We bought a house for 40K that had a leaky roof and to our knowledge, we probably needed to do some rebuilding of the water damaged parts and put a new roof on the house. We had budgeted 20K for this work.
We started calling contractors in May and went the entire summer trying to solicit quotes. We'd get people to come out for assessment and then they wouldn't call us back. Finally in September we got a contractor to come out who told us we'd need to do major demo work before he could quote the new roof. The quote for demo work was 20K, our entire budget for the new roof!
We decided to proceed with the demo work because it was needed and we had hopes to get the roof done before winter sets in, and the company promised they could seal the house if we cannot get to the roof before winter. The demo work was extensive, removing interior plaster walls and taking everything down to the studs. This part was needed because we knew we needed to rewire and we'd been told by State Farm that plaster walls were so outdated that they couldn't insure because there was no one in the area who even did plaster walls anymore! The stuff we've learned since buying this home has been interesting.
So two months ago, realizing this demo work would take our entire savings, we decided to look at our budget and squeeze as tight as possible along with looking for more earnings with other streams of income.
I can honestly say that living on a tight budget hasn't affected our quality of living, we still have fun with the kids but we're very careful about eating out and pack meals for all days when we will be away from our home for a lengthy period of time. It's worked out well because the kids tend to like what I pack better than any restaurant or fast food place.