Renovation projects often start off simple and then snowball into something major. Part of this is finding out hidden problems as you go along, but there is also that situation where the creative bits of our minds start over-ruling our common sense bits. If you can afford to let the creative genius takes over the project, that’s not usually much of an issue, unless you and your significant other can’t agree on the décor. But that’s another story.


The concern is when that creative vision opens up the wallet and drains it faster than you can replace the funds. Sometimes you just have to put the brakes on and replace what’s needed and leave the ultra-sleek, oversized, dream of whatever wait until next time around. Ether that or prepare to spend a lot of time at home soaking in, showering in or admiring that creation while you pay off the monthly bill.



For example, you may have water damage in your basement to take care of, say replacing the floor and the drywall that is now “wetwall” and showing signs of mould. You may be tempted to replace your appliances, put in a wall or two or otherwise try and turn the basement into a “man cave.” If insurance is paying for the damaged repairs this may not be so bad. If all of it is on you, consider your financial situation before making that move.


If you are of a mind to do some home renovation just because you want to, pick a project that will give you the most return on your money. Kitchen upgrades give you’re the most bang for your buck. Often considered the heart of the home, this is where the family gets together. It is also the room that potential home buyers focus on.  



A nicely done kitchen will go a long way in making up for other minor home issues. Wow them with stainless steel appliances, granite counter tops and an island if there’s room. Tie it all together with hardwood floors and lots of cupboard space in real wood cabinets and your home will be an easier sell once the time comes.


Second on that list should be your bathroom. Hopefully you have more than one, a definite selling point. If you have the need and can afford it, putting in a second bathroom will not only improve your living experience but make your home more marketable. Make your bathroom/bathrooms bright and cheery with lots of natural light and clever but understated lighting fixtures. Recessed vanities make the bathroom appear larger. If you have room for it, a separate tub and shower are desirable features.



Putting in a swimming pool may be near the top of your renovation list. But consider this, in some areas of the country homes with pools don’t sell as fast. Homeowners in the northern parts of provinces may only get a few months use out of that pool each year. Then it has to be drained and covered before the weather turns cold. It’s expensive to keep the water warm during an Edmonton winter and if you elect to go without that heater you might end up with one giant ice-cube. That may make an interesting skating rink for a game of backyard hockey, but when your “pond” thaws in spring you’ll have cracks in your pool lining that need repaired.


Nope, if you must indulge in outdoor water sports all year, try putting a hot-tub on your patio. You’ll still have to heat it, but it won’t be nearly as expensive. It is rather an interesting experience to be soaking in nice warm water under a covered patio while looking at the snowflakes pile up in your backyard.


The logical progression of things used to be, go to college, get a good job, buy a home and then start saving for retirement. Along the way you might have a kid or two that might put a blimp in your timeline, but thing still moved forward more or less as expected. For the Gen Y crowd that progression may not be so easy. The cost of living, lower wages as compared to that cost of living and the price of getting into a home are all higher than in even the generation before. Compare that to half a century ago and the differences really stand out.



The big decision is whether to put your priorities in a home or in saving for retirement. If you are in your 20s or 30s you may not even be thinking about retirement, after all that’s almost a half-century away. But do consider it. Fifty years ago employers hired someone and that person stayed with the firm for most if not all of their working life. Then they were rewarded with a pension to get them through their golden years. That doesn’t happen much anymore.


Employers are thinking short term, hiring on a contract basis rather than for full time work. And if you’re thinking of depending on a government pension, well don’t. All you have to do is listen to the cat fights in Washington DC about doing away with Social Security and you see where that wind might eventually blow. Will Canada end up having similar ideas? Who knows?


Now let’s look at the home buying situation. Prices are steadily increasing but interest rates, so far, are the lowest they’ve ever been. Based on the average price of a home in Canada you’ll need between $25,000 and $30,000 to cover the mandatory 5 percent down. If you plan on living in Vancouver, Calgary or Toronto add another $5,000 to $15,000 to that figure. It may take you a decade to save up that kind of a down payment depending on your salary. If you have student loans to pay off, plan on it taking longer.


But there is one way to gain a tax advantage in buying a home if you have an RRSP account. That is a registered retirement savings plan that allows for tax free savings on a portion of your income each year. RRSPs have a Home Buyer Plan that allows you to pull up to $25,000 from that plan without penalty if it is used to buy a home. The money also has to be paid back within 15 years to avoid penalty. If both you and your spouse have accounts and decide to go that route then you have $50,000 to use towards a home.

Additional tax savings are possible if you tweak the system, so to speak. This works if you know you are buying a home and if you already have sufficient funds in your RRSP. Take $25,000 from your regular savings and put it into the RRSP, then withdraw $25,000 for the down payment. You must have had at least $25,000 in the account already for at least 90 days for this to work. The actual savings on your taxes will depend on your tax bracket.

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