(MONEY Magazine) – BY TROY AND MARGI HAMILTON, GLEN ELLYN, ILL. AS TOLD TO DAPHNE MOSHER

"We closed on our home, an 1894 Victorian, for $360,000 in December 1998. It was in really bad shape. After decades of hard use by nine owners, there were missing floorboards in the kitchen, sagging floors on the first level and an interior that had been chopped up into apartments. We knew we had a lot of work ahead of us. We had one financial rule: not to take on substantial debt for our renovations. We had $120,000--mostly profit from our last house--to get our project under way.

We rented a Dumpster and started to gut the kitchen and back stairwell ourselves, saving about $10,000 in labor costs. Instead of renting an apartment for $4,000, Margi took the boys to stay with friends and relatives for five months. By the end of the first year, the house wasn't finished, but it was livable. Each month we would save money and put it into our renovation fund. We also refinanced our mortgage when rates dropped. We even used American Express points to buy about $3,000 worth of tools and building supplies.

Over the past seven years we've put more than $50,000 worth of sweat equity and $194,000 in actual dollars into our home. It was recently appraised for $850,000. There's still a little bit of work to do, but that's always the case with a historic home. Beyond the dollar value, we love living in a house that's a piece of our town's history--it's even been included in our local preservation society's annual tour."