How should I pay for garage renovation?

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davehica
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How should I pay for garage renovation?

Post by davehica »

My wife and I recently moved into a new home and the garage is in very poor shape (IE unusable). We desperately need the additional space and I'm planning to have it done sometime next year. Here are a few details:

We are 39 And 44, make about $210k base with another $40k in bonuses. Retirement accounts have $1.6M, another 10k taxable and $54k in cash. After taxes and bonuses next year, we should have about $84k in cash. I expect the remodel to cost about 30-40k.

My question is should I use cash or is there a better option (IE heloc, loan, etc)? I'm trying to build up cash and taxable acct that were depleted for the down payment, so it hurts a little to halve it in one fell
swoop.

Appreciate the input.
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bottlecap
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Re: How should I pay for garage renovation?

Post by bottlecap »

I'd use cash. That's what cash is for.

Good luck,

JT
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JPH
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Re: How should I pay for garage renovation?

Post by JPH »

If you can afford to pay in cash, that is the cheapest option.
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LadyGeek
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Re: How should I pay for garage renovation?

Post by LadyGeek »

How's your Emergency fund? As long as you've got about 6 months of funding that will cover unplanned events, you've got enough to pay cash.

Don't let emotion cloud your decision making, see: Behavioral pitfalls. Taking out a loan of any form is far more expensive than paying cash.

Consider that renovating a home is a worthwhile investment (and you need it done). Start now by creating a "new garage fund". Once you've mentally assigned the funds to the task, going through the mechanics of saving becomes much easier.

If you need time to build up your emergency fund, then simply delay the start of the project. You don't need it done ASAP, so let the finances decide when the project can start.
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Jack FFR1846
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Re: How should I pay for garage renovation?

Post by Jack FFR1846 »

Can you describe the renovations to the garage? Often, people convert usable garages into living space which does nothing to increase home value. Consider getting rid of "all this stuff" that you don't have room for. Craigslist, eBay, yard sales. Can you put your cars in the garage? Is it a detached garage that's falling down? That's a ton of money for garage work. Are you demo'ing the floor and repouring to fix cracks and breaks?
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oregonian
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Re: How should I pay for garage renovation?

Post by oregonian »

As we move into the final stages of our garage remodel (converted a poorly built eyesore into a workspace, bay for truck, mudroom/pantry) we mostly financed through cash flow (one advantage of going slow.....) but we also set up a HELOC with our credit union. We tapped into that as the project passed the original budget with an expansion of the work (fencing, dog run, patio) mostly as a cash flow management tool between bonuses to avoid hitting the emergency funds.

This worked well for us, HELOC cost $50 to set up, net interest will be < $250.
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Toons
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Re: How should I pay for garage renovation?

Post by Toons »

Cash.
Be Done With It.
Free Your Mind.
Move On.
In a Forward Direction





:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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Kenkat
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Re: How should I pay for garage renovation?

Post by Kenkat »

How much equity do you have in your house? If a lot, I'd consider a HELOC; if you have little equity in the house, I'd probably go the cash route.
dandinsac
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Re: How should I pay for garage renovation?

Post by dandinsac »

I'm in a similar situation with almost all of my assets in tax-advantaged accounts. We're going to do a kitchen remodel and we've saved enough to pay this with cash outside of our emergency fund. I decided though, to set up a HELOC so that I had the flexibility. The interest rate is low if I need it, which is unlikely unless we run into unforseen issues. Good luck!
stan1
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Re: How should I pay for garage renovation?

Post by stan1 »

Cash. I'd recommend deferring for a few months for two reasons. First, most important is to spend a few months on the design to make sure you get what you want out of the remodel. Your initial ideas will often be quite different than what you decide upon after several months of evolution with the design. This may be less of an issue with a garage than with a kitchen but still worthwhile. Second it will give you a few more months to restore your cash reserves. With your retirement assets and income I don't think it makes sense to borrow money but you don't want to get into a situation where you have a cash flow problem.
spitty
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Re: How should I pay for garage renovation?

Post by spitty »

If going with cash, put as much as possible on plastic to get rewards! We built an addition several years ago and made an arrangement with our contractor to pay for all materials ourselves. Ended up with 8 round trip tickets---SW was still using vouchers at that time.
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