Track spending to avoid being house poor

October 03, 2009

Jennifer Wilson-Speedy

YOURHOME.CA EDITOR

Mounting debts and unfinished projects are par for the course these days and HGTV's new House Poor (Mondays, 9 p.m.) is taking a cue from the times to help homeowners revamp their finances and complete necessary renovations.

Of course, in order for these cash-strapped folks to get their stunning reveal, and up to $10,000 in bonus money, they've got to reform their spending with some guidance from financial expert Suzanne Schultz.

These homeowners really do need Schultz's budgeting tips and contractor Frank di Leo's savvy planning – the premiere features a family unable to cook in their fixer-upper kitchen, resulting in monthly food bills of more than $1,000, and the following episode visits a couple whose lousy financial choices have led to washing dishes in the bathtub.

While the featured families face vastly different circumstances, from the fallout of the crumbling auto sector to adequate incomes but crazy costs, they do share one thing, says Schultz: "None of them has ever tracked where their spending was going or worked with a budget before."

To save yourself from a similar predicament, she suggests starting with tracking your household spending.

"From there, you can put together a budget that works for your family," Schultz says, which will also tell you how much you can afford to spend on your reno without getting in over your head.

Renovation costs should also include a contingency fund.

"There's always going to be unknown costs that come into play when you're doing a renovation," Schultz explains, adding the contingency fund has been a factor in every House Poor project. "If somebody lives in an older house and the renovation is fairly extensive, you're going to need a fairly extensive contingency – you never know what you're going to find when you knock down a wall."

Then comes time to prioritize.

"Replace what really needs to be replaced, reuse what can be reused and update other items later when you have the money," she advises, adding that limiting yourself in the planning stages will help keep you from blowing the budget. Plus, that kitchen sink might just need a healthy dose of elbow grease to get it back to sparkling like new, leaving you money for other projects.

When it comes time to shop, "don't just go into one store and see something you love and buy it," says Schultz. Shop around.

Shoppers can score deep discounts on discontinued lines and floor models. Scope out second-hand shops. Channelling your inner handyman, or enlisting a few skilled friends, are other great ways to cut down on expenses. But Schultz says it's key to know when it's safe to DIY and when you should have it done for you.

Finally, don't forget to check out government funding, like Ontario's Home Energy Savings plan (homeenergyontario.ca) and the Home Renovation Tax Credit (cra-arc.gc.ca/hrtc) which can help stretch your dollars even farther.

House Poor airs Mondays at 9 p.m.

Another new show: Just announced is new reality series My RONA Home, starts Sunday, Oct. 4 at 9 p.m. on Citytv. The 10-part series will follow two Calgary families with young children who are designing, building and decorating new homes.

The winning family, chosen by viewer's votes, will win their dream home.

Read our full TV preview and check out our cheat sheet for the fall schedules. Read more from Jennifer in the Yourhome.ca Editor's Blog.