The first step is usually to hire a general contractor (G.C.) to create a budget, shop for materials and hire subcontractors. Doing this yourself is a full-time job but can save as much as 20 percent of the bill. The Tanseys, with family friend and G.C. Dave Fahlman on speed dial, dared to do it. They expected to save $50,000, which they could put back into the house.

But, says Erika, "Some of our estimates were way off." Upgrades were the biggest culprit. They budgeted $7,000 for siding but found they preferred cedar shingles, which cost five times that. They compromised on cedar siding, which still rang up at $21,000. Other last-minute upgrades, such as mahogany decking, added to budget woes.

It's crucial to have room in the budget for errors and uncertainties. Even a seasoned G.C. can't know exactly what's needed until the walls come down or know how a natural disaster will affect wood prices. "Add 10 percent to your total budget," says Carl Heldman, author of Be Your Own House Contractor. "I promise you'll spend every penny."