Hello,

I live in the Chicago area and I am finishing my basement. I did much research on the vapor barrier issue. I feel the proper way to insulate basements is to use the 1" - 2" pink board against foundation, then stud, batt insulate if desired, then rock... no vapor barrier. There are many opinions on this but I feel that you should not trap any water between the foundation and wall board if it does get wet. I have decided against using the pink board because of space and cost. I do not have any water issues or condensation issues at this time. However, I want to try to avoid any future problems as best as I can with what I have decided to go with. This is what I am doing / have done. Foundation wall sealed with waterproofing paint, 1/2 inch space between foundation walls and 16 O.C. studs, Kraft faced mold resistant insulation with a vapor retarder not barrier, then mold resistant sheet rock. My main question is whether I should seal the 1/2 inch gap between the top plate and the sill plate. If I do, it is basically going against my thinking that I would like an air gap between the foundation wall and studs just in case it ever did get wet or condensate without me knowing. However, if I do leave the gap open, will this allow warm air in to condensate against the cold wall? I will be insulating the areas above the sill and between the joists'. Any opinions or advice is much appreciates.

Thanks

Flukie I understand the cost variable, but I read the latter part and its almost like saying I know I should space my roof truss at 2 OC but that's to expansive so I going to space them at 4 OC use 3/4 ply instead of 5/8. See it just doesn't quite get it. That's what I feel is happening here. The right way is just that and why risk it otherwise?
Kraft face in my area IS considered a vapor barrier Pa. It says vapor retarder on the kraft faced because the Kraft Faced in the colder states needs a heavy barrier 6ml to completely 100% keep the moisture out because of the very cold areas and you are borderline in Chicago. Actually I have some questioners on the sane subject and the Big Box stores don't even Sell kraft faced insul. Just to let you know what your are doing in your set up there is what I as a builder usually end up tearing out here. Just 5% of moisture in fiberglass insul will make it loose 95% of its Insul properties! So now what.
You are reading " Mold resistance" and taking that like it's a protection. It simply means it may get mold on after the back of your studs does. So do we need now "mold resistance" studs. That's exposed in the 1 1/2 back side?
See the main objective is NOT to let moisture in to begin with.
It remains me of the saying" Its hard to remind yourself while in the swamp up to your butt in alligators the main directive was to drain the swamp and no alligators"
So now you state keep the 1/2 air gap which vents to know where and you want that in case it gets moisture behind that without you knowing it. So it will happen eventually and how will you know that? And when that does happen and to see it you have to rip out the drywall to get to it.
The plate area above needs to be sprayed foamed
The warm air theory you have to get behind the wall is EXACTLY why it will condensate You NEVER want a warm air mass to a could air mass reacting like ice in a glass in summer. That transition needs to take place SLOWLY and then the condensation's is stopped.
Basic science shows this with Dew on grass and the rain because the warm to hot was to direct. Think 95% humidity and no rain until a small cold air mass comes in.
It will be raining behind the 1/2 inch air gap without a doubt especially in the cold area you are in. Sorry Flukie I'm not trying to bust your chops here but if you would see my rehabs tear outs in basement you would want to run to get foam insul.
Here's some more info on it.
YouTube - Best way to insulate a basement 800x600

YouTube - Install Rigid Foam Insulation in Basement Video

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I agree with foam insulation between the studs.

Use drywall with a foil backing for the walls for the vapor barrier.