I Did Another Thing!

TDBankDKBoard

Remember about a month ago when I did a Thing and that Thing was presenting on the topic of DIY at the New England Home Show? Well I did it again, this time down on Long Island, and this time outdoors, and this time they had me cut my presentation down a little and answer more questions about renovation stuff.

TDBankVan

Here’s what the Thing is: TD Bank has teamed up with HGTV Magazine to go around the country on what they call the TD Bank Rolling Renovation. This flashy car photographed above is driven by a couple of very nice men who evidently never sleep, because essentially everyday they have to set this whole thing up, work an event, pack it all up, and drive to some other faraway place to do it all over again. I’m very fascinated by these very nice men, because I have to imagine that they’re surviving on a diet of Red Bull and more Red Bull but they still manage to be so nice.

At a lot of the stops, HGTV and TD Bank have lined up people to give presentations and Q&A sessions. Sometimes it’s a blogger. Sometimes it’s that hunky blonde guy from DIY Network. Sometimes it’s a hunky blogger, who is me.

TDBankiPads

The point of the Thing is to help spread the good word about TD Bank’s Home Equity Lines of Credit. It’s all very civil and not-gross—there are people there to give information and answer questions, a sweepstakes you can enter, small prizes to win, and games to play on those iPads. They don’t take personal information so they can’t bombard you with junk mail later and the point is not to get anyone to sign up for anything right then and there, even if they want to—nary an application or anything like that in sight. It’s more like, “here’s this interesting way that you can finance stuff, and we offer a pretty sweet deal, and also here’s an iPad with games and a blogger to talk to!” Nothing wrong with getting some information and a free tape measure, am I right? I like information. The Thing is not a bad way to spend a little time on a sunny Sunday afternoon on Long Island. Especially when you arrive an hour early and have unexpected time to go to the adjacent mall to buy pants.

Not that I know anything about that, because I am a professional who brings my own pants.

Even though all I was hired to do was give a couple of presentations and answer questions about renovating—how to choose a contractor, what to tackle yourself, what to do first, how to avoid buying a money-draining nightmare of a property (thank you for teaching me so much, Olivebridge Cottage), that kind of thing—hanging around the TD Bank Rolling Renovation set-up was actually pretty informative for me in terms of thinking about how to finance all this stuff. If you need a wall covered in subway tile, I’m pretty good for that kind of thing, but I’m basically a toddler when it comes to understanding semi-complicated things with money. In general, it’s like this:

  1. I get paid.
  2. I pay for stuff.
  3. I put some money away for later to pay for other stuff.
  4. I charge stuff for which I don’t have enough money to pay but still need.

That is my financial planning. It is not the most advanced.

But what I do have is a house, and because the initial purchase price was very low and I took out a proportionately small loan to pay for it, I actually don’t owe that much money on my house. But I have poured a lot of cash money and time and hard work into my house, and it’s worth a lot more than I bought it for, which I guess means I have a lot of this thing they call equity, which I literally had to google a few years ago because I had no idea what it actually meant. Thing is, it’s been almost three years and I still have a lot of work to do on this sucker, and honestly? Some of it I just want to be DONE. You know I’m all about that crazy renovation lifestyle, but what I might be more about is having a renovated bathroom or a bedroom without crumbling walls or even something crazy like a guest bedroom I don’t have to apologize for. I’m not saying, like, finish the whole house in four weeks, but having someone hand me a big ole’ check that I get to repay over time, in exchange for some of this invisible equity thing I have, at a pretty low interest rate, to knock a few major things off the list that will drastically improve my quality of life? It kinda sounds good?

People ask me a lot of questions about renovating old houses, many of which I now feel equipped to answer, but I’m pretty much useless when it comes to ones pertaining to financing and I’m probably doing all sorts of things wrong. Maybe this is not the kind of thing to be discussing on my blog, but I’m genuinely curious: is a home equity line of credit something you’ve done? How’d that go? Any other financing tips you care to share, for those of us that are not so financially savvy? Since I’m worthless as a resource on this topic, I’d love if the comments section on this post could be a better one!

This post is in partnership with TD Bank and HGTV Magazine! All text, photos, opinions, and confusion about grown-up things are my own. 

 


102 Comments

  1. We did this to pay for our kitchen. We bought our house about five years ago when both my husband and I made quite a bit less money. We make more now so can handle an additional monthly payment on top of the regular mortgage. We do most of the renovations ourselves, but we are slow and the idea of being without a kitchen for 6 months while we did it ourselves was not appealing. Neither was waiting the additional three to five years it would have taken to save for the expense, so we got a loan and are paying it off month-by-month, while getting to enjoy having a modern and more functional kitchen. Our rate wasn’t as good as I hoped it would be b/c of the bank’s perceived value of our house. It seemed like the basically just used Zillow to determine our home’s current value, instead of actually assessing it themselves. But in the end, we have a monthly payment that we are comfortable with and a shiny new kitchen, so I would call that a win. It’s probably also worth nothing that we live in a metropolitan area (Northern VA!) where home values are increasing steadily, especially homes with new kitchens. We keep on top of the local real estate market all the time as a way to ensure we aren’t “over-renovating” for the area.

    • I hear ya, Kate! I’ve always thought of my kitchen as a project that’s wayyyyyyyy in the future, but getting the cash in hand to just tackle it sooner (and maybe with the luxury of some hired help to avoid living without a kitchen for too long) is really appealing, especially knowing that other repairs and renovations (expected or not) will continue to take precedence for the foreseeable future. But not cooking on a 40 year old cheap electric stove, in exchange for some of my equity that isn’t really doing much for me right now anyway? I think I could live with that.

  2. Yup the home equity sounds good for releasing cash from your asset – but when you do that you reduce your asset value at the same time. Not a problem if you never ever expect to move house again, and if you don’t have family relying on your home as an asset after you’re gone – who cares if part of your house belongs to someone else when you die. But – if you do ever move – you’ll sell your house and immediately lose a chunk of the proceeds, because part of your house is no longer yours. This means you have less cash for your next purchase, and have to get a bigger mortgage. In the UK the bigger your mortgage the higher the interest rate – so a bigger loan costs you more per pound, not just more overall. On the up side – if getting your home finished more quickly releases you to be more creative, earn more money, and make up your asset value in another way e.g. stocks and bonds – then it may still be a great idea no matter whether you move again later or not. Personally, living in a home that’s part building site messes with my motivation and creativity significantly, so I usually try to get it done quickly, and perhaps reduce the ambitiousness of what that looks like to do so. So I can see why someone doing renovations might find home equity release very helpful indeed. It’s just important to be aware of what you’re trading for that.

    • I’m trying to understand this… I had the impression that a home equity loan was a loan using your equity as collateral, and that once you paid the loan back, your home was 100% yours again. Do they always get a portion of your sales proceeds, no matter whether the loan was paid back or not?

      • You are correct. Once you pay it down you are fine. The tricky thing is that people keep borrowing more and more towards their equity and in the end owing more than they might have when they first bought the house. The other danger is that now you are starting to pay off interest again rather than working on paying down your principal. Which is why the bank loves to give you a home equity loan ;).

    • Thanks for this, Catherine! I do understand all that, which is why I really am thinking about it…because I don’t intend to sell or move (or die, but I guess it would be weird if I did…) in the near future, so knowing that I have a good amount of equity in my house and that I own most of it is great, but it’s not actually doing anything for me in the here and now, ya know? You’re also bringing up something I wasn’t even thinking about, which is putting what little money I do have that would otherwise ALL be going toward renovations toward something else that would potentially have a higher return…like investing it in my business, or just having a little more breathing room to be creative in my approach to what I’m currently doing. Lots to think about!

  3. Absolutely! As a realtor and an owner of a construction company with my husband, we have found lines of credit invaluable and have also remortgaged after improvements. We don’t go crazy and manage money well and if you have good money sense, it is wonderful to have the option. Unlike the UK, the higher the mortgage does not equate to a higher rate (often the opposite is true) and as for giving up some of that equity for the future, you are actually trading it for living well NOW, which must have value too (emotionally and spiritually). Of course, your home and your income will probably not stop rising in value as well so don’t worry too much about future purchasing power.
    I am so fed-up with not having the final part of our renovation done that we will be accessing our line of credit this year to complete it. Living in a beautiful space is priceless (for everything else, there’s Mastercard!)

    • Ha! I’m thinking exactly along those lines…like, I can trade some equity to make my life better sooner, and that is a valuable thing that is hard to put a price tag on. Living in renovation for 3 straight years (five, if you count my apartment which I was still actively working on up until and after the house purchase) is wearing—I wouldn’t mind speeding up the process with a little extra cash.

    • I like this logic: actually enjoying living in your house is also ‘equity’ of sorts.

  4. Oh yeah, we used a home equity line of credit (heloc) + ARM to help finance our loft (which normally is a crazy and irresponsible thing to do, but that’s the only way most folks can crack the San Francisco housing market + interest rates were horrible for so long the ARM ended up being awesome. + tax deductions for the win). We paid off the heloc fairly quickly and originally intended to use the line of credit to have cash available make home improvements – of course, this was right before the great financial collapse of ’08ish, so the bank took that all away. As Catherine said, proceed with caution and your eyes wide open – I find them handy but oh-so-nerve-wracking in that way that debt hanging over your head can be. I’m so glad you brought this up – I didn’t know what any of this was, either, until we actually used one.

    • For sure! Debt sucks, but obviously avoiding it is a luxury that a lot of us just don’t have…I’ve done literally NO shopping around but the advisor at this event really made it sound like these loans specifically were better (as in, more favorable to the homeowner) than a standard HELOC, which makes me want to look into it further. All of this was reluctantly explained to me because I was hired to speak at this thing and I’m sure they didn’t think I *seriously* wanted to know about the loans (which was totallllly not what I was hired to discuss), but even when they thought I was wasting their time it still sounded like a pretty good set-up.

      • Ha – their marketing roadshow messaging is so on point! Must be the power of the reno-financingmobile.

        I’ve been toying with the idea of the heloc for awhile after 6 years of the same. My financial advisor said it was a no brainer with the rates where they are and the pricing trends in NYC. If your local housing market is appreciating at an equivalent or faster rate than that of the heloc I think it’s an investment.

        If it’s not, I would probably draw up a budget for all the stuff I wanted to do, prioritize my top projects and take out a line of credit based only on those project budgets under the assumption I would be able to pay it off in a set number of months. Then give it a trial run. :)

        I’d also make sure that there are no early payment penalties too! Feel like there could be lots of sketchy heloc deals.

  5. Bravo to you. At this moment, with such low interest rates, people might not save so much by paying off their mortgages, but it’s generally good to be debt free. As for sinking lots of money into renovations, people should do it (1) because it will make them happy and give them joy every day and/or (2) because certain things need to be fixed, especially as homes get older. They should NOT do it for resale value. Resale value is a nice cherry on top, a lucky byproduct. Unless you’re a professional flipper, it’s the wrong reason to reno.

    • I agree! I mean, I TOTALLY understand the practical side of renovating for resale, but I think it often ends up being a trap where people don’t actually get what they want because they’re too concerned about what will appeal to an imaginary buyer. It’s something I’ve dealt with with a few clients over the years—my opinion is pretty biased because as someone designing the space, I want it to be the BEST it can be, not what joe-schmo thinks he wants after watching too many episodes of House Hunters. It’s sometimes shocking how even people with great taste will water it down SO MUCH just because they think it won’t sell down the road.

  6. Oh Daniel, “I am a professional who brings my own pants” made me laugh out loud, all by myself in the dining room.

  7. A home equity loan USED to be called a second mortgage. We have used them in the past, when the kids were very little, and I was only working part time. We used it for home repairs and renos, as well as to consolidate some credit card debt. If you are able to itemize deductions on your federal taxes, home equity loan interest is deductible, just like mortgage interest.

    I also agree that it’s a practical way to do renovations NOW, making everyday life much more enjoyable.

  8. The general rule is to only put your home equity loan money back into your house. As in, use a HELOC to pay for a new roof, repair the bathroom, upgrade the electric. Do not use your HELOC to pay off your credit cards, consolidate student loans, buy a car, etc.
    Unlike what the above poster from the UK said, in the US t’s not just getting equity out of your house, it’s a LOAN which has an interest rate and must be paid back.

    • Yes, for sure! Technically, it was explained to me that basically the only thing you can’t spend a HELOC on is starting a small business, so it actually *can* be used to do pretty much whatever, but THAT is what seems like dangerous territory to me. I know of a house where I presume this was the case, because the bank is owed $180,000 on a house that’s worth MAYBE $40,000 due to the poor condition, and I don’t understand how anyone really wins there.

  9. you only post now when paid to do so? i can’t tell you how sad this makes me.

    • And you pay nothing for your reading pleasure?

    • I think that’s a *bit* of an overstatement (my last post wasn’t sponsored, nor the one before that, and my time to blog has been EXTREMELY limited these days…so yeah, when I’m contractually obligated to put up a post, that has to take precedence)…but I’m sorry to have made you so sad. I want to be clear, though, that reading or not reading any post on this blog (or others! the whole internet!) is your own prerogative, and as (I presume) an adult human person, you are also in control of how you react. Trying to shame me for taking a much-needed paycheck because I had the nerve to present you with the option to read a post that I guess you didn’t like? Also your prerogative, but I think your energy could most definitely be put to better use. I’m in the midst of wrapping up some pretty major projects which, yes, I will blog about and will be available for you to read with no obligation for the low low cost of your internet connection, so….sorry. But I gotta do my job, blog as my time allows, and pay my bills.

      (btw, it’s OK to just pick one name, stick with it, and own your words whether you’re saying something flattering or not! Jeanette was very kind when she called something I did “truly inspiring” three months ago, Amey has a lot of mixed emotions, and I don’t know Purejuice very well but I’ll give him/her the benefit of the doubt.)

      • Daniel, it’s sad that you have to defend your blog. When you made the decision to sell ad space on the blog and do sponsored posts, you were very up front with your readers. Your writing quality, in my opinion, is the same regardless of whether a post is sponsored. Content-wise, maybe 1 post a year is relevant to my life – but I read regularly because I love your writing style and find your commitment to your work inspirational. With that, I want to say thank you for taking the time to keep this blog going! (And if you want to do more of those Instagram posts like you did when you refinished that chest, I love those too! Maybe there are useful sponsors interested in that type of following and influencers?)

      • Daniel, I’ve been reading your blog since the Manhattan apartment days (I think the first post I read was that DIY desk? Anyway…) and I just wanted to say that I feel lucky to follow along with your renovations and adventures, however much you choose to share. A lot of the projects in my own home (ductwork! cabinets! bathtub installation!) happened because your can-do positivity and perseverance inspired me.

        All that is to say, post on your own schedule and I’ll just be thrilled every time there’s a new post. Thanks for being such a bright spot on the internet.

      • I cannot stand when people complain about sponsored posts. Am I dying to hear more about Olivebridge Cottage and your other projects? You betcha! But I totally support you doing whatever you have to do to be successful. And I am pretty jealous of the people who get to hear you talk in person. Kudos to you for being recognized by HGTV!

      • This may be the best response to one of *those* posts I’ve ever seen. You write plenty of in-depth stuff on topics most of my blog-buddies aren’t even taking on.

        Don’t like it, don’t read it. Or, you know, sue the blogger for the breach of contract they clearly commited by not writing the post *you* wanted for *free.*

      • I would pay to read your blog. For realsies.

      • There is probably nothing more boring to me than financial loans but here I am a bit more educated than I was earlier AND reading what your other readers have to say about it!
        Why? Cos you write good ;)
        Keep doing your thing Daniel because we LOVE you.
        P.S. posting to complain about sponsored posts is such a cliché YAWN

  10. Will regular posts ever come back? Sad.

    • Trust me, me too! I’m trying here, really I am. Even posts like this take a long time to put together, and being in the midst of a few really big projects at once just doesn’t leave that much time for me to sit down with an internet connection and put them together with the regularity that I’d like. All I can do is my best. The load should be lightening a bit soon, which will free up some time to give this blog more attention. I promise nobody is more grumpy about infrequent postings than me!

      • I wonder if people truly realise how much work goes into putting together a blog post, especially posts as detailed and well crafted as yours – TONS of hours!! Hours you don’t have for free to pamper us with your missives. As I and others have said before – we would PAY to read your blog -seriously.

  11. Honestly, home equity lines scare the you-know-what out of me. At the end of the day, your home equity is paper money until the moment you sell your home. So if you spend it, like you would by using a home equity line to finance a renovation, be prepared to not get it back.

    We were buying and selling homes, out of necessity, between 2007 and 2009. If we had spent our home equity, even to make improvements, we could have very easily ended up underwater and possibly had to declare bankruptcy. I guess to a huge portion of the population this is not a big deal?.?.? I think it is, though.

    How solid is the market in Kingston? Is the trend new? What is your home worth now v. what it would have been worth at the bottom of the market? How steady is your income? All things to have a firm grasp on before you go down that path.

    • Oh, I think bankruptcy is a huge deal! I don’t even totally understand how it works and I know it’s a huge deal! I’m pretty old-fashioned when it comes to money…I try to only buy things when I can pay with the cash I have on hand, and otherwise I wait when I can. Then again, a few years ago I had to make the decision to have my roof replaced for far more money than I anticipated spending (based upon written estimates, not just homeowner stupidity of thinking it would be cheap) or lose my homeowner’s insurance and potentially some of the structural integrity of my home due to the leaks, and I was given the option to charge the whole thing to a credit card with a limit I never would have qualified for had the company doing the work not done some weird voodoo magic that I didn’t ask questions about to allow it to cover the entire job, or come up with the cash, or some combination. I charged the whole thing, and I’m still paying it off, and I’m totally aware that a healthy portion of that money is going toward interest I wouldn’t be paying if I could have just paid for it all from the get-go. But you know what? I have a roof that doesn’t leak, a homeowner’s insurance company that isn’t threatening to cancel my policy (which would have been awful, because I have a house under renovation and a pit bull—NOT a good combo when trying to secure insurance!) AND I had money leftover that was supposed to be spent on the roof to make some other improvements that were also much-needed. So…I don’t know. I know what debt looks and feels like (shitty!) but I also can see the appeal of getting to enjoy my house more and sooner than I’d be able to otherwise. I just think it’s an option worth exploring, at least for me.

      • In your particular case, would a home equity loan make sense to pay off your credit card debt from fixing the roof? I don’t know about you, but even with my great credit rating, the interest rates on my credit cards SUCK. My interest rate after I refinanced my mortgage, though, is fantastic.

      • Lori, I honestly don’t know! Probably, actually. I believe the interest rate for the remaining balance of the roof is 5.99% which isn’t so bad, but a small part of the balance (which was other stuff, not the roof…this is a Lowe’s credit card) is like 24.99% which is a helllllllll of a lot of interest and the part that I need to pay down ASAP. Thank you for bringing this up!

      • Wait… your insurance company cares about what dog you have?

        I must say I’m quite puzzled by American insurance, it seems somewhat… predatory? I’ve read accounts on other blogs from people having insurance cancelled for claiming twice. Isn’t that what insurance is FOR? I mean I claimed for a (minor) car accident and later hijacking of the same car on the same day (bizarre but totally unrelated – still must have seemed weird to the insurance company though) and not only did they pay out without a peep they also offered me the best deal when I insured my replacement car.

      • Alexis—Yes! American insurance is an absolute NIGHTMARE! Nearly all major insurance companies immediately disqualify applicants for homeowner’s insurance who own “bully breeds”…there’s a list of about 10 dog breeds that includes German Shepherds, Dobermans, Rottweilers, and Pit Bulls. It doesn’t matter if you have the most mild-mannered, friendly dog in the world with no bite history. It also doesn’t matter if you have a lunatic aggressive shitzu who bites anyone who comes close, because that’s a-OK. It’s based COMPLETELY on prejudice, not on actual empirical date (which I believe shows that Poodles bite more people per capita than Pit Bulls…but Poodles are, of course, not on the list!), and it is appalling. There are actually laws in place in many municipalities in the states that ban pit bull ownership altogether, which is just so unbelievably fucked up that I don’t even have words for it. If we didn’t have so many other enormous problems as a country, I guess people might care, but we do so these policies persist and expand regardless of reason or logic.

        And yeah, auto insurance is also a racket. We don’t have no-fault insurance here, so aside from the legal requirement to carry basic liability insurance, you kinda do really need it to protect yourself from losing EVERYTHING because of a split-second accident. If you’ve opted to carry collision coverage as well, chances are that you have a $1,000 deductible at least, so if you file a claim you have to pay that out of pocket, hope that the insurance company doesn’t increase your rates for filing a claim or cancel your policy altogether (which makes it REALLY hard and more costly to get a new policy elsewhere) because you asked them to perform the service you’ve been paying them to do. It is horrendous. I’ve been driving around with a fucked up bumper for a year because after paying the deductible, the amount covered by the insurance company wouldn’t be enough to make risking increasing my premium or getting my policy canceled worth it. It’s a total mess.

      • Daniel –
        Here’s the answer to paying off your credit card sooner … really. Tried and true method. If you have a decent credit rating, and any income to speak of, you can apply for a credit card that has a zero percent balance transfer interest rate for a year or slightly more. Then you transfer the balance from your current card to that card, and all your payments go to principal (because there is no interest) for that period. (You may, or may not, have to pay a 1-3% of the balance transferred as a fee for the privilege of transferring the balance – but you do the math, and that one-time fee is often way less than the interest you currently are accumulating in a short period of time.) When the zero interest months expire, you can often transfer the remaining balance to another card with a zero rate. (Maybe to your old card – they may be offering a zero interest rate to tempt you to transfer money back to them.) The one thing you need to make sure you do is pay that sucker on time, by the due date, every single month, or you can lose the zero rate early. If you are organized about paying all your bills on time, this is not hard. (If you are not, don’t do this.) It saves a ton of money, and gets stuff paid off faster. Banks are looking for you to do this. They want your balance, hoping you will someday be paying them interest. You can google for articles telling you which cards are good bets for these offers now.

  12. HI Daniel….I read Pants as Plants at first….sounded more like you..LOL
    Used a line of credit to do new roof, new windows and doors, new kitchen….using the equity to keep the house current just helps in the end when you sell it….the house looking after it’s self in a way.

  13. Debt is a trap. Steer clear of it whenever possible. A house in progress is a beautiful thing. Live with the incomplete; it’s much easier than giving your freedom to a bank. The housing market is going up now, but it will go down again and if you don’t time your buying and selling properly you can get caught, as many found out a few years ago. Don’t gamble with your homestead.

    • Debt is a trap up to a point. It depends whether or not it is used for a depreciating asset. A house in progress is a beautiful thing if it isn’t sapping your soul to live with the incomplete. It’s a balancing act. Is it worth the extra debt for the quality of life it provides? That is up to the individual to decide. In Daniel’s case it sounds like he is in a pretty good position, not owing much on his house. He has lived there for a number of years with the incomplete and he seems to have had enough of that. He is short of not only cash flow, but time. So for him it, it could be well worth it to incur a little more debt.

      • I hear ya both! And I think Pippa is explaining things well. Debt sucks, plain and simple. I’d love to live debt-free. But that isn’t possible for me, right now at least. I’m 26, I live alone on a single freelance income, and I frequently work for too little just to keep up with it—oftentimes it feels like at the expense of being able to pursue potentially better things or dedicate the time to stuff (like this blog!) that I’m already doing. Saving is very difficult under these circumstances, and it pretty much entirely goes to the house. So I’m thinking about it! Temporarily trading a portion of my biggest asset for the freedom to live a little more comfortably is perhaps not such a horrible thing.

  14. we were in a similar situation to you. We bought a foreclosed (and in need of a lot of elbow grease and TLC) bungalow off an auctiion and got a conventional 30 year mortgage. Six years later, we had enough equity to roll everything into a conventional loan, instead of a mortgage. We called around, asked the interest and pyments for 10 years, 15 years, and 20 years. We wnded up taking out a loan for 15 years and adding an extra $20,000 to finish up all the stuff that still needed to be taken care of. We got a much lower interest rate AND saved paying that interest for those years we chopped off. We ended up with a payment that was higher by $200 a month.

    Things to check: That your current loan does not have a penalty for early pay off of the loan. That you have the finances to handle paying taxes and insurance yourself– these are typically paid out of the escrow in a. conventional mortgage. That you are talking to reputable loan companies – there are lots of rip off companies out there. We ended up going through a bank, but we still documented everything., and triple checked they paid off the first loan. Finally, You can also get another conventional mortgage – but you will get better interest rates if you have the equity to get a straight loan.

    Most of all – don’t rush it. It took us three months to compare, shop around, and come to a decision.

    • Thank you for this comment, CC! I’m definitely not applying for any loan blind or hastily…it’s honestly something I’ve just started considering seriously and will certainly explore lots of options to see what’s the best fit (if anything). Wise words!

      • Yeah, we bought a drug house at auction and made the rather questionable decision to live in it while renovating! Some of your posts bring back some memories that are funny now, but not quite so funny when we were slogging through repairs. I also totally get what you mean about getting to a point where you just want to make the place livable, and not have to have The List of Never Ending Projects hanging over your head.

        We originally assumed we would have to stack an equity loan on top of the original mortgage to pay for last of the repairs. Then we started shopping around and realized that the equity we had from doing the renovations gave us the leverage to roll the mortgage plus an extra $20,000 into a new loan. By taking out a 15 year loan, we wound up being able to pay off the house by the time we hit our mid-40s. (We paid on the original mortgage for 6 years, paid 11 years on the second loan and then paid off the rest of the balance) It sounds like you may be in the same situation we were in, where you have enough equity to be able to leverage a much better loan than what is typically offered.

      • Cc makes an excellent point. Before you go down the HELOC route, shop around to see if you could refinance and take out a slightly larger first mortgage to untap some of your equity. The advantages I see are: 1) potentially lower interest rate and the ability to lock in a rate now when rates are historically low– HELOCs usually have variable interest rates; 2) set monthly payments that partially repay principal- our HELOC has monthly minimum payments that just cover interest- you could pay for years and not make a dent in the principal and have a big sum due at maturity; and 3) no ability to take out additional advances as things pop up (or as Reno dreams start to get out of hand). I’m not saying this would unquestionably be the right route for you, but I think it’s easy for someone with variable income and your boundless (and admirable) optimism to get into trouble with access to a revolving credit line.

      • Seconding the first part of what Kate said. I’d consider taking a new fist mortgage for considerably more if my equity had gone up a lot, if my rate was going to be lower or the same as on the mortgage I currently had, and I had the income to may the payments on a somewhat higher mortgage. It spreads the cost out over 30 years (nothing says you can’t pay it sooner – on most conventional residential loans there isn’t a prepayment penalty, or you can almost always find a residential mortgage with no prepayment penalty), at today’s low rates, and you can take a larger chunk of money and use it over time for renovations (and pay off other debts if you want), and deduct the mortgage interest. I wouldn’t do this past 75-80% or so of the home’s current value, or in a place where prices could dip A LOT (there are places where prices barely dipped in the past decade, but these are popular urban big-city neighborhoods, not Kingston necessarily), unless I knew I could rent out the house for enough to pay the mortgage and expenses on it if I just sometime decided to move away for any of a variety of reasons I couldn’t foresee now (sometimes life surprises you), just so I wouldn’t ever have to sell for less than it would take to pay off the mortgage and cover my selling expenses. (The part I don’t agree with Kate on is the part about your getting into trouble with a revolving credit line – you sound more cautious than that. I think revolving credit lines are fine, but I’d rather they be the unsecured credit card type, rather than secured by my home.)

  15. Yeah, but being as debt-free as possible has a lot going for it. If you’re paying for everything out of pocket, you tend to spend less and live within your means. When you have a big fat chunk of money in the bank, you (one) tends to spend more. You’re over there keeping all your old timber, scavenging bits and bobs, and paying as you go. Imagine — you could probably be totally debt-free by 40, 45 years old if you just work slowly on a cash basis and keep plugging away at your mortgage. And that means you can do whatever you want for work, as you aren’t beholden to debt you must pay. I’m pushing 50 and have a bunch of debt that came largely from doing splashy stuff with home equity and credit and I wish I could do a take back!

    • See, I feel like a lot of that is particular to the individual, though…right? I mean, I keep all my old timber and scavenge bits and bobs because it feels like the right thing to do…it saves me money, yes, but it also keeps still-useful and sometimes beautiful materials out of landfills that are farrrrr more saturated with stuff than they need to be, including other useful and beautiful things. I honestly can’t picture drastically changing my approach to living and my beliefs because I have more money in my bank account! One thing that I’m VERY good at financially is dividing money for various uses…I have multiple checking accounts for this purpose, including one dedicated exclusively to the house! And I KNOW how expensive renovations are, and I’m always trying to stretch a dollar, whether that’s for my own house where I’m typically working on a maximum budget of under 10K or a client project where the budget is over 200K. It doesn’t matter! The same principles of frugality, reuse where possible, and minimizing waste apply across the board. So even if my “house fund” got a 20K boost overnight, I only really see it as a means to accomplish things I’d be doing anyway, but able to do them a bit sooner. It’s a complicated thing, but I don’t think debt is necessarily so awful depending on the circumstances!

  16. I forgive you for partnering with a bank an not a credit union- a nonprofit!

    • Well, I actually partnered with HGTV Magazine, who I guess partnered with the bank, if you want to get all particular about it! I’m honestly not sure why HGTV Magazine is a part of this at all, but that’s who my contract is with (Hearst) and where my paycheck came from, so I have absolutely zero allegiance to TD Bank! This is just an interesting topic for me because I know so little about it—I’d love to know more about credit unions and what they offer, too! Feel free to chime in! :)

      • I LOVE credit unions. I’ve had nothing but great experiences with credit unions and shitty experiences with banks (looking at YOU, Bank of America!) The bottom line is that banks are for profit companies and that profit goes to shareholders. Credit unions, on the other hand, are the friendly hippies who live in that cool old Craftsman down the street and invest your money and then pay it forward by giving you higher savings rates & lower loan rates. I LOVE my credit union. Don’t even get me started. I normally don’t wax rhaphsodic about customer service, but the people who work there really give a shit, seem to love their jobs, treat you like a human being, and are super on the ball any time you have a question or problem. I have NEVER had that kind of experience at a bank. Sadly, since my credit union is Texas local, I can’t recommend them to you, but seriously, check out your local credit unions. They have much less of a chance of being evil than your big chain banks.

      • Good to know! I have actually never worked with a credit union and actually didn’t know the distinction between them and banks. I’m dumb! We have some good ones up here that I know of, so I’ll definitely look into it.

      • I’m a big fan of credit unions, and was happy when I could join one. But part of why they are stable is they don’t make risky loans. If you aren’t the most stable of risk to them, you won’t get a loan – and as banks take more risks, often you can get a loan from a bank when you can’t get one from your credit union.

      • Lori summoned it up perfectly!

        I work in marketing at a credit union and today sums up my job pretty well- I spent the morning at the high school on the Indian reservation talking to kids about financial responsibility, in the afternoon it was approving a t-shirt by our in house graphic designer for our staff to wear in a parade we are sponsoring, the afternoon was spent patting ourselves on the back for a successful baby food drive for our local food bank. We are the largest mortgage lender in our county and largest account holder overall- so we must be doing something right!
        …but I live in a Victorian and not a craftsman, and am more preppy, less hippie :)

  17. Daniel, I am thrilled any time you post and I consider it a gift. I always laugh or have warm feelings for what you say – intelligent, insightful, interesting, hilarious…that’s a win, win, win, win in my book. Linus and Meko — are you kidding!? LOVE. As to the debt vs living for TODAY question: go for today, every time, within reason. You’ve got a great head on your shoulders and won’t get carried away. Life runs away FAST – I say grab your joy as soon as you can! And don’t change one dang thing on your blog.

    Liz Van Buren in Oregon

  18. I’ve found it best, as a small business owner, to work with an accountant. Ours is like us: running his own small business. He has helped us decide on write offs and depreciation, on strategic planning for short and long term, on how to use cash versus loan, on options that self employed people have to maximize dollars.

    And read Mr. Money Moustache blog. He has the same philosophy that we have, all wrapped up in a blog. Debt free is the way to be.

    • Yes! I DESPERATELY need an accountant. I feel like I’ve been flying by the seat of my pants financially, which is kind of scary as a self-employed small business owner because I don’t know how to do anything. I will definitely check out that blog, too!

  19. I liked this post – I don’t care if it’s sponsored or not. It’s really interesting and nice to talk about something that can be confusing (and potentially a bit taboo). We just bought a house in Charlotte, and are going to use a home renovation loan to fix it up. We are also putting a lot of our cash into it (we sold a house and made over $100k on it… yep), but the renovation loan will get us an additional bathroom and bedroom, which is vital for our overall happiness in the home and for resale… contrary to an earlier poster, I think you should absolutely think about resale with your home. Anyway, the renovation loan get us more loan-to-value (like 95% of the appraised value we can get), and it then becomes part of our mortgage – so it’s not an additional, separate loan. Essentially, we’re putting around $50-60k into new hvac, electric, siding/insulation, new floors and opening a wall, as well as a new kitchen (that will come from lowes with our lowes credit card, but we’ll pay it back over 18 months), and then the renovation loan will get us a laundry room/office (3rd bedroom addition), and a master bathroom. All of which are for resale, and our own enjoyment of the home. Home values in Charlotte are insane and I think will continue to rise, especially in the neighborhood we are in. So for us it was a better option than a HELOC loan, and we obviously don’t have any equity in the house yet. Anyway – another option that is very helpful. My husband is very handy (I am not) and builds furniture on the side, so he’ll probably install our kitchen cabinets and tile, but otherwise we’re hiring a contractor and architect for the rest.

    • Thanks, Emily! The folks at HGTV Mag loosely wanted a recap of the event…I’ve never been asked to talk about loans or lines of credit at all, but this seemed like a good opportunity to open up that conversation a little bit! Talking about money is kind of uncomfortable and awkward, but one of the biggest stressors when renovating is the MONEY and I feel like that usually gets totally glossed over. Bloggers don’t want to discuss it because it’s private, TV wants to make you think that you can budget everything out JUST SO from the beginning (to the point that a show like “Fixer Upper” literally presents homeowners with options for what to do with the “additional $4,000” or whatever in their budget, because there’s just no way they’ll spend it on anything unexpected before they can build that nice pergola add-on!), and I think the result is that people feel shame and confusion when their lives don’t work out that way and they need to look into the options that are being mentioned above! ANYWAY…sounds like you’re doing all the right stuff and your insight is really valuable, thank you! Best of luck with your new house!!

  20. My two cents:
    If you decide to get a loan, get a Home Equity Line of Credit (HELOC), *not* a Home Equity Loan. With a HELOC you only draw the funds that you need, on the day(s) you need it, and you pay that off as you can, and you are only charged interest on the exact amount you have withdrawn. You can always initially apply for a larger amount than you actually need, but only take out smaller amounts; then you pay it down (and off) without an additional charge. With a HEL, you take out a set amount, and pay interest on the entirety from day one – whether you’re using the money or not, and there’s typically a pay-off charge to boot.

    If you have those “ACK!” expenses such as a roof repair, or a plumbing fiasco – something that *must* be addressed and is time sensitive – a HELOC is far better than a credit card as your interest rate is substantially lower. And yes, you also get to deduct any HELOC interest you pay on your taxes – obviously you’re not saving money by making an interest payment in the first place, but it’s potentially hundreds or thousands of dollars cheaper at the end of the year than using a credit card.

    In my opinion it’s best used for those major issues that must be addressed and are time sensitive. People get into trouble when they start pulling lots of money out of their house for the “frou-frou” type things like wanting a hot tub. In my experience, it’s beneficial to to apply for one for more money than you anticipate you need (because you will have a one time fee for applying for the loan), and then treat it with kid gloves – it’s not “free money” but it’s a great tool to have if and when you need it. Then just pay it off as fast as you can, but leave the line of credit “open” in case you ever need it in the future.

    (And yes, this is coming from someone who likes to pay cash for everything. I don’t have a car loan, I paid off my mortgage as fast as I could. It is absolutely possible to use a HELOC responsibly!)

    • I just wanted to chime in and say thanks for breaking this down! I was wondering exactly what the differences were, and like you, I really try to focus on staying as debt free as possible and really hate the idea of a home equity loan, especially living in an extremely volatile housing market. I know I’m going to need to address some structural issues within the next few years, so this is super good to know!

    • K! OMG TEACH ME EVERYTHING! I didn’t even realize a HELOC was different than a loan, but your explanation makes totallll sense. Thank you!!! HELOC sounds like a really good fit for me. This is hugely helpful!

  21. Oh, P.S.: Your mantel is just SO excellent compared to the others. I am voting every day and hope other readers are too! You deserve that prize.
    xo

  22. So we have a HELOC that does not exceed the value of our home and is liquid. We rolled another home equity loan from an energy retrofit into a HELOC at a lower APR from our credit union. Here’s what I love about it: it allowed us to do things that save us money every year such as INSULATE our super drafty 1920’s bungalow and get a 98% efficiency furnace that makes our gas bill $60 a month in the coldest two months and about $10-$25 the rest of the year (granted we live in Portland, OR). Also it allowed us to finish the renovations in our home in three years, we did a lot ourselves but we were able to hire professional painters to strip the lead paint from the outside, etc. Also, as the HELOC is liquid we have used it to pay off unexpected things like my husband’s surprise appendectomy, at a lower interest rate than our credit cards, and the cherry on the financial sundae, the interest paid is tax deductible. Mic drop.

    • Dammmmnnnnnnn…can I just fly you out here for a week so you can restructure all my money? I can offer food, booze, and dog cuddles.

      • That’s so weird, dog snuggles are the only forms of payment I take for anything!

  23. Money-money-monayyy!

    I once worked for a bank calling people to remind them to pay their loans when they fell into arrears. It was the worst job in the world and banks are terrible.

    That’s all I have to add to this conversation because I have still yet to ever purchase a home amd probably never will, just like most of us common folks living in New York City so it’s all moot to me.

  24. THANK YOU, thank you, thank you for this post!!!
    Having recently purchased our first home, that needs a lot of love; this is stuff we’ve been thinking about. The comments have been REALLY helpful, so thank you commenters as well.
    xxoo

  25. I’m not at all your target audience (if you have one!), being a vibrant middle aged woman. However I have been enjoying your blog since you lived in the original NYC apartment, I think even before you met your ex. Always look forward to your posts, they are interesting, informative and entertaining.

    We’ve been homeowners for 30 years and did the save-till-you-can-pay-it-all thing with home repairs and renovations. I’m writing to share this: we prioritized other things and didn’t update our original 1950 kitchen for 25 YEARS. I raised a family, worked and cooked every night in a really crappy, worn out badly laid out galley kitchen with no dishwasher. And….once the kitchen was finished I realized how much it would have added to my quality of life to have had a decent, well laid out place to use EVERY SINGLE DAY. It was really a mistake, looking back, not to have done it so much sooner.

    So as long as you aren’t doing stupid things like using your equity as a piggy bank to buy everything in sight it’s not a bad idea to educate yourself on the risks, then do what you need to do to make your life at home easier, more useful and more pleasant. Again, your home is the place you need to feel safe, comfortable and happy EVERY SINGLE DAY. Don’t be afraid to explore ways to do that you may not have considered.

    • Oh Ann, I’m pretty sure vibrant middle-aged women are my target market! And my favorite demographic. ;)

      Thank you so much for adding this perspective! I’ve been thinking about that kind of thing a lot…because I DO love my house, and I’d REALLY like to actually be living in and using more of it! Saving for everything can be a really slow process, and so there are a lot of spaces that actually don’t need very much at all to get them up and running, but I just don’t have it because that money has to go to some MAJOR stuff that needs to happen first. It’s only been three years (a little less, actually), but I worry that in seven more years it’ll be ten, and that’s an entire decade I’d be paying taxes, insurance, mortgage, etc. on areas of the house that I haven’t even been able to use or enjoy as actual rooms! The prospect of that is much more upsetting to me than the idea of taking on a manageable amount of debt.

      • “Oh Ann, I’m pretty sure vibrant middle-aged women are my target market! And my favorite demographic. ;)”

        Thank goodness! I knew I couldn’t be the only one!

      • Why not finance renovations faster if you can? I have friends who have espent decades renovating a wreck, but i know myself well enough to know that I would find the project wearing if I couldn’t get it done the first few years. I can imagine you are tired of it!
        .
        Realize that the same argument that you should renovate only by paying as you go could be applied to buying a home with a mortgage to begin with. I laugh at all these people who think debt is bad!, bad!, bad! – and yet they bought their homes by taking a mortgage!!! (They could have saved up and bought with cash, but they wanted to buy sooner.) Debt is not bad – it is the only reason I have a few degrees and did own a place for some years, and it is the only way most people buy a home.
        .
        For you, taking more mortgage debt would be like having bought a more renovated home with a bigger mortgage. You didn’t do that – whether because you were considering it a weekend house at the time, or because you couldn’t afford to borrow more then, or because the place wasn’t worth as much then, or all of the above. The only reason not to borrow to get your home done faster if you want to do that is if you don’t think you will be able to make the mortgage payments. Can you spend some time upping your business income in the next few years so you can then hire a bunch of renovation projects done for you? (I know, the problem with being self-employed is that you can have good years, and bad years. But those will regular jobs never know if the job might go away as well – we all go on blind faith things will work out.) Since you have large home, you could always rent out a room, or do an Air B&B thing to bring in some cash if need be – both easier with more renovation done – if you could stand doing that (I’m not sure I could.)
        .
        There’s also the option of working all the time, if you can get the work, and paying someone to do the renovations for you (perhaps by paying on a loan). There’s no shame in paying others to do things you can, and even like doing, yourself. Plenty of people can do their own house cleaning, their laundry, take care of their children all day long, change their car’s oil, do their own taxes, etc., etc., but pay other people to do these things for them instead because they want to use their time to work to earn more money, or maybe have a little free time when they aren’t working. Same goes for renovating projects. You can still blog about it, and you will always have projects you’ll do on your own.

    • Middle aged? Check
      Vibrant? Check
      Crappy sink? Check
      Are you my doppelganger??? All through reading this post (and comments) I have been thinking ‘hmmm that sink could be gone from my life forever…equity loan you say?’
      We bought this old house 20 years ago and it now belongs to us 100% but the kitchen – already ancient when we bought it – is TERRIBLE, especially the sink. My better half WONT get a loan, just WONT… but maybe if I showed him this article I won’t have to live with said sink for another 20 years?

  26. There’s nothing wrong with financing renovations so long as you do so responsibly, and despite popular sentiment banks are not all evil (nor, certainly, are all the people who work for banks – at least, I don’t think I’m evil). If you do decide to explore financing options, make sure you consider whether a home equity line of credit (or “HELOC”) or a home equity loan is better for you. A HELOC is generally better if you don’t know what your expenses will be and you need the option to draw on the line over time as needs arise. The trade off is that the interest rate will generally be variable – meaning it changes over time. We’re still near historically low rates right now, and rates are generally expected to (slowly) rise over the next few years. If you have a pretty certain budget and you know how much you need to borrow to accomplish your goals, a home equity loan may be a better option. You’d get one lump sum check rather than the ability to draw down the loan over time, but the upside is that the interest rate would be fixed, meaning it won’t go up as interest rates rise. A third option to consider would be a cash-out refinancing – it would refinance your existing mortgage and add on the principal of a loan for renovations (which you would get in one lump sum). This option is only worth exploring if you would currently qualify for a mortgage rate that is lower than your existing mortgage rate (but sit down with a mortgage broker or banker and make sure they explain to you how fees and other costs affect any perceived savings). Whatever you do, ask lots and lots of questions and, if you feel like you don’t understand the explanation, ask again or ask a different broker or banker. Finally, negotiate the interest rates offered to you. If bank A quotes you a lower rate than bank B, but you like the people at bank B better, ask them to match bank A’s quote.

  27. When my husband and I purchased our home, we realized it had a lot of hidden things that needed to be addressed. We took a second mortgage with a local small bank. Everything was fine until one of the big purchased the loan and the nightmare began. They changed the terms of the loan in a sneaky way. We have been hammering away at that second mortgage for 13 years and we still owe money on it. My suggestion to you would be save and do as you can. It is not worth the headaches something like this can create.

  28. Daniel, you’re such a little cutie that I want to kiss your face off! Lol I don’t care what you write about as long as I get to read it! Having been a homeowner for 25 years I have some knowledge about mortgages and home equity lines of credit. When we used a home equity loan I absolutely abhorred the extra payment each month and since finances were tough at that time it was really difficult to make those payments! We all have different circumstances and in your case it might be a good idea to go ahead and use one. I can tell that you’re feeling bogged down by your lack of cash flow and I think you need to just get on with it! Keep it moving, baby!

  29. I enjoy your blog and wish you could clone yourself to be able to post more frequently!! I couldn’t care less if your posts are sponsored or not.
    Financial decisions need to be tailored to the individual. Get some good advice from someone who has your whole financial picture and do what ever makes you the most comfortable and happy. Best financial advice I ever received is make short term goals and long term goals. What those goals are are up to you. Ask yourself do I need this or do I want it? How will it impact my financial goals? You are a smart, funny, resourceful guy and I believe you will be just fine and have a bright future!

  30. I just read a response saying you’re 26…! Now I feel incredibly unaccomplished. But that’s awesome for you!! Your writing/outlook seems incredibly mature and I had assumed you were later 20s/early 30s.

    Our HVAC unit recently (this week) went out and we’re currently receiving replacement estimates. Which is annoying for many reasons but especially because we aren’t really in a place where we can pay for it outright–unfortunately it seems we’ll be taking on more debt. I might have considered a HELOC to replace the HVAC and do some needed upgrades, but we’re planning on selling in 3-5 years and I would prefer to get more from the sale of the home later.

  31. I agree with those above to get yourself an accountant or financial adviser. Really. Money is important and most of us are dumb. Also, thinking more long term, once Bluestone is sold, what will you do with that money (besides re-pay investors). Will those funds go towards buying another home to fix and sell, or could the funds go into your new kitchen/bedroom/death bathroom?

  32. I’m in the middle of getting a HELOC (home equity line of credit) now! Here’s my situation:

    – We bought our house 3 years ago for $MONEY with 20% down. We got a pretty good interest rate (3.5%).
    – Our house is >100 years old and has been extensively DIY remodeled. Badly. Like, the bathroom floor is caving in because the previous owner couldn’t be bothered to secure plumbing connections. Also, black tile with pink grout.
    – We live in a crazy real estate market so the house is now worth something insane like $MONEY * 150% even in bad condition because of the location, lot size and square footage. So we have about 50% equity despite not having paid down much of our mortgage.

    After living in the house for a couple of years, we’ve decide to remodel and reconfigure the kitchen + two bathrooms, because shit is literally falling apart around us. We have two kids under 4 and two full-time jobs, so we have decided to pay someone to do the vast majority of the work. Even if we totally outsource this part, there are enough DIY projects in this house to keep us busy for *years*, and there’s now way we’d get a kitchen remodel finished ourselves without one of us quitting our job. The remodel budget currently stands at $MONEY * 20% (EEP). And that’s assuming all goes well and we don’t find any glaring structural issues or have to replace the water heater or something. We have saved about $MONEY * 25%.

    While we theoretically have enough on hand for the project…things will go wrong. Budgets will go up. So if borrowing wasn’t an option, we’d probably have shrunk the project and waited to do one of the bathrooms so that we could have a larger financial cushion (I’m pretty conservative about this kind of thing). But that would mean living with our terrible bathroom for a long time and the joy of another several months of construction (with little kids!) in a couple of years. Plus there are some efficiencies of scale from doing it all at once.

    So we applied for a HELOC for $MONEY * 10%. The interest rate is the same as our mortgage. If all goes well we won’t use it at all, or we’ll use it briefly to smooth over cash-flow issues and pay it off right after. And if the shit hits the fan and the project goes crazy over-budget, we’ll use the HELOC to borrow more money and effectively have higher mortgage payments for a while. But either way, we won’t have to scramble for money mid-project. For me it’s less about spending cash I don’t have and more about having insurance against the worst-case scenario, cost-wise. Or the scenario where some other life event (medical stuff, etc.) requires cash at the same time as the remodel. (It’s also maybe worth mentioning that we don’t have any debt except for our mortgage. If we did, I’d consider rolling it over into the HELOC if the interest rate was lower.)

    At the end of it, we may owe more money, but we’ll have a (probably) more valuable house that’s much nicer to live in and easier to sell in the event that we need to move for some reason. (At the moment we could sell our house because the market is insane, but in a slower market I can imagine it being too weird/broken for most buyers. This makes me nervous.) Overall it seems like a big win!

  33. Daniel may not even let this post go through because sometimes he censors me but I feel the need to try anyway. This poor kid is working his ASS off and running in way too many directions at almost all times. Do you know it actually costs HIM money to run his blog site? Like actual dollars per month he has to pay for the privilege to post? When the opportunity arises for a sponsor to cover those costs and put a few bucks in his pocket how can you blame him? And he has never been anything but honest and forthcoming about any post where this is the situation. Do you have any idea the writing time, editing time, photo time, photo-editing time, placement time, and maybe even re-editing time all this takes–to say nothing of the actual work invested in the project itself? Plus, would you really have him say NO to opportunities to work with the likes of HGTV? GET OVER YOUR DAMN SELF. I could use more expletives but for sure Daniel will censor me then.

    • Agreed! 1,000,000x!!

    • You tell’em, Daniel’s Mom!

      I honestly feel like the people who criticize have never blogged themselves. That shit takes an unbelievable amount of time and energy, especially if you have perfectionist tendencies and an audience with expectations. And then these days you have to take all kinds of precautions to keep blog scrapers and other sites from stealing your content without attribution, which adds even more time behind the scenes before hitting post. The work/fun ratio can get pretty skewed. Most of my blogging friends have given up. My own blog is nearly defunct. I’m so glad that Daniel is still finding the time to post here, because he is my favorite and I think he’s awesome.

    • Daniel, I love your Mom. Don’t you dare edit her!
      You do what you need to keep blogging and make money, we understand completely. I too also found good useful information in the comments. Thank You for bringing this up.

    • WORD, Daniel’s Mom! Good on you for pointing this out! I only had an inkling of this expense for the blog. But Daniel obviously has lots of us virtual friends who love him and his blog and appreciate all he does. Dude gotta life to live and if he can make money doing the blog in addition to the 15,000 other things he does, there is NOTHING wrong with that. The advertising on the blog is unobtrusive and tasteful – I don’t even notice it. I say ignore the haters, Daniel. I look forward to every post. I am in awe of all the helpful advice on this post! Wow!

    • Just read you Mum’s comment Daniel. Sorry, I haven’t read other comments, so don’t know where the negativity is coming from over sponsered posts.

      I personally have no problem with sponsored posts, and you seem to be pretty transparent about it all (I mean, do people want to actually know how much you’re getting from these guys, or what?!! HA! That’s your business, and nobody else’s).

      I don’t have a problem with advertising because I’m an adult, and I make my own decisions about what I buy and don’t buy. I also decide which blogs I read, and what I spend my time on in general, so if something no longer fits with my life philosophy, I ditch it.

    • Settle down momma bear – we got his back :) xxx

      • Thanks for the reality check, Luna. That was exactly where my reaction was coming from. Ask any of my children, you don’t wanna mess with me in my role as momma bear. Sorry I let that bit show and good for you for calling me on it. It’s so hard to keep that under wraps.

      • No NoNo Mom, I wasn’t calling you on it! I Totally get where you’re coming from being mother to 3 boys myself I would have been worse!! xxx

  34. I’d do a couple things before I took out another loan:
    1) get yourself a financial planner
    2) get yourself an accountant
    Depending on your income level, a home equity loan may make a lot of sense to help offset some income. However, those benefits really accrue to mid to high income people, so I wouldn’t just assume you’d end up ahead from a tax perspective and get another loan. Depending on the loan amount and rate, you may not be any better off than taking the standard deduction. Home equity loans could help you consolidate the debt from your roof repairs as well, probably at significantly lower interest rates (even assuming you didn’t benefit from a tax standpoint). If you get a financial planner, look for a certified person and ask them how they make money – it shouldn’t be commissions from the products they sell. Some banks are now offering financial planning services for lower asset individuals at different or lower rate structures – the old school method is 1% of your invested assets, but some now do a fee or just a significantly smaller percentage (I graduated from law school about 4 years ago and my net worth remains negative due to insane student loans so I’ve done my homework on finding someone who can help me when I don’t have lots to spend). You can even sign up for online services (Learnvest does this) for a one time or ongoing consult. I’m not one of those no debt ever people (those people did not go to law school), but I would definitely talk to a money pro about your whole picture, including your business to make sure you’re making the right strategic choices. A good financial planner will not chastise you for how you live, but help you spend and save smarter. They can even help with insurance. An accountant will make sure you’re maximizing your tax savings – small business owners have a much trickier tax landscape and can really benefit from some help. In terms of learning to be a better money steward generally, I religiously read the Your Money column in the NYT. The Mister Money Mustache blog mentioned by another commenter preaches a lifestyle that involves not spending money on things I care about, and avoiding any consumption in the name of amassing a lot of money at a young age. They’re noble goals, but I’ve never found the advice very helpful because, frankly, a girl likes to go out to dinner and buy a dress from time to time :)

    Good luck Daniel. I love the blog and can’t wait to hear updates on your other projects.

  35. Go mom!
    I’m in the middle of a remodel and as a 56 yr old have never lived in a finished house. They’ve always been done on my way out the door to the next one! Don’t let that happen to you. Get the heloc and enjoy your home now. Save the remodeling for your clients.

  36. Daniel, it’s NEGATIVE EQUITY you have to watch out for . . .

    Think ‘Olivebridge Cottage’ . . .

    Always think long-term, whether you might need to sell your property in an emergency, and base it on your type of mortgage. In other words, make sure you have enough cash flow (or simply cash, the real stuff, in an easy access bank account) and NOT related to your property funding in any way.

  37. We bought a brand new winner in our town’s Parade of Homes. It seemed so lovely and shiny. That was in 2001. Now it is l5 years old, the microwave, fridge and counter top have ended to be replaced and certain real estate trends at the time are now very unfashionable. That’s how fast the fun wears out and off. I think that you can buy a new stove and reno one bedroom for under $1000(those are the only two things that you mentioned)!!! Anyway, I love your kitchen. You truly did the whole thing yourself and it was wonderful to see what you did and your vision for it.It would be sad to see you pull it out. You are so young, you might get sick of Kingston, the real estate market might go down- putting you in the position of being unable to sell your house for what you need to pay your debts!

  38. Question – have you looked into refinancing your mortgage? If the value of your home has risen as you’ve said and your mortgage is low you should be able to refi your mortgage, take more equity (AKA cash) out of your home and amortize the payments over the course of however long a mortgage you choose. the advantage imho here is – LOWER interest rate than the usual home equity line of credit. mortgage rates are a stupid low. sure HE loans are lower too, but not as much as a mortgage. that said, think long and hard before jumping into the more debt pool. especially as an entrepreneur with a varied income stream i suggest caution with additional debt unless truly necessary or seriously beneficial to your lifestyle.

    that said, keep on doin’ what yo do – love your blog!

  39. Hi me again from the UK (see how cleverly I added that to my ‘handle’ lol). I just love this kind of discussion – all the wisdom that’s there in us ordinary folk. Daniel – one more idea that has saved my life financially – the integrated finance spreadsheet. (If you already have this stop reading now!) I have several pages in mine – page one is ‘asset value’, page two is ‘profit and loss’, and the other pages are one for each bank account, with 2 or 3 years shown, allowing me to create cashflow forecasts. All the pages are linked so the asset value and profit and loss and transfers get updated automatically – apart from a few items like house value and the value of my company, which I add by hand from the zoopla website and another site I found that values companies. It’s a bit of a faff to set up, but not that hard, and it makes financial decision much much easier. You can just run off a dummy copy of the whole thing and feed in ‘what if’ scenarios, and see what the effect will be across the next few years. Another idea about the blog and income etc – IF there was an option on your blog for people to take out a subscription for a modest fee, and if that subscription gave people, say, 5 free one-to-one consults by e-mail with you on anything to do with reno – then next time I was doing a reno that would be on my list of things to help me – just saying – I think a lot of people would jump at the chance for some access to your experience like that. Wonderful discussion – thanks again everyone, loving it :-)

  40. It seems to me that your remodeling projects are part of your business/income, so investing in that could be a smart move that pays eventually (and could even be a tax write off!). Even if that’s not the case, doing careful work that actually increases the value of your home along with your enjoyment is smart. There’s a difference between remodeling to fix a broken down mess that is detracting from the home value (peeling lead paint, broken windows), vs. just remodeling to suit your personal taste (marble counters! steam showers!). You also need to consider home values where you live realistically. How low could they go in the next recession? One rule of thumb is don’t borrow more than 10% of a home’s value.

  41. I have not and would never do a home equity loan. I like to pay off houses as quickly as possible and then use whatever money I generate later to fix them up. This meant living in a 70s-era timewarp for a long, long time (almost long enough for it to come back in fashion). It has been taken from 60s/70s Colonial/Country to Arts&Crafts/Craftsman/Shaker, now.

    Living frugally when one is young stinks. All my relatives lived it up while they were young, and they were known to mock us for being such squares (yes, I am that old). Those relatives are now hitting us up for loans when their cats become ill, and they don’t have the $400 for the vet. “The Ant and the Grasshopper” comes to mind.

    I think that a second mortgage can be okay if one is going to immediately plow the money into the house and then turn around and sell it, to realize the profit quickly. And, I think it can be okay with a reputable firm, but not all of them (anyone remember Countrywide Mortgage–had to buy an elderly relative’s house just to keep him from being foreclosed on–yes, he is still living there, rent-free). But, personally, I like to pay off loans as quickly as I humanly can and do without in the meantime. But, that is me. I am an ant. A boring ant.

Leave a Comment

Back to Top