2009-2010 Best Value Home Renovation Projects

I like taking a look at this list every year because it gives me a good understanding of what makes a good renovation project, in terms of ROI, and what makes a terrible one. When it comes down to it, I know it’s not about ROI. You don’t add a deck to your house because of the ROI, you add one because you want a deck. You put a bedroom above the garage not because some book says the ROI is high, you do it because you want a place your guests can stay that beats an air mattress in your study.

However, if you have several projects on the list and you aren’t sure which one to take on first, a list like this could help break the tie.

I haven’t looked at the list since 2008-2009 but not much has changed. Back then, the best renovation you could do was the addition of a deck, with a recoup of 81.8%. This year, the best major project is the addition of an Attic Bedroom (wood deck addition came in #2).

As you can see, the recoup values have fallen a little, which I believe reflects the softer housing market, but they’ve been falling a few fractions of a percent every since I’ve been looking at the list. One interesting note from the original list is that there is one midrange project that is “profitable,” replacing the entry door (steel) with an ROI of 128.9%. It’s a cheaper project ($1,172) so getting a return isn’t as difficult, especially when it’s such a big aspect of curb appeal.

Worst ROI project is a home office remodel (48.1%) and the addition of a sunroom (50.7%). However, like I said earlier, sometimes you want to do a project because you’ll enjoy it, not because of the ROI. Sunrooms are great if you love them… but they won’t make you any money.

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Top Personal Finance Blogs Roundup

Every few weeks a random person usually emails me with their latest list of “best frugal bloggers” or “best personal finance bloggers” and I usually ignore them. It’s not that I don’t enjoy a good superlative or two, it’s just that these lists often have an ulterior motive. That said, I didn’t respond that way when the guys at Money Crashers unveiled their top PF blogs list, which looked quite similar to Wise Bread’s more venerable Top 100 personal finance blogs list. The two are similar but not the same, each using a different equation to calculate awesomeness, but I’m honored that Bargaineering appears in the top ten of both.

Here are this week’s gems:

I’ve long argued that creating a budget is absolutely crucial in getting your finances on track but I’ve never explained how as elegantly as Jeremy has in his post on how to create your first budget.We’ve been cooking a lot lately, mostly because we enjoy cooking and taking advantage of our local farmer’s market, so this latest Fresh Air show with Harold McGee was in our wheelhouse. It’s always interesting to learn the science behind cooking.If there’s a tax cut and no one hears it, did it really happen? The trouble with cutting people’s taxes and not telling them is that you don’t get political points. If you cut them in a way that makes them very visible, people may not spend those cuts (which is the point of using them as stimulus). It’s quite a conundrum… it says something that President Obama went in the direction that helped the American economy the most, not the one that helped himself and the Democratic Party the most.You still have time to open up a Roth IRA, Pete shares his thoughts on the Best place to open Roth IRA.It’s a few weeks away but if you’re a Vet, here are a few Veteran’s Day Discounts.Flexo takes a look at some Mint data, some interesting stuff in there.

Anyone else remember the Super Mario Bros infinite 1-up trick? In an interview, Shigeru Miyamoto explained that it was included on purpose. Remember this trick?
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What is Quantitative Easing?

Quantitative easing, known as QE, is a monetary policy used by a central bank to increase the money supply by increasing the excess reserves. In layman’s terms, they inject a lot of new money into the money supply through open market operations. If this sounds like the central bank is just printing more money, you’re right (technically they just make up money out of thin air electronically, no actual printing is necessary). The specifics of how they do this are probably not important to 99.99% of us, but they’re explained below, but what is important is why a central bank like the Federal Reserve would want to do this.

(in case you were curious) The central bank essentially credits its own account with new money and uses that money to buy assets from banks, thus increasing the reserves at those banks. Those banks can then lend that money out at a multiple based on the reserve ratio. If the ratio is 10%, then they can lend out 90% of the amount of the added reserves. Reserve ratios are the percentage of an asset they must keep as reserves (so if you have $100 and the ratio is 10%, you can lend out $90). The next bank can lend out $81, keeping $9, and so on and so forth.

As you may be aware, the current federal funds rate is remarkably low – target is 0 – 0.25%. If additional stimulation is needed, they can’t exactly lower the federal funds rate to under 0%, then banks would be paid to borrow money from the Fed (and they would borrow an infinite amount!).

Quantitative easing is just another monetary policy tool they can use to inject money into the money supply to spur lending and boost the economy.

The biggest risk is hyperinflation, as it’s happened in a variety of places. Whenever you print more money, you devalue existing money since the underlying characteristics of the economy have not changed. Simplistically, if your economy is worth $1000 and you have 1,000 bills, each one is “worth” $1. If you print 1,000 more bills, each one is really worth just $0.50. In enormous economies worth trillions of dollars, the degree to which you print more money has the effect of nudging the economy in certain directions. The risk is that a nudge becomes a push or even a shove… down a hill. (Think: 1920s Germany following World War 1 and Zimbabwe in the early 2000s)

There you have it, quantitative easing in a nutshell.

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