For Roxanne Greenberg*, it all came down to the bathtub. It wasn’t just any bathtub, but a Victoria and Albert freestanding soaker tub with sleek lines and a deep basin. It also cost a cool $3,000.
“It’s gorgeous. It’s the nicest tub you’ll see in your lifetime. I thought it would be the pinnacle of my bathroom,” says Greenberg, a 42-year-old writer from northern New Jersey. “And then I realized how stupid I was because the only person who uses that bathtub is my 4-year-old daughter.”
Greenberg was suffering from what could—or perhaps should—be called New Home Syndrome. And it’s been known to afflict freshly minted buyers eager to turn their scruffy abodes into a page torn out of Dwell magazine. For Greenberg, it started when she and her husband, a public school teacher, remodeled their Colonial-style house. For other homeowners, it may start a few hours after their broker hands them the keys.
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How Your Dream Home Can Do You In
For many Americans, buying a house is the biggest purchase they'll ever make. And, after a down payment and closing costs, their finances can be in a state of shock. But the siren call of decorating your new home is hard to resist, and it’s a sentiment reinforced by HGTV reality shows, websites like Houzz, and home decorating magazines that imply that the perfect living room is just one overpriced throw pillow away. Enticing as the message may be, furnishing a house to perfection can wreak havoc on a homeowner’s wallet and undercut longer-term financial goals.
"Greenberg's remodeling aspirations went way over budget—and are still costing her in credit card debt."
“We always advise our clients that the emergency fund should not be used for anything but an emergency, but of course people might march straight to Bed Bath & Beyond and start spending,” says Ellen Derrick, a certified financial planner™ with LearnVest Planning Services. “If you haven't saved up for home decor, don't put your financial security in jeopardy just to impress your friends with your decorating style.”
Cait Slater* and her husband spent a year searching for their first home, a two-bedroom apartment in Brooklyn. When they finally landed one for $100,000 under budget, Slater took that as an opportunity to make her shabby-chic domicile look a little less shabby. In just a few months, she spent $30,000 refinishing the floors, repainting the rooms, and adding a patio to the mossy, overgrown backyard.
“Buying my first home made me feel like I was entitled to live in the pages of Elle Decor,” says Slater. “In the end, I had to realize I wasn't born a viscount who could afford bespoke silk wallpaper.”
Many homeowners ultimately come around to their realization that their budget cannot compete with their West Elm fantasies. But, coming around to that epiphany often happens only after credit card bills soar to new heights.
For Greenberg, her remodeling aspirations went way over budget—and are still costing her in credit card debt. Some of her choices not only cost more but were impractical too. For example, her soapstone countertop was far pricier than granite and, unlike granite, chips easily and requires weekly maintenance.
“I went over budget,” she says. “I try not to look at my credit card bill. I just pay it and tear up the bill.”
A Better Approach to Renovating
Rather than go into debt to pay for decor, Derrick suggests homeowners set aside a home decorating fund separate from a regular budget. And only dip into that spending pot once your emergency fund is flush with at least three to nine months of net income, depending on your life circumstances. If a furniture store is offering a credit card promotional rate for new purchases, open the account only if your budget allows you to make the payment on-time every month until the sum is paid in full within the teaser period.
But before setting foot in Pottery Barn, consider living with that ratty old couch from college for a few months longer, even if you can afford a new one. It could save money in the long run. Oftentimes tastes change after spending a few months living in a house. That horrifying jungle wallpaper in the dinette might look quaint in the morning light. Or, the entryway that absolutely needed a corner table might really need a bench instead. Holding off on decorating purchases can give a homeowner time to ponder aesthetic sensibilities. It can also stave off the irrational impulse buy.
Slater finally curbed her spending urges by establishing a Pinterest rule: Before making a purchase, she posted an image of her desired object on the decorating website. (That $212 Anthropologie pillow costs a reasonable $0 if you don’t actually ever buy it.) After a few months, many of her home decor impulses passed and her bank account began to recover.
“Now that I look back, many of my decor crushes have worn off, and I have become much more aware of the fact that I have champagne tastes on an Etsy budget,” she says.
Slater had another epiphany during her self-imposed cooling off period. If she hadn’t rushed to hire a gardener to landscape her yard for $5,000, she might have discovered sooner that she had a pretty sizable green thumb herself and could have planted all those perennials for free. Now, instead, she's back to shoring up her emergency fund.
While we're all familiar with buyer's remorse—that little dip in enthusiasm you get after a big purchase—be sure in your rush to buy paint chips and stave it off you don't dig yourself into a bigger financial hole.
*Names have been changed.
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment advice. Please consult a financial adviser for advice specific to your financial situation. The people quoted in this piece are not clients of LearnVest Planning Services. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.