Photo by Scott Tennant

Update: Now more than ever, people are being far more cautious with their money. The sad truth is that, even if you love your home and your neighborhood, if it will require you emptying your savings or taking out a large loan from the bank to remodel the house to the standard you need, then you may need to seriously consider moving instead. In many instances you’ll find that moving is simpler and much more affordable than embarking on an expensive remodel, and right now in the current climate you need to be making decisions that make sound financial sense for you and your family.

You can profit from an intelligent remodel, but in reality, some remodel projects are not worth the investment or effort.

Ultimately, you should spend your money the way you would like, so if installing a $20,000 custom-built bathtub imported from Italy in your $80,000 house makes you happy, then go ahead and do it. However, many of us would like to make decisions that are practical and will bring us years of enjoyment. In these cases, we need to weigh the cost and benefit of a remodel versus a move.

If your dream is to live in an affluent neighborhood with large lawns and 4,000-square-foot homes and your neighborhood is full of bungalows with single-car garages, the chance of your getting what you want for a reasonable amount of money by remodeling is unlikely. In addition, it is cheaper to build new than to remodel. Starting from scratch is easier than working with what is already there. So before you take the plunge on a major remodel, consider what you could get if you invested the money in a new home.