way to make these activities even more “Canadian” would be to add poutine or a keg of beer.
Unfortunately, in my 15 plus years as a Licensed Insolvency Trustee, I have worked with many young families and individuals that have faced personal bankruptcy or have found themselves in need of a consumer proposal due to the costs of pursuing the Canadian dream. A recurring theme that gets pointed to as a driver of financial stress is a home renovation that exceeded budget, a fixer upper that has turned into a money pit or a botched backyard project that needed substantive monies to repair or completely redo.
So how does a young family get that dream deck, mini bar, swimming pool or backyard kitchen without facing the consequences of a budget crisis? Having consulted with many families facing personal bankruptcy as a result of a botched reno, here are some mistakes to avoid.
- Not having a budget
We have all watched the renovation superstars on HGTV build swimming pools or complete basement renovations. What many fail to remember when planning their own dream job is that TV renovations are meant to be over the top — these extravagant lifestyles sell advertising. It’s also fun to watch. Before you start your own renovation, make sure you do your research online and at your local home renovation centre. Going into a project you should understand in general terms what items cost. Figure out how much you are willing to spend or how much you can afford and put together a renovation budget. A budget will help ensure that you do not go overboard with your initial expectations, and that you end up with a stress-free finished product.
- Not sticking to a budget (slightly worse than not having one)
Once you have established what you can afford to pay for your renovation, stick to it. By managing up-front expectations and researching your quotes and material costs ahead of time, you should be able to stick to your budget. Be aware of the costs of a change. Many people forget that if something is installed and you want to tear it out for something else you are going to pay twice for one finished product. So make sure the handrail or countertops you pick are the right ones. Finally on this point, do not get sucked into upgrading your finish, cabinets or materials on the spot. The high end product may look better in the showroom, but if you budgeted for an economical but useable renovation, stick with your original plan.
- Not doing your homework on the contractor
This is key when tackling a renovation. Before you sign an agreement with a contractor, check their references and ask to see other projects or a portfolio. Before you hand over your hard-earned savings as a deposit, make sure you know who you are dealing with. Sometimes the cheapest contractor in the yellow pages is not going to provide you with the best product, and the least expensive contractor may actually cost you more in the end. In addition, always get a quote ahead of time and sign a contract. Put something in writing so that if you have to sue your carpenter to get a job completed, or you have to withhold payment for an incomplete job you have a contract to negotiate from.
- Not hiring a contractor
This one is simple. If you are not a carpenter — or at least the one in the family that everyone considers handy — make sure you know what you are doing before you embark on a renovation. Even if you consider yourself handy, make sure the job you are tackling is within your skillset. There is a huge difference between knowing how to re-stain a deck and rebuilding one from scratch.
- Credit is costly
When putting together your renovation budget make sure you estimate the full cost of the job. That includes the ongoing interest costs that go along with any credit that you may use during construction. We see so many people that are forced into a personal bankruptcy only because they did not appreciate the true cost of credit.
Just a few thoughts before you embark on building the backyard of your dreams. Now get out there and make that gin and tonic by the pool a reality.
Jayson Stoppel is a Licensed Insolvency Trustee and Chartered Accountant with BDO First Call Debt Solutions. With over 15 years in practice, Jayson assists individuals, families and companies with financial difficulties in Thunder Bay and throughout Northwest Ontario. To reach Jayson by email: JStoppel@BDO.ca
