How Would You Pay?

[Cappy]

If it truly must be done this summer vs. next, I'd pay cash and hyper focus on rebuilding it. If your cash savings is only 3-4k, any short term emergency of that amount could probably go to a low rate credit card as unsecured debt (vs. wrapping your home up into it).

[lemoncupcake]

Would you qualify for a 0% interest card?

[lolalolalola]

I don’t know why you would pay 6% on a heloc if you have cash to pay for it. If you have an emergency before you’ve replenished your finds, use the heloc for that.

[sadlebred]

Jun 25, 2020 15:46:29 GMT -5 Cappy said:

Cappy

It has to be done now. I had hoped to get another year, but this winter we had a lot of rain, cold, and generally icky weather. There was no peeling paint in the fall other than one window. I had that taken care of in late winter. There is a ton of peeling now. It needs to be done before any damage occurs. The companies didn't see any damage beyond one small area I've known about, and that will be repaired.

[sadlebred]

lemoncupcake Yes, but that is not something I'm likely to do as I don't want/need another CC.

[lemoncupcake]

Jun 25, 2020 17:33:16 GMT -5 sadlebred said:

lemoncupcake Yes, but that is not something I'm likely to do as I don't want/need another CC.

You can just use it for this project and then close the account - if you have personal reasons to not want another card that’s fine, but I wouldn’t pay interest if you have an alternative.

[wanderingback]

Jun 25, 2020 17:41:35 GMT -5 lemoncupcake said:

Jun 25, 2020 17:33:16 GMT -5 sadlebred said:

lemoncupcake Yes, but that is not something I'm likely to do as I don't want/need another CC.

You can just use it for this project and then close the account - if you have personal reasons to not want another card that’s fine, but I wouldn’t pay interest if you have an alternative.

Yeah I agree with this.
I honestly don't know much about HELOC, but if you can get 0%, then why would you do 6%?

Especially with covid I've become much more of a cash hoarder due to what's going on. 
I personally wouldn't want to wipe out savings as I assume the rest of your savings is in something that's not as easily accessible or might have penalties to withdraw?
If you do have cash some other way that you can access to super easily with no penalty then I'd use the savings and replenish as quickly as possible. If that's not an option then I'd do the 0% cc. I wouldn't do the 6% HELOC since those other 2 options are available. 

[coffee]

How secure is your job? If I were worried about job security, I would hold the cash and put it on the CC.
If your job is secured, then I would pay cash. If any emergency comes up I could use the CC. I am better at saving money when I feel My emergency fund is not where it should be, rather than paying off a credit card when my payments are on time.
This is just the way my mind works. Getting my emergency fund in place feels more like in a survival mode and gives the rush to save lol

[puppylove64]

It is possible the painters charge a higher fee if you pay by credit card. Usually they only accept cash/check.

[Accountingcat]

I might get kicked off MM for this suggestion...401k loan? I have used mine for an emergency repair before. I don't know if all 401k loans work like this but for mine, the "interest" is technically paying myself back and I wasn't making any money in the market right now anyway. I was in your boat and didn't want to touch my cash reserve to due an unstable job and didn't want to pull from mutual fund to pay capital gains tax. The loan sent me a check within a week and there was no penalty to pay off the loan early. There was no tax penalty for taking a 401k loan.

[lust2hart]

I would use cash.

[melmel48]

Mentally I couldn't completely wipe out my savings, so I would probably do half cash; half HELOC out of the options given.

[wildrice]

How long will it take you to rebuild savings, and since it sounds like you have other available money elsewhere, what would be the downside of dipping into that if you had an emergency?

I don't love the idea of paying interest on something you can pay for in cash, but to be honest it sounds like your savings is pretty small to begin with, so I wonder about your ability to rebuild it quickly. I am not super comfortable with having NOTHING in savings. Do you have credit cards you could use quickly in a pinch - say you had an unexpected car repair in 2 months, what would be your plan for covering that? If your lack of savings would mean you are in trouble, don't drain your savings. If it would just mean you'd grab that money elsewhere, I'd lean toward paying for the paint in cash and just do what you can to get savings back up quickly.

Taking out a HLOC for 2k seems like a lot of hassle for not a lot of money, so I'd probably either do the whole thing on HLOC or the whole thing cash, too.

[badgergrl]

Jun 26, 2020 10:11:00 GMT -5 Accountingcat said:

I might get kicked off MM for this suggestion...401k loan? I have used mine for an emergency repair before. I don't know if all 401k loans work like this but for mine, the "interest" is technically paying myself back and I wasn't making any money in the market right now anyway. I was in your boat and didn't want to touch my cash reserve to due an unstable job and didn't want to pull from mutual fund to pay capital gains tax. The loan sent me a check within a week and there was no penalty to pay off the loan early. There was no tax penalty for taking a 401k loan.

We have used 401k loans in a few weird situations before - as a bridge loan between moving when we owned two houses for 8 days and to take advantage of an end of the year tax benefit for renewable energy that required us to get money faster than we could any other way.

I would NOT use it if my husbands job wasn’t rock solid as I believe that if you are fired you have to immediately repay the loan or you are on the hook for the taxes and the penalties for early withdrawal

[SusanBAnthony]

How long will it take to rebuild 3-4k? That would significantly affecty answer.

If it's just by the end of 2020 I'd pay cash. If it's longer than 3-6 months I'd probably do a combo. I wouldn't get a loan for the full amount.

[goldengirlz]

I’m confused by what you mean when you say you have other money that’s not “readily accessible.” As in real estate holdings? Retirement accounts?

If you were to face an emergency, do you have other lines of credit you could access until you could free up those funds?

I’d lean toward cash but I would not want to have zero savings, especially during these strange times. So I guess my answer depends on how inaccessible we were talking about. Otherwise (and assuming you’ve looked at all options for a lower interest rate) sometimes debt is a necessary evil. Just be disciplined about paying it back and not accumulating more.

ETA: We’ve chosen to finance in situations where the cost of financing was less than the cost of cashing out investments (namely capital gains tax.) In terms of how much cash to keep on hand, that really depends on how much you need to sleep at night.

[boiler717]

I would not want to eliminate my savings right now. If you have job loss, you won’t be able to get a HELOC to cover emergencies. I would probably get a HELOC and then use cash to immediately pay it down but leave it open. You won’t have to pay the interest, can take time rebuild savings, but will be able to tap into it if you have another emergency before you rebuild savings.

[k3am]

Jun 27, 2020 12:31:47 GMT -5 mofongo said:

Jun 26, 2020 7:29:51 GMT -5 puppylove64 said:

It is possible the painters charge a higher fee if you pay by credit card. Usually they only accept cash/check.

Yes we did a $$$$ outdoor kitchen/patio project and wanted to use our cc for the points and pay it off, but it was 3% more, so we didn’t.

With our A/C, we put it on a credit card. We asked if there was a discount for paying in cash, and there wasn’t, so credit card (well, 3 different cards since I didn’t want to request an increase) and rewards it was.

I was shocked. First time it’s ever happened.

[imojoebunny]

My painters, a reasonable and competent team I have used to paint 5 houses, inside and out, only takes cash/check. Otherwise, I have to go to the bigger painting guys who have "payment plans" and/or take credit cards, which will cost me a lot more. Is there any chance you could paint it yourself? We did that for our first houses, and our rentals many times, before we made enough/got enough rent to afford to pay someone. It isn't fun, but it isn't hard. Watch some you tube videos. Get some supplies. Start with the back/least viewed side, and by the time you get around front, it will be ok. If you have some difficult elevations, like my 1st house had a 3 story eve in the back, you can hire someone to do that, but you would save by doing what you can.

[sadlebred]

imojoebunny No way! I have a 3 story home and don't do heights or ladders.

[agnes]

Jun 27, 2020 16:22:16 GMT -5 boiler717 said:

I would not want to eliminate my savings right now. If you have job loss, you won’t be able to get a HELOC to cover emergencies. I would probably get a HELOC and then use cash to immediately pay it down but leave it open. You won’t have to pay the interest, can take time rebuild savings, but will be able to tap into it if you have another emergency before you rebuild savings.

Depending on if the painters charge a higher fee for credit card payment, my first option would be finding a 0% credit card to put it on.  If not, I would go with the above.  

[k3am]

Jun 29, 2020 11:14:39 GMT -5 mofongo said:

Omg at paint it yourself!

Definitely the MM suggestion.. but 100% not ever going to be on my radar as an option. Nope. No way. Maybe for a some people though. 

[goldengirlz]

Jun 27, 2020 12:31:47 GMT -5 mofongo said:

Jun 26, 2020 7:29:51 GMT -5 puppylove64 said:

It is possible the painters charge a higher fee if you pay by credit card. Usually they only accept cash/check.

Yes we did a $$$$ outdoor kitchen/patio project and wanted to use our cc for the points and pay it off, but it was 3% more, so we didn’t.

To be fair, the 3% charge could still be less than paying the 6% in interest

[k3am]

Jun 29, 2020 12:53:41 GMT -5 mofongo said:

Jun 29, 2020 11:51:05 GMT -5 k3am said:

Definitely the MM suggestion.. but 100% not ever going to be on my radar as an option. Nope. No way. Maybe for a some people though. 

Also the most likely to land me in a hospital suggestion!

Same. I definitely got a chuckle out of this. 

DH and I have agreed that for many things around the house, it's cheaper to pay someone to do it than to pay for the ensuing divorce.

It's all about knowing your limits.