Hammered Home

Michael Flack

ALMOST 20 YEARS AGO, we renovated our entire Washington, DC, home. The memory is still quite fresh. If you’ve ever renovated a house, you’ll understand.

A home renovation has similarities to personal finance: You can do it yourself (DIY), you can pay someone to do it for you, or you can do something in between. This last approach has worked well for me—both with renovations and financial matters.

Our home consisted of a three-level townhouse. I decided to renovate it in detail, top to bottom, one floor at a time. I told myself—and my wife—that we were doing it this way to reduce the fiscal pain. But in the end, I just wound up increasing the mental pain. Here are three lessons I learned from the experience:

1. It’s difficult to find a good contractor. You can ask friends for recommendations, search the internet, check references and interview multiple contractors. But in the end, it’s a crapshoot.

By the end of the third-floor renovation, I had become fed up with the contractor I’d hired. Ditto for the second-floor contractor. Checking references and interviewing can only do so much. In both cases, the guy I interviewed didn’t manage the actual work. Instead, one of his underlings did. Our third contractor—who worked on the first floor—was excellent. But when I subsequently tried to contact him to do further work for us, I found he’d disappeared.

It’s the same with financial advisors. Over the years, I’ve twice hired accountants to prepare our taxes. But after working with them, I noticed they never asked any questions or provided any guidance. I later realized they may not have done the actual work, which was confirmed by a friend who’s a partner at a New York City accounting firm. He informed me that, while he signs the 1040s as “paid preparer,” he has his staff actually complete the returns. Another time, I must have spent 10 hours with a Capital One financial advisor preparing a financial plan, only for him to get promoted and never call me back.

2. If you want to get more out of your contractor, try a little DIY. As the renovations continued, I started doing more of the work myself. While I did it mainly to save money, I found that some of it was enjoyable. Watching a light come on after you wired a switch is more satisfying than a hundred spreadsheets.

Each small job made me feel more confident and better able to perform the next, larger job. If I never installed the light switch, there was no way I could have installed the 240-volt service to the dryer. Each job also made me a little more knowledgeable, so that—when I managed my next contractor—I understood a little more of what he was saying and whether it was the best advice for our house.

You may think that you have no skills and therefore DIY is not an option. I felt the same way at one point, but I was determined to try, so I did the demolition on our second bathroom. I’m as good at breaking stuff as the next guy. The demolition led to some rough plumbing, which led to the aforementioned electrical work.

This DIY technique can also help when managing financial advisors. The first year I had to submit a tax return, my preparer made a mistake that I was lucky to catch, so I handled the return myself the next year. That was quite satisfying, enabling me to learn about the tax code, better understand my finances and gain confidence.

This then allowed me to tackle future tax returns, which gradually became more complicated. A few times, I had to hire an accountant, but each time I felt I learned a little more. If I didn’t have this basic understanding of my taxes and therefore my finances, I would have been at a severe disadvantage when hiring each advisor. Also, I’m not sure I could have determined if what they were saying was the correct advice for me.

3. You need some basic understanding of home renovation. After all, how else could you adequately supervise a contractor? And trust me, they all need supervising. One contractor notched out support beams to install some of the plumbing. If I didn’t realize this was an issue, he would have compromised the integrity of the house.

Similarly, my Capital One advisor recommended I sell many of my long-held stocks to conform to the financial plan he created. If I just went along, I would have been hit hard with capital gains taxes.

Now that I’m retired, my tax situation has become simpler—fewer forms, no state income tax, no deductions—which makes me more confident about using the DIY option both for preparing our taxes and managing our finances. Don’t get me wrong: If I need to avail myself of a professional’s services, I will. But as I see it, if you’re making no effort to DIY, you’re wasting an opportunity not just to save money, but to become far smarter about your finances.

Michael Flack blogs at He’s a former naval officer and 20-year veteran of the oil and gas industry. Now retired, Mike enjoys traveling, blogging and spreadsheets. Check out his earlier articles.

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