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I am about to have a major home repair bill of about $15-$17k, what is the best way to handle this?

1,947 650 March 23, 2020 at 07:18 AM
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Should I open a 0% interest (intro rate)credit card? or look into borrowing from the bank? I really don't know what to do!

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Let Sleeping Dogs Lie
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#2
well I would look at reward credit cards and then see if you can move to zero percent interest credit cards.
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#3
Is saving up for it and/or cash flowing it not an option?
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#4
The way things are right now I wouldn't be borrowing money for anything other than an emergency repair. Even in good times I'm going to try to avoid borrowing money for anything that I don't have the money saved for.
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I like what she said, not what it means.
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#5
you want to use it for the credit card rewards and if you can pay it off.
Not borrowing money leveraging credit card deals.
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#6
Quote from speas
:
Should I open a 0% interest (intro rate)credit card? or look into borrowing from the bank? I really don't know what to do!
If I had to spend $20k on something and they took CCards I would personally open up a few new CCards, all on the same day, that had high rewards when meeting the minimum spend.

I just as an example opened up an airline CCard that gave me something like 80k miles for spending $5k. That translates in to at least 3 R/T flights to Hawaii when we go. Something that I'd value at around $1k. Some other cards like the Chase Sapphire Preferred will give you $500 (at a minimum) worth of points for opening up a new CCard and meeting their minimum spend.

I would however only do this if I know I can pay off the CCards with savings or some other loan before the interest hits. Doing it and leaving the balance on the card will quickly cost you more than the benefit they give you. Another option is to do this and hope you could get a 0% card that you could do a balance transfer to. I don't know your credit situation so it's a bit of a gamble (would a CCard issuer want to issue you a new card at 0% interest if you have 15k and nearly 100% utilization on another? maybe, maybe not...). It's a risk, one you need to be willing to take or not and no one can make that call but you.

if you can't pay it off quickly you could look in to 0% cards at the beginning and use the card as your "loan" but be wary of when that 0% goes away and also what counts as 0% as some times it's only balance transfers, some times spend within a certain timeframe, some time it's with the checks they give you, etc.. It's not necessarily get a 0% card and charge everything on it and everything is at 0% so read the find print! Another thing to consider is whether you can get that big of a credit limit on a 0% card.

And like the others said I would personally be a bit wary of spending $ right now I don't have if I don't have to. It's one thing if your roof has massive leaks and has to be repaired but it's another if you need to resurface your pool if you know what I mean. Best of luck!

Many people may also poo poo this but if you have a 401k you can borrow against it for very little interest. It could be a way to get those reward CCards up front and then use that loan to pay them off netting you probably at least $1,500 in rewards (to double that) if you can get the right cards. There are some downsides like if you lose your job you have to pay it back relatively quickly (I don't recall the exact timeframe) so again this could be a risk you would need to be ok with, not to mention be ok with having some of your 401k funds out of action while they were being paid back.

Whatever you decide I wish you the best of luck and isn't home ownership wonderful Big Grin Me personally I've got a looming roof & window replacement and partial wood siding removal/replacement, with whole house painting, pool resurfacing, deck redo, and driveway demo and a new one put in bill coming my way. Ugh! Been like 20 years really since anything was done so not a huge surprise but damn if that bill isn't gonna sting!
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Last edited by LivninSC March 23, 2020 at 03:49 PM.
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#7
How is your current mortgage rate? You can always refinance and cashout some of it to take advantage of the low rates and lower your monthly payment as a bonus. Just depends on if you plan on staying there as your forever home. We don't plan to be where we are for more 5 more years or so (and have only been here 3 years). So it made sense for us to refi to get some funds for renovations. Dropped out monthly payment down $140 and got $10k out for the renovations. We didn't care about resetting the 30 year timer.
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#8
What kind of repair is it?
1) does it need to be done right now, as in is there a safety or structural integrity issue
2) if you can get 0% APR then try to do that provided you can pay the debt off before any kind of interest kicks in
3) if you can get some sort of bonus along with that, more power to you (e.g. CC signup)
4) another option is HELOC/refi - refi might hit 2 birds with the same stone if your current rate is high

As for me I like to cash flow home projects; biggest one I've done is a basement finish which was around $7k several years ago. I had an emergency septic repair I HAD to do in January to the tune of $4500, also cash flowed. I do have a looming driveway repair to do which will be about $12k, but it's a shared driveway so I'll only have to eat about 2/3 of that. Getting buy-in from the others (one of which just closed a few weeks ago, new owner) is probably the biggest issue even though I have the legal means to force them to do it. It's not absolutely critical but the driveway is crumbling and needs to be fixed.
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#9
Quote from LivninSC
:
If I had to spend $20k on something and they took CCards I would personally open up a few new CCards, all on the same day, that had high rewards when meeting the minimum spend.

I just as an example opened up an airline CCard that gave me something like 80k miles for spending $5k. That translates in to at least 3 R/T flights to Hawaii when we go. Something that I'd value at around $1k. Some other cards like the Chase Sapphire Preferred will give you $500 (at a minimum) worth of points for opening up a new CCard and meeting their minimum spend.

I would however only do this if I know I can pay off the CCards with savings or some other loan before the interest hits. Doing it and leaving the balance on the card will quickly cost you more than the benefit they give you. Another option is to do this and hope you could get a 0% card that you could do a balance transfer to. I don't know your credit situation so it's a bit of a gamble (would a CCard issuer want to issue you a new card at 0% interest if you have 15k and nearly 100% utilization on another? maybe, maybe not...). It's a risk, one you need to be willing to take or not and no one can make that call but you.

if you can't pay it off quickly you could look in to 0% cards at the beginning and use the card as your "loan" but be wary of when that 0% goes away and also what counts as 0% as some times it's only balance transfers, some times spend within a certain timeframe, some time it's with the checks they give you, etc.. It's not necessarily get a 0% card and charge everything on it and everything is at 0% so read the find print! Another thing to consider is whether you can get that big of a credit limit on a 0% card.

And like the others said I would personally be a bit wary of spending $ right now I don't have if I don't have to. It's one thing if your roof has massive leaks and has to be repaired but it's another if you need to resurface your pool if you know what I mean. Best of luck!

Many people may also poo poo this but if you have a 401k you can borrow against it for very little interest. It could be a way to get those reward CCards up front and then use that loan to pay them off netting you probably at least $1,500 in rewards (to double that) if you can get the right cards. There are some downsides like if you lose your job you have to pay it back relatively quickly (I don't recall the exact timeframe) so again this could be a risk you would need to be ok with, not to mention be ok with having some of your 401k funds out of action while they were being paid back.

Whatever you decide I wish you the best of luck and isn't home ownership wonderful Big Grin Me personally I've got a looming roof & window replacement and partial wood siding removal/replacement, with whole house painting, pool resurfacing, deck redo, and driveway demo and a new one put in bill coming my way. Ugh! Been like 20 years really since anything was done so not a huge surprise but damn if that bill isn't gonna sting!
Great post
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