Though the cost of gas is rising towards $5 a gallon and air travel is less than convenient or cheap, Americans are ready to start spending again - within reason. A January 2011 poll conducted by the National Foundation for Credit Counseling indicated that 66% of Americans said that while they were tired of pinching pennies, they'd have to continue the lifestyle, and cut back on formerly frivolous spending patterns. (For related reading, also see 4 Types Of Home Renovation: Which Ones Boost Value?)
TUTORIAL: Buying a Home

A Vacation Alternative
For Americans who are suffering from so-called "frugal fatigue," there is a way to reap the enjoyment of luxury vacation, while making smart spending decisions. The answer lies in an equity-building vacation alternative: home improvements.

The Joint Center for Housing Studies at Harvard University reported that in 2010, Americans spent about $463 billion dollars on home remodeling initiatives. Further, it predicts that in 2011, spending will increase further to $491 billion, an increase of 6%, in part thanks to low interest rates and a slowly recovering economy.

However, many homeowners are still dealing with lagging home values. As such, equity home improvements that mimic a vacation retreat can't solely serve luxury needs; they must be cost-effective. Here are a few ways to invest in home improvements that will deliver the luxury you seek in a vacation, with the least hit to your wallet.

Yard Improvement
Yard improvements can instantly make your home feel like a quiet retreat, and they can be good investments in increasing the look and comfort of your home-if you prioritize and stick to a budget. The general rule of thumb with these projects is that the more you spend, the harder it becomes to recoup the full cost later on. Focus on projects that will provide immediate gratification, like minor landscaping work, planting flowers, trimming trees and keeping the yard maintained, to get the most bang for your buck down the road. (Learn more about this topic in Will Your Home Remodel Pay Off?)

If you are seeking a backyard transformation that mimics a vacation retreat, are willing to do the work yourself and are certain you won't sell your home for several years, it may be worth investing a bit more money. Ideas include a sophisticated backyard cabana to create the feel of a high-end resort. Expect to spend about $1,000 on materials, if you're willing to build it yourself. Meditation gardens, stone benches and ponds are other relatively budget-friendly ways to add a "zen vibe" to your yard.

Spa-Style Bathrooms
Transforming a traditional bathroom into an open, spa-like sanctuary is a popular trend in equity-building home improvements. The DIY Network says that oversized tubs surrounded by music and candles are a great way to create a world of relaxation in your home, and that tub technology has far surpassed the traditional whirlpool tub with side jets. Newer luxury tubs now include features like precise massagers that mimic the work of a masseuse, and air channels that deliver a steady flow of warm air bubbles to circulate and relieve muscle stress. Most newer luxury tubs are designed large enough to allow for complete immersion, and many include "chromatherapy" lighting, in which the basin itself has light fixtures, to fully recreate the spa mood. According to DIY, these luxuries are becoming accessible to the masses; a whirlpool tub can be found for less than $1,000.

Movie Rooms
Home theater rooms may sound like an indulgence reserved for the rich, but even a messy or unfinished basement or bare room can be transformed into a home theater for around $1,000 to $2,500, if you're willing to do the work. Carefully select the space for your home theater, to cut down on costs and headaches. Try to avoid concrete walls, or you will need to create bass absorption for theater-quality sound using drywall. Consider the dimensions of the room as well, avoiding even-room or same-room dimensions, like 10' x 10'. Walls of this dimension will require moving walls in to create proper acoustic quality, which will add to your costs and home improvement timeline.

In the past few years, home theater systems have become far less expensive and complex to configure and install. Creating a quality home theater system used to involve an amplifier, five speakers and a subwoofer, and could cost several months pay depending on the level of sophistication. Mass manufacturers like Panasonic, RCA and Sony now produce "home theater in a box" systems that include all the components needed to create a home theater system, complete with color-coded wires, for easy installation, and at a fraction of what such a system used to cost.

The Bottom Line
Living within your means doesn't equate to foregoing all of life's luxuries. Investing money strategically in expenses like equity building home improvements can be a great way to strike the balance between enjoying life to the fullest and maintaining financial responsibility. (For additional reading, also check out Top 6 Home Renovation Scams To Avoid.)

Related Articles
  1. Savings

    Best Places To Exchange Currency In Miami

    Miami may be a 24-hour party, but it takes plenty of cash to get in the groove. Here's where to exchange foreign currency before you head for South Beach.
  2. Investing

    Why Las Vegas Hotels Charge Resort Fees

    One of the easiest ways that hotels send their guests home with thinner wallets is by means of drip pricing, the act of charging additional mandatory fees for even the cheapest of hotel rooms.
  3. Personal Finance

    The World's Most Luxurious Vacation Retreats

    White sand beaches, nature preserves, amazing hot springs...if you're looking for heaven on earth, these spots qualify.
  4. Home & Auto

    4 Areas to Consider Roofing Material Types

    Roofing your home is very important, that’s why you should choose a roof specifically designed to handle your area’s climate.
  5. Savings

    Best Places to Exchange Currency in Boston

    Since the nation’s first colonial currency was established in Revolutionary War-era Boston, the city’s currency exchange situation has come a long way.
  6. Personal Finance

    Finding Cheap Airline Tickets: An Insider’s Guide

    If understanding airline pricing feels like decoding riddles, arm yourself with these six simple strategies to land the best value ticket available online.
  7. Home & Auto

    Looking To Invest In Home Improvements?

    Some home improvement projects could cost you more to complete than they’ll pay out in equity. So, here we show you the worst projects to avoid.
  8. Investing

    The Top 3 Most Profitable Mid-Priced Hotels

    American hotels recently released earnings. Here's a look at three of the most profitable mid-sized hotels.
  9. Investing

    The 3 Most Profitable Luxury Hotels

    Staying at a luxury hotel is the stuff of daydreams for most people. The few who do regularly stay, or even live, in upscale hotels know that there is no substitute for a life where anything ...
  10. Investing

    Find the Private Island of Your Dreams

    The perks, the problems and the pleasures of owning your own little piece of paradise.
RELATED TERMS
  1. Construction Loan

    A short-term loan used to finance the building of a home or another ...
  2. SENTRI

    This U.S. program grants pre-approved travelers access to a faster ...
  3. Reverse Culture Shock

    The shock suffered by some people when they return home after ...
  4. Water Rights

    Water rights are one of the interests that may attach to real ...
  5. Paycation

    Taking a vacation from one's main job and using that vacation ...
  6. Staycation

    A vacation spent at or near your own home, rather than traveling ...
RELATED FAQS
  1. What are the warning signs of online hotel / travel booking scams?

    Travel booking scams ask travelers to book a vacation stay at a residential rental property that is fake or that belongs ... Read Full Answer >>
  2. What are the best ways to pay off my mortgage quickly?

    There are two main strategies for paying off a mortgage more quickly, which can be used alone or in tandem: making larger ... Read Full Answer >>
  3. What are the pros and cons of a simple-interest mortgage?

    The basic disadvantage of a simple interest mortgage lies in the fact that unless the borrower conscientiously makes all ... Read Full Answer >>
  4. Is a waiver of subrogation clause better for a tenant or a landlord?

    A waiver of subrogation clause is good for both a tenant and a landlord. A waiver of subrogation is a two-way agreement in ... Read Full Answer >>
  5. Is the high cost of installing solar panels justified by the money saved by going ...

    In favorable locations and under suitable conditions, homeowners can recuperate the cost of installing solar panels. The ... Read Full Answer >>
  6. If my home runs power off the grid, what is the specific environmental impact?

    Running a solar-powered home with energy that is natural or off the grid has several environmental benefits. By using solar ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!