Wise stewardship for renovations

Many people think that when they do significant renovations to their home, its value will increase in recognition of the money they have spent on it. However, extensive kitchen and bathrooms will probably add little value to your home. That’s because the work done is mostly catching up on deferred maintenance. The same principle applies to replacing your roof or other significant repairs needed.

If you are planning to do work on your home:

• First, determine if you can afford this project and how quickly it needs to be done. A key financial principle is that the renovation will cost you less if you have saved up the money before you start the renovation.
• Establish a budget for what the total renovation will cost. Estimate your debt payments divided by your monthly income to determine how much you can afford. Otherwise, abandon the idea of using any type of top up loan, and wait until you have saved enough to pay cash or can manage with a smaller loan.
• If your roof is leaking, check the cost of making short-term repairs to give you more time to save up more for the full cost of replacing the roof.

Investments that may add value to your home include:

1. Installing or adding additional insulation
2. Installing double glazing
3. Installing solar panels and potentially a battery
4. Adding new rooms

You need to think about these investments from a cost-benefit basis. That means calculating what the project will cost and how much your home will increase in value. Insulation and solar panels will reduce your energy cost but is the benefit higher than the cost? Borrowing money to pay for these investments adds to the total cost, so may reduce the financial benefits. Even if you have cash to make these investments, there is still a cost to you. That’s because when you use your savings, you are reducing the amount of interest you would earn if you didn’t invest in the home improvement.

Suggested steps for major renovations

• Get a valuation done and an estimate for how much the renovations will add to the value of your home.
• Calculate the equity you have in your home.
• Get a solid estimate of renovation costs.
• Review your budget to confirm what you can afford to pay.

Consider the following:

• Can you realistically manage both payments—not just today but in years to come?
• Have you thought through the “what-ifs” that might impact your income
• Do you have a solid emergency fund?
• Do you have the ability to pay off the loan faster to reduce the amount of interest you pay?
• Try out the calculators on the Crown and Sorted websites to see how much a top up loan will cost you.

Consider the times, pray, and seek wise counsel. If you’re married, make sure you are united in the decision. Ask God for wisdom; He gives it generously without reproach.

“A house is built by wisdom and becomes strong through good sense.
Through knowledge its rooms are filled with all sorts precious and riches and valuables.”   Proverbs 24:3–4 (NLT)

Myth 2 – I don’t need a savings account because I have a credit card.

This is a surefire way to get into debt. A savings account is crucial because you can’t always plan for emergencies and the unexpected in life. Instead of charging unexpected bills such as car repairs and home improvements on your credit card, dip into your savings and avoid debt altogether. The Bible doesn’t prohibit borrowing, but it does discourage it.

Myth 3 – I don’t need to pay my credit card off in full every month because I am building my credit.

A very common myth is that credit card companies want to see your ability to pay off balances steadily and over time. But this doesn’t do anything for your credit score! It just prolongs the amount of time you’re in debt and the amount of interest you are paying. If you use a credit card for cash back rewards or airline miles points, pay it off in full every single month. Commit to not be in debt, even if it’s for a short period of time.

Myth 4 – Buying a house is better than renting.

When you buy a house you are investing in a property that should increase in value over time. But for some people, renting may be a better option. This could be for a variety of reasons:
• if you expect to move in the near future,
• if you have a busy lifestyle that prevents you from taking care of home maintenance and landscaping,
• if you don’t have enough money to make a sufficient deposit payment on a house, and
• if you don’t have enough income to pay your mortgage off in less than 30 years.

Once you have a mortgage, it increases your access to debt. Some people borrow more against their house as it increases in value. While that may be cheaper debt for financing purchases, the additional interest you pay is significant.

The most common complaint about renting is that you’re just “throwing away money”. However, that doesn’t recognise the costs the landlord faces for rates, insurance, repairs and maintenance. Key factors in working out whether home ownership is better than renting are:

• how long you take to pay off your housing debt
• how much house prices increase compared with your income

Look online for rent vs buy calculators to see what the best option for you is.

Myth 5 – I don’t earn enough money to have a budget.

You should have a budget no matter how much money you earn. But if you live from one pay to the next or find that money is tight, it is vital for you to stick to a budget. Recording your spending allows you to know exactly where all your money is going so you can control it, instead of it controlling you.

Myth 6 – I’m young so I don’t need to worry about saving for retirement yet. OR I’m old so it’s too late for me to start saving for retirement.

Neither of these myths could be further from the truth. If you’re young, now is the most important time to start planning and saving for retirement. Compound interest is a beautiful thing that works for you…if you give it time.

And it’s never too late to start saving for retirement. It would be better to have something saved for retirement than nothing at all. Even if you can live on New Zealand Superannuation alone, when you have savings, you can leave an inheritance for family or a gift to your church or ministry. Stewardship is about managing your life in a way that gives you the freedom to do what God has called you to. If you’re stressed or anxious about money, surrender your circumstances to the Lord and ask Him for direction.

But it is side two of the coin that we may miss entirely: the opportunity of generosity.

For many Christians, giving is limited by our understanding of God’s Law, with the focus on “How much am I expected to give?”

Yet the Bible says our giving should flow freely from our share in God’s grace, with the focus on “How much more may I give?” Indeed, Jesus said, “It is more blessed to give than to receive” (Acts 20:35). How can this be? Let’s examine the benefits of generosity.

Understanding
First, generous givers gain a deeper understanding of God’s grace and nature. “For it is by grace you have been saved, through faith—and this not from yourselves, it is the gift of God” (Ephesians 2:8).

“For you know the grace of our Lord Jesus Christ, that though he was rich, yet for our sakes he became poor, so that you through his poverty might become rich” (2 Corinthians 8:9).

Randy Alcorn wrote, “Gaze upon Christ long enough and you’ll become a giver. Give long enough and you will become more like Christ.”

Joy
Second, generous givers experience joy through giving. “We want you to know about the grace that God has given the Macedonian churches. Out of the most severe trial, their overflowing joy and their extreme poverty welled up in rich generosity” (2 Corinthians 8:1-2).

Freedom
Third, generous givers experience freedom through giving. “No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money” (Matthew 6:24).

The paradox of wealth is that the more you have, the less free you are. This is proved true by the wealthiest king in the Bible, Solomon: “The sleep of a labourer is sweet, whether he eats little or much, but the abundance of a rich man permits him no sleep” (Ecclesiastes 5:12).

This also is proved true by the one of the wealthiest men in America. John D. Rockefeller said, “I have made millions, but they have brought me no happiness.” Christian financial expert Ron Blue said, “The amount of money you have has nothing to do with financial security or contentment. The secret to financial freedom and joy is directly linked to one thing: the willingness to be generous with what you have.”

Purpose
Fourth, generous givers experience purpose through giving. “You will be made rich in every way so that you can be generous on every occasion, and through us your generosity will result in thanksgiving to God” (2 Corinthians 9:11).

Grace-centred giving gives us a higher purpose for managing our resources. We understand that God raises our income not to raise our standard of living but to raise our standard of giving.

Rewards
Finally, generous givers reap eternal rewards through giving. Jesus said, “Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also” (Matthew 6:19-21).

Jesus is not against investments…just bad ones. Our giving on earth impacts our experience in heaven. Winston Churchill said, “We make a living by what we get; we make a life by what we give.” Let’s make sure our lives experience God’s grace, joy, reward, freedom, and purpose through grace-inspired generosity.

So let me ask you, whom are you serving?

Are you serving your husband, your wife, your children, your boss, your family, your neighbour or others in your church? If so, don’t begrudge this as a burden. You are actually blessed. These are opportunities for you to grow and experience the joy and satisfaction of life. Jesus himself said that he did not come to be served but to serve. He fulfilled His purpose on earth in the same way. In fact, when asked who was the greatest among the disciples, Jesus made it clear that was the one who serves.

So today, thank God for all those you are called upon to serve. They are giving you the privilege of being filled to the full measure of Christ. Show appreciation for them. Thank God for them, and serve your heart out. In the end, you will experience true self-fulfilment and the rewards of a life well lived.

These three principles: Lordship, Stewardship and Generosity should change our financial plans, our financial purposes and our financial goals.