Hopefully you are not one of the millions of Americans who spent this past weekend sifting through receipts and statements in order to finish and file your IRS tax returns by the Monday deadline. It always amazes me how many folks wait until the last minute given how long the lines are on the final day of each tax season.
Looking at tax day from another angle, doesn’t it make you take a financial snapshot of your family’s finances in order to look at where you are and where you want to be? I think that all of us in some form or another do that and end up either with a smile or sadly, a frown. Given the tough economy over the past several years things have understandably been difficult for most Americans and we all have had to work much harder just to keep up.
We here at ABT do not claim to be economists or a financial advisor in any way but we believe given the industry that we are in that we have a unique vantage point on some historical truths that apply today as well as they did in the past.
* Investing in your personal residence is one of the smartest investments that one can make with their money. In this regard we have all learned that building a McMansion or over-improving a home for what would be considered “normal” for your neighborhood doesn’t work for any one in any location. But for those with money to burn, have at it and this article doesn’t apply to you anyway. But for the rest of us, we need to stay focused and be mindful of the improvements we choose to make in our homes to ensure that we are making smart choices.
* Clearly define our motivation for making any home improvements. There are generally two motivations present for those renovating a home and it helps to know which one that you fall in to. The first is the financial motivation that was most prevalent for Americans in the early part of the 2,000 years during the housing boom. Then there is today’s primary motivator which is the desire to add functional improvements to a home to make it more livable for a family that has decided they will be in their home for many years to come.
* Pay for any improvements with cash whenever possible. This mostly applies to smaller improvement projects under $5,000 and is smart advice for families to follow in most cases. Not all projects are going to hit the $5,000 plateau and most will be in the $500 – $2,500 range, especially when you can do much of the work yourself. Tiling a kitchen backsplash depending on the size of the backsplash will routinely be under $1,000 and is one of the most visually appealing upgrades that can be done when improving a kitchen. Choose projects that meet some of the following criteria:
* smart, impactful upgrades that are manageable in both time and budget
* projects that are not to expensive where the lower cost projects are also easy to
budget and save for
* projects that will bring enjoyment for the family living in the home.
These are some of the time-tested truths that we believe apply as much today as they did when your parents were deciding what to do with their tax refund. In most cases, we believe you can never go wrong making wise decisions on select improvements to your home.