Sure, Corollas are nice and all, but if you need to mix up a couple dozen cubic feet of manure compost and stuff (as I do this week), you just can’t do it in a Corolla.

sandy: Corollas rock!

However, normally I’d never take out equity for anything else. Especially not in the current financial crisis. But I feel confident for every $1 that I put in renovating my house, I can expect a $2 return on my investment. So I’ll make an exception this time.

-Jon

skymosher: ego is a powerful motivator to not take the loan. As Andy points out below, there is real satisfaction in telling others you did a fantastic work yourself, esp. if you do it on the cheap, and you didn’t have to finance it. (its akin to owning a nice sports car–it’s even better if the bank doesn’t own half of it).

jennifer: I agree with you on the cars … nothing like running an old model right into the ground. My Corolla just turned 135,000 and is running strong. I consider 250,000 the low-side of what this car is going to handle

Andy: maintenance cost is an EXCELLENT point that I really didn’t think about. Pools and hot tubs are a prime example of this - big holes in the ground you pour money into over and over again.

corey: While I am personally debt-averse, I can definitely see merit in buying a fixer-upper and doing the repairs with a loan. That’s what virtually all house-flippers do, because the cost of debt is lower than using their tying up their own assets… its a trade though - and peace of mind is very important to me. (As I said, I don’t like being wells fargo’s servant)

Also, glad you came into some additional cash flow. THAT is always a plus.

Karen: At some point I’m going to do a post on the devastating effects a HELOC (or any ARM mortgage) can have. Of course, these tools can be used for good (emergency fund supplement, e.g.). They are even more effective when they offer a conversion option to a fixed-rate loan. Our HELOC does offer this, and we did use it in the past once, for what I consider was a good cause (adoption of our children). We have since paid it off.

The trap to watch out for is what’s happening these days (less so, so far, in our market): if you have loans for $X, and your house is worth $X+Y on paper, but the market is such that you can’t sell it for more than $X-Z, then it really isn’t worth $X+Y. The problem is, you can’t tell what Z is going to be until you (have to) sell, so wisdom dictates you have to be conservative.

We’re thinking a second mortgage (”home equity loan” sounds too innocent to me, but maybe that’s just me) for the kitchen remodel, but only if necessary. Never, never a HELOC. Open-ended=bad.

Now I may not need an additional loan due to some additional cashflow, but that wasn’t the plan from the beginning.

Also, some of the high end things I’m doing as it gives me the opportunity to learn. While I may not do things perfectly on this house, my skills will be honed for the next one.

That factors into my calculations a lot as well, regardless of project. Sure, I could buy that top-of-the-line thing with all the bells and whistles, but first off, am I going to use all those bells and whistles, and secondly, when it breaks or malfunctions, what is it going to cost me in time, effort and dollars to fix it or have it replaced?

Personally, the thing that gets me most excited about home improvement is completing a project, blowing people away with how it looks and then having them mess their pants after I tell them how LITTLE I paid. I love to hear how much people pay to have/DIY their half-bathrooms remodeled, and then I show them pics of the half-bath I redid at the condo and told them it cost me $900 and a lot of hard work.

My husband and I are VERY against debt of any sort… in fact, we regularly pay down our mortgage with extra money we have (after our emergency savings, retirement accounts, and such have been paid). I know it’s supposidly better to invest the money instead of paying down a mortgage, but I can’t wait to be done with it!

I have no interest in getting a home equity loan to help with the fix up… I’d be too afraid I wouldn’t get it back! (Especially with the way the market is right now).

I’ve always paid cash for my cars… (and kept them running for 250,000+ miles)… here’s to Corollas!

And vacations… what are those? I would love to travel… we are hoping later in life… save the money NOW so we can spend it later.

Having said all that…
I think I’m abnormal.