Paying for Remodel

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StinkyPoodle
Posts: 1
Joined: Thu Oct 11, 2018 12:13 pm

Paying for Remodel

Post by StinkyPoodle » Thu Oct 11, 2018 12:26 pm

Looking for input on best way to pay for $40k remodel.

We have about $35k in cash (some of which is earmarked as EF) and another $125k in a taxable investment account, not earmarked for anything specific. We have about 500k in home equity. Currently on year 5 of a 15 year mortgage at 2.5%, so not anxious to refi and lose that rate. A home equity loan would be at a rate of about 6%.

No debt other than the mortgage and I’m comfortable with where we are in our retirement accounts and college savings. My job is extremely stable and represents about 75% of our household income. My spouse’s job is somewhat less stable, but not terribly precarious.

I am leaning toward using 15 to 20 K of our cash, and pulling the rest from the taxable account but thought I would throw this out to others to see if there is something I’m not considering.

We definitely want to do this project but spending saved money is hard for me!

frugalista
Posts: 5
Joined: Wed Oct 10, 2018 3:45 pm

Re: Paying for Remodel

Post by frugalista » Thu Oct 11, 2018 4:32 pm

How long will it take you to save 15k so you don’t have to tap into your taxable? If you’re in time crunch, your plan seems reasonable to me. Otherwise, I would build the cash to pay for it.

Broken Man 1999
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Joined: Wed Apr 08, 2015 11:31 am

Re: Paying for Remodel

Post by Broken Man 1999 » Thu Oct 11, 2018 4:49 pm

Any TLH opportunities for taxable, since there has been a market drop?

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

Goal33
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Joined: Sun Apr 12, 2015 12:30 pm

Re: Paying for Remodel

Post by Goal33 » Thu Oct 11, 2018 5:08 pm

Drag out the remodel long enough to save up another 5k, and use cash.
A man with one watch always knows what time it is; a man with two watches is never sure.

ddurrett896
Posts: 883
Joined: Wed Nov 05, 2014 3:23 pm

Re: Paying for Remodel

Post by ddurrett896 » Thu Oct 11, 2018 6:15 pm

StinkyPoodle wrote:
Thu Oct 11, 2018 12:26 pm
We definitely want to do this project but spending saved money is hard for me!
Open a credit card that's 0% for 18+ months.

If approved for less than $40k, max it out and pay cash for the difference.
If approved for more than $40k, max it out with no cash down.

At the end of the term, pay it all off.

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GerryL
Posts: 1960
Joined: Fri Sep 20, 2013 11:40 pm

Re: Paying for Remodel

Post by GerryL » Thu Oct 11, 2018 6:30 pm

StinkyPoodle wrote:
Thu Oct 11, 2018 12:26 pm
We definitely want to do this project but spending saved money is hard for me!
But isn't this just the kind of thing saved money is for?
I did my remodel (~6 years ago) using money that I had saved for no particular goal. Yes, it hurt to see balance of account go down, but it sure feels good to have it all done and not be paying for it afterwards.

JoeNJ28
Posts: 12
Joined: Sat Aug 25, 2018 9:13 am

Re: Paying for Remodel

Post by JoeNJ28 » Thu Oct 11, 2018 6:48 pm

ddurrett896 wrote:
Thu Oct 11, 2018 6:15 pm
StinkyPoodle wrote:
Thu Oct 11, 2018 12:26 pm
We definitely want to do this project but spending saved money is hard for me!
Open a credit card that's 0% for 18+ months.

If approved for less than $40k, max it out and pay cash for the difference.
If approved for more than $40k, max it out with no cash down.

At the end of the term, pay it all off.
This is what I did for a remodel because I always have a hard time pulling from savings. Put it on a 0% card and then instead of saving money every month just paid down the card so I never pulled from established savings. I just stopped saving until the card was paid off.

GeoffD
Posts: 55
Joined: Tue Mar 20, 2018 1:31 pm

Re: Paying for Remodel

Post by GeoffD » Thu Oct 11, 2018 8:24 pm

I did $200K+ in remodeling over four years out of cash flow. Remodeling is discretionary spending. I think it's foolish to borrow money for any kind of discretionary spending. Repairs are a different story. Water heater, furnace/boiler, A/C, roof, I'd 'borrow' from my emergency fund and pay it back as quickly as possible. Well, roof you normally know years in advance so you should have the money for it.

Ron Scott
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Joined: Tue Apr 05, 2016 5:38 am

Re: Paying for Remodel

Post by Ron Scott » Fri Oct 12, 2018 2:21 pm

Goal33 wrote:
Thu Oct 11, 2018 5:08 pm
Drag out the remodel long enough to save up another 5k, and use cash.
This, or close it.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

Starfish
Posts: 499
Joined: Wed Aug 15, 2018 6:33 pm

Re: Paying for Remodel

Post by Starfish » Fri Oct 12, 2018 10:58 pm

GeoffD wrote:
Thu Oct 11, 2018 8:24 pm
I did $200K+ in remodeling over four years out of cash flow. Remodeling is discretionary spending. I think it's foolish to borrow money for any kind of discretionary spending. Repairs are a different story. Water heater, furnace/boiler, A/C, roof, I'd 'borrow' from my emergency fund and pay it back as quickly as possible. Well, roof you normally know years in advance so you should have the money for it.
Mental accounting.
All the money you pay are interchangeable. If a loan is good deal for something, it's as good of a deal for anything else you spend money on.

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