We stayed close to our $7,500 budget by using these tricks:

DIYing most of the work. My husband and his dad did all the framing, insulation, and sheetrock hanging. They installed all the cabinetry and the doors. We hired subcontractors to lay the flooring and finish out all the paint and trim work detail. We also hired a friend who is an electrician for all lighting and electrical. The painted stairs were done by yours truly. :)

Shop for bargains and use what you've got. We found a discontinued floor display at a local cabinet shop for just $750, so we bought it and delivered it ourselves then my husband reassembled it after the floors and walls were finished. The granite was a scrap piece that we got at a huge markdown. All the furniture was either hand-me-down or purchased used from Craigslist. The wall art was my own photography enlarged to poster size at Costco and framed in Hobby Lobby discounted frames. I work in the construction industry, and had the flooring material leftover from another job so we only paid for labor.

Use free programs such as Sketchup to draw out the space before construction to see how it will look afterwards. It's better for everyone to see things in 3-D to you can all be on the same page with how it is supposed to look.

Now my husband has a great place to escape all the cartoons that play on our living room tv for our 5 year old. It's also a fun place to host Polar Express showings every Christmas. The kids love the arcade and the foosball coffee table.

We managed a custom closet system for two closets under $100 each using the IKEA Billy bookcase and a few slight modifications resulting in a custom look that could've costed us hundreds of dollars more. Add a few shelves and bars in between two Billy bookcases and you've got yourself an easy DIY custom closet on the cheap!

Basically, I assembled 2 Billy Bookcases, 1 Billy Wall Shelf, 1 Smadal TV Console from IKEA and attached them to the wall up against a section of beadboard forming an inverted "U" shape. I also attached the bookshelves to the wall shelf for added stability. I left the TV stand free and just pushed it against the wall (as a bench and shoe storage) so that I could remove it to sweep under it. I did reinforce the TV stand with some metal L brackets to support the weight of my kids sitting (and standing and jumping) on it.

Where the shelves met the wall, I added quarter round trim and added corbels under the wall shelf for architectural interest. I also added crown molding along the tops of the shelves.

I had paint color matched and painted all the trim, beadboard and crown molding "Ikea White" (which is actually more of a cream color)

Lastly I added coat hooks and my mudroom built in was complete.

Total cost (shelves, hardware, paint, hooks): $309