Help me explain this to my husband

[Anonymous]

Anonymous wrote:What does your budget look like now? How much does your DH bring home each month? What are you expenses? Do you have an emergency fund? This should tell you if you can afford the payment.

I do not think it is unreasonable to take out $100k for renovations on a house you have no mortgage on.

+1

OP, we were in a situation uncannily similar to yours. You should answer the PP's questions. Also, could you elaborate on your renovation idea? After you've done that, if I have any advice to give, I'll give it.

[Anonymous]

OP is only answering questions that are favorable to her argument. I doubt that she will tell us her true budget or other specifics. She either doesn't know them or she doesn't want to swing the anonymous vote towards her husbands side. Typical DCUMish stuff.

[Anonymous]

$1500 is a HUGE extra fixed monthly expense! I'd only take that on if absolutely necessary - if you had a 6-month emergency account saved up; you were maxing out 401ks; and saving for the kids' college funds.

And having kids is also only going to get more expensive as they get older, with more clothes, gear, classes, summer vacations, etc.

OP, I think your mistake was to sink your entire inheritance into a "fixer upper" without reserving cash for renovations ...

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My parents own their house outright and have for ~15 years. They have an HEL with their local bank and have always used it for cars (they buy used) rather than taking out car loans. I don't see a problem with it. Make sure you get a good rate.

This isn't very smart. They have made their house collateral for a car loan. Silly silly.

Only if you can't pay it. We've done that, use a low rate (2-4% after tax rate) HELOC for a smallish car loan that we could pay off in cash any day we want, and save the outlay for ongoing savings and leave it in investment accounts that are almost always doing better than 3-4% over time.

I agree on not doing it for any amount that you couldn't easily cover monthly payments for or, ideally, pay off in full at any time. You don't want to lose your house because you can't pay your car loan (generally speaking).

+1 I am the PP whose parents use their HEL to finance their cars and I just don't understand why people think this is so unreasonable if you can afford it. And why would my parents pay the cash (which they do have) for the cars if their money is making more for them annually than it costs to pay off over time. It also improves their credit since they have no mortgage or other loans, their only monthly payments are insurances and the cars.

[Anonymous]

Anonymous wrote:OP is only answering questions that are favorable to her argument. I doubt that she will tell us her true budget or other specifics. She either doesn't know them or she doesn't want to swing the anonymous vote towards her husbands side. Typical DCUMish stuff.

OP here. I'm not at all adverse to answering questions! I frankly don't know our budget. We probably live close to paycheck to paycheck, putting $ away for real estate taxes (@ $8k a year), etc. We own our cars.

We have sizable savings and investments (i didnt include amounts in our annual income) which are part of our inheritance, but DH doesn't want to use them for the renos. He wants to save up an additional amout for them. He wants to keep the rainy day fund in tact, which I am fine with. What I don't want to do is wait many years until we've "saved up" for the renos when we could do them now under a low interest loan.

If he were to lose his job, we would likely sell the house and move elsewhere and I would work.

The improvements aren't life and death. I'm just tired of looking at my cramped 1980 kitchen and old appliances. We have a weird indent in our kitchen and if we bumped it out to meet the rest of the house, we would nearly double the size.

[Anonymous]

If you don't know your own budget how can you possibly even think of entertaining thoughts of the scheme you're asking for advice about?

That's nuts. You are way ahead of yourself and must go back to square one and start figuring out your financial picture in detail.

It sounds like you may have spent too much of your liquid resources on the house and now are cash poor when it comes to associated/ other expenses.

It's also clear that you're not fully financially literate regarding your own situation and that should be your first step.

[Anonymous]

Sounds like it was DH's inheritance you are trying to blow through. I agree w DH.

[Anonymous]

Anonymous wrote:Sounds like it was DH's inheritance you are trying to blow through. I agree w DH.

+1

[Anonymous]

If you're living paycheck to paycheck, then by definition you don't have the money to start paying $1000+ a month to service a $100,000 debt! If you don't have a handle on your finances, then I don't see how you're complaining about your DH not understanding. Your house is an asset, not income. What your DH is saying is that he doesn't feel you have the income to comfortably pay those installments for 10 years. Unless you understand your own budget, there's going to be no way for you to figure this out.

[Anonymous]

If you are living paycheck to paycheck, how will you pay the monthly payments? You should thank your lucky stars for your inheritance, because your financial skills seem to be lacking.

[Anonymous]

Anonymous wrote:OP here. I'm not at all adverse to answering questions! I frankly don't know our budget. We probably live close to paycheck to paycheck, putting $ away for real estate taxes (@ $8k a year), etc. We own our cars.

We have sizable savings and investments (i didnt include amounts in our annual income) which are part of our inheritance, but DH doesn't want to use them for the renos. He wants to save up an additional amout for them. He wants to keep the rainy day fund in tact, which I am fine with. What I don't want to do is wait many years until we've "saved up" for the renos when we could do them now under a low interest loan.

If he were to lose his job, we would likely sell the house and move elsewhere and I would work.

The improvements aren't life and death. I'm just tired of looking at my cramped 1980 kitchen and old appliances. We have a weird indent in our kitchen and if we bumped it out to meet the rest of the house, we would nearly double the size.

16:35 here. I agree with your DH about not touching the inheritance for any reno. I'm not surprised that you don't know your budget. Lots of people don't know it. But without a budget, you can't do a house project. Not now and not later. Calculate your spending for the past year and divide by 12. Is the amount more or less than DH's monthly net income? (Are you maxing DH's 401K? If not, then do that, and re-calculate your monthly net income.) Where could you cut right now? What spending will increase in years to come? I'll make it easier for you by giving you your budget lines.

Housekeeping/lawn care/repairs
Eleectric/gas/water/phone/tv/internet
Health co-pays/doctor bills/medication/glasses/therapies
Diapers/baby items
Groceries/coffee or meals out/alcohol/entertaining
Preschool/summer camp/lessons/memberships
Charitable giving
Car repair/gas/EZ pass/Metro/parking
Clothes/dry cleaning/hair/spa
Movies/going out/babysitting/gym fees
Presents/toys/music/books/crafting/photo
Travel

[Anonymous]

It'll take us 10 years to save up $100k and life is too short.

Here's your problem. If you are making $130k/year, have no mortgage and no daycare expenses, you should be able to save up the 100k within a year or two. I'm on team husband. Your finances need some close examination and overhaul.

[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.

That makes no sense to me. You would buy a home that you could not pay for out of pocket. View it like this -- if they sold their current home for 900k, and purchased a 1 million dollar home, with a down payment of 900k and a mortgage of 100k. How is that any different than buying a 900k home with a 20% down payment?

[Anonymous]

Anonymous wrote:

It'll take us 10 years to save up $100k and life is too short.

Here's your problem. If you are making $130k/year, have no mortgage and no daycare expenses, you should be able to save up the 100k within a year or two. I'm on team husband. Your finances need some close examination and overhaul.

That is absurd. I mean you could save that much that fast, but you would surly be sacrificing your lifestyle.

[Anonymous]

That is absurd. I mean you could save that much that fast, but you would surly be sacrificing your lifestyle.

Of course they would be sacrificing their lifestyle. They spend every cent of $130k/year right now. They need to start sacrificing. If they saved 50k/year, that would still leave them 70k/year to spend. Considering two very large expenses for most people are not factors here, they should have NO trouble living on 70k. That's almost 6k/month! The OP also said the two cars they own are paid for. What on earth are they spending 10k/month on?