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 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.
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.
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.)