Help me explain this to my husband

[Anonymous]

There is some awful advice here and a couple of good pieces of advice, as usual with DCUM.

if this is something that is important to you, you need to draw up a plan and account for all variables. Right now it seems too abstract. What does the renovation look like? What is the timeline? What would be accomplished? What is the real budget? (get estimates). Can it be done in stages, or are yo thinking kitchen renov or add on, so it's all one chunk.

Then, the other side - how does this fit in your budget? What would the terms be? How much can you save in advance?

What are you willing to sacrifice now to do this renovation?

I think if you can save 100K in ten years, with minimal impact on your lifestyle, then saving 10K in one year puts you in strong position to move this forward - and you only need a 90K loan, to boot.

In short, if you want to convince your husband, get more specific and concrete and run the numbers and costs/benefits explicitly.

[Anonymous]

Any kind of debt is silly.

[Anonymous]

Who inherited the house- you did or he did? If he did he might be thinking he brought a lot to the table so he gets to decide on issues relating to the house.
I

[Anonymous]

It is astounding to me how many people don't regard marriage as a partnership. An equal partnership.

[Anonymous]

Anonymous wrote:It is astounding to me how many people don't regard marriage as a partnership. An equal partnership.

+1

I think the starting place is to run the monthly numbers. Then maybe start setting aside that amount or more in savings-- gives you a dry run of living on that budget and helps pay for it as well.

[Anonymous]

Anonymous wrote:If it takes you 10 years to save up $100k, it will take you a lot longer than that to pay off a $100k loan. I would save more aggressively for the renovations ($100k in 5 years seems doable) and try to do the renovations part at a time.

I agree. I wouldn't do any renovations that I couldn't pay for out of pocket. I sure as hell wouldn't do any renovations that would take me 10+ years to pay for. Live within your means.

[Anonymous]

Who inherited the house you or your husband?

[Anonymous]

Anonymous wrote:

Anonymous wrote:If it takes you 10 years to save up $100k, it will take you a lot longer than that to pay off a $100k loan. I would save more aggressively for the renovations ($100k in 5 years seems doable) and try to do the renovations part at a time.

I agree. I wouldn't do any renovations that I couldn't pay for out of pocket. I sure as hell wouldn't do any renovations that would take me 10+ years to pay for. Live within your means.

+1

[Anonymous]

Hi- I'm the OP. Here are more details-
Our kids are very young (newborn and early preschool and I was not a high earner before we got married). I would likely be working to pay daycare costs.

We are in a $900k fixer uper. We bought it in 2008 knowing that over the years we could grow into it and make it ours. It's the smallest and least updated home on our street.

Renos would include bumping out our kitchen, moving the laundry room upstairs and carving out a spot, reworking the mudroom. I picked $100k as an amount but it could prob be done for $80k. I'm not looking for high end finishes. Just trying to make the space functional for our family.

The contractor we met with said that most people take loans for this type of work. DH seemed ok with that at first but then got cold feet.

I'm confident that we could afford $1500 a month for a loan payment. However, to save up $100k would take quite awhile. I want to enjoy the space now, when my kids are young and we truly need it.

[Anonymous]

You could easily save 80 k in 4 years then if you say you could afford 1500.

if you make it 1700 per month for 12 months (add 200 yearly interest (conservative)

after 4 years this adds to 82,400 k

just save for 4 years. and that's without increasing your income as you said, and with a very low interest projection.

[Anonymous]

Anonymous wrote:You could easily save 80 k in 4 years then if you say you could afford 1500.

if you make it 1700 per month for 12 months (add 200 yearly interest (conservative)

after 4 years this adds to 82,400 k

just save for 4 years. and that's without increasing your income as you said, and with a very low interest projection.

If you felt 1700 was too much, it would still be 72,800

[Anonymous]

Anonymous wrote:Your reasoning is off, OP. you should not be thinking about this in terms of equity in your home, since most likely having to sell your home or have your home foreclosed on to get the equity out to pay off the loan would be a complete disaster for your family, right? Your home is collateral for a loan you would be paying out of your family's existing income. Your home is NOT a source of income. So what you need to do is figuring out if there is room in your current budget to make payments on that $100,000 loan every month. At 130k HHI if you guys are trying to save for retirement, college, have car payments, etc, there may in fact not be that much extra in your monthly budget. And don't forget that you have to budget for normal home maitainence too!

It's reasonable to put some money in the house for upgrades if they are really going to make a big difference. But 100k is a lot!

You are NUTS. $130k income is A LOT. A $100k mortgage is pretty small.

[Anonymous]

Anonymous wrote:I'm with your husband, unless the renovations are for health and safety. If it's "I want a new kitchen" then I'd increase family income (pick up a part time job, sell belongings we have but don't need), increase savings and specifically earmark those savings for the house fund (cut back on dinners out, jog in the neighborhood and cut the gym membership), or simply wait until our normal saving pattern allowed us to afford it.

I would rather wait 5 years or even 10 years to get my new kitchen than put my house at risk in case of job loss.

So you don't have a mortgage?

[Anonymous]

Anonymous wrote:Hi- I'm the OP. Here are more details-
We bought it in 2008 knowing that over the years we could grow into it and make it ours.

Did you budget for upkeep and renovations when you bought?

It's the smallest and least updated home on our street.

This isn't really relevant to whether or not you can afford a 100k update. In fact, this makes me think you just want to "keep up with the Joneses."

The contractor we met with said that most people take loans for this type of work.

Of course he said that. He's selling his services.

You have no mortgage, no daycare expenses and have a 130HHI, but you can't pay for home renovations without a loan? What are you spending your money on?

[Anonymous]

Anonymous wrote:Your house should never be collateral for anything other than a mortgage.

What exactly do you think OP would be doing by using the house as collateral to do work on the house? How is that different from using a mortgage to buy it?