Fools, I am having a dilemma.Background: We are snowballing nicely and after a 2-month setback when DH was out of a job, we are on target to retire the credit cards by February 02, the student loans by May 02, and DH's back taxes by December 02, leaving only the mortgage. We owe $229,000 on the mortgage (we're in the Los Angeles area, where that is a modest mortgage amount), and figure the house is easily worth $325,000. (Yahoo.com's real estate page figures it's worth $344,000, but I like to be conservative.)Last spring we decided to get the outside of our house painted, and it turned into a pretty horrible disaster. We spent $2000 (cash) and got the stucco and much of the trim painted before we fired the guy, but the windows and some of the eaves still need to be done. We bought the paint to finish it ourselves, but what with one thing and another, it is still not finished. I noticed this evening that the wood siding on one exterior wall (the rest is stucco) is starting to peel and crack already because it was not properly prepared. We are also going to need a new roof in the next year or so. I reckon the paint job needs to be totally re-done, and the wood siding possibly needs to be torn out and replaced. (We've had a few painting contractors out to look at the mess, and nobody so far is willing to finish it -- they all want to start over.) That would cost from $5,000 to $7,000. The roof is probably another $5,000 to $8,000. Also the landscaping needs some work -- new sprinklers and some planting, both front and back. Figure $3,000-$5,000. Total for the needed/wanted work is probably $12,000 to $20,000.We could save up the cash and do either the paint job, or the roof, or the landscaping, some time next year, even while continuing the snowball. Our final snowball amount will be $4200, so we could save up enough ony to do all three projects after the snowball is finished, which puts us in mid-2003.Or.... the devil is sitting on my shoulder, urging me to take out a home equity loan or do a cash-out refinance, and just do the darned work on the house. At 8%, the payments on a $20,000 home equity loan would be about $400 for 5 years. (I wouldn't want to get a longer term loan, because the improvements wouldn't last much longer than that.) But we could knock it out in 5 months by just adding it to the end of our snowball program, which would still put us debt-free with the work done by mid-2003. I am the person in the family with good credit, and the credit cards and student loans are in my name. The house and the mortgage are also solely in my name. "I", as opposed to "we," will be credit card debt free in 2 months, leaving only the student loans and the mortgage. Or I could wait to get an HEL until I pay off the student loans, which makes "me" debt free except for the mortgage.Anybody feel like talking me out of this? Or into it? I have this idea that trading some of the equity in the house for improvements on the house is somehow more okay than trading the house equity for something like a car. What do y'all think?
If not doing the work is going to cause damage to your home, then I say go with the home equity loan. I would consider roofing and siding to be critical needs; sprinklers and landscaping can wait until you have cash.Have you looked into replacing your trim and siding with colored vinyl? I don't know how much more it costs, but it would never need painting again!
The facts:You are debt free in Dec 2002 if you continue the snowball. Call it a year away.Critical repair: paint job.Critical repair: roof.Esthetic repair: landscaping.DH just got a "new" job. This has the potential, however small, of not working out. My opinions: you don't talk about your emergency fund. What shape is it in?If the landscaping is not critical then I would DEFINTIELY wait on it.If the paint and roof job are CRITICAL then I would pay the MINIMUMS on the debt and push back the snowball and pay for the paint and roof upfront.IMHO, it is a question of priorities on debt. I WOULDN'T take on more debt. You don't need to.Mangard
The new job definitely might not work out, but that has been par for the course -- DH's industry is one in which people work on a project-to-project basis so ever since I've known him he has been hustling for work. We are hoping this "real permanent job" will work out, but we are pretty well prepared if it doesn't. Which brings me to your question about the e-fund: It's in decent shape (we could go 3-6 months on my salary alone without feeling much of a pinch, if we go back to minimum debt payments), but I won't feel really good about it until we have the stupid debt gone (at which point we could do nicely on either of our salaries alone, indefinitely).*sigh*Okay, I'm over it. The only thing worse than an ugly paint job and a raggedly front yard is MORE debt.We will suck it up and either finish the painting ourselves or find a way to pay cash for it, either at the end of the snowball, or by finding money outside the debt-repayment funds (like overtime by DH). As for the roof, DH has been good at patching the leaks and he thinks we can make it through this winter. If there is a catastrophe, we can tap the e-fund and repay it by re-directing the snowball payments. If there's not a catastrophe, we'll be able to save up the cash and get it done for the winter rainy season in 02-03.Thanks for the input!mlk58...but I want it ALL! And I want it all NOW!!
mlk58 ...but I want it ALL! And I want it all NOW!!Sister, tell me about it.MangardP.S. Consider seriously putting the snowball payments on "hold" and getting the roof done now OR consider getting a roofer out there to assess the damage to your roof. Why? Because the longer you let it go the more structural damage might be done by the water and you will end up paying thousands more to repair the damage done in the interim.Will homeowner's insurance help?Just my $.02Mangard
Thanks, Mangard. We had a roofer out last year, and he showed DH how to patch it, and said there was no structural damage and wouldn't be as long as he kept it patched.Don't really want to put in an insurance claim because we just put in a claim last year for a plumbing disaster, and I don't want to get cancelled or have the premium hiked way up.mlk58being patient, impatiently
Don't really want to put in an insurance claim because we just put in a claim last year for a plumbing disaster, and I don't want to get cancelled or have the premium hiked way up.Isn't it interesting that people buy insurance, either on their own or forced to, and yet are afraid to use it because they are afraid that the insurance company will hike their rates (not saying this view is without cause). Wonder if I can get in on the insurance business?Wolfshead
Isn't it interesting that people buy insurance, either on their own or forced to, and yet are afraid to use it because they are afraid that the insurance company will hike their rates (not saying this view is without cause). Wonder if I can get in on the insurance business?Yeah, sad but true. You just need to remember that insurance companies are in business to do two main things: (1) collect premiums, and (2) NOT pay claims.mlk58thinks insurance companies are more evil than credit card companies
Here's my experience. Im 1983 we bought a townhouse and used Nationwide for insurance. In 1993 we bought our present home and lease out the townhouse. Still use Nationwide. In 1996, tenant calls and says she noiced a waterspot on the ceiling of a closet. I get a roofing contractor over and, he says it's hail damage and to call my insurance co. The Nationwide adjuster agrees and they honor the claim minus the dectductible. No problem until 1997 when, the policy renews. There is a 43% increase in preium. I call to complain and they tell me it is due to claims history. That is the only claim we ever filed.We no longer use Nationwide-"Not on our side"!
Like I said, not that the view isn't justified.Wolfshead
Nationwide is one of the worst for homeowner's claims. They are extremely cheap (not that most insurance companies aren't cheap but many others are at least fair)!! A warning to anyone who deals with them. I work for a contractor that specializes in insurance repairs. Nationwide has often sent their adjusters to inspect damage, determine a settlement price and write a check to the homeowner right there. These checks often say settlement in full. If you cash them, the company no longer owes any more money for the claim or you must fight, fight, fight to get more money out of them. Many times a contractor's estimate is much higher and the insurance check is NOT enough to hire a contractor to have the repairs done. Wendy
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