Hi! Long time, no write!
Lots has been going on at our house this last month! Today’s post is to update about a big financial move we made. Namely, we took out a home equity loan! Our home value increased to the point where this was possible, and we decided to pursue it to solve a few problems.
The money is intended for a combination of financially responsible items as well as lifestyle improvements that we deemed worth the financial risk of taking money out of our home’s equity.
1. Pay off credit card debt (again). And dammit, this time we’re going to keep it down. Seriously. I mean it!
We’ve paid it off and let it creep back so many times that it’s embarrassing. But I think we’re in a better place financially overall now, so maybe (no, definitely!!) this will be the time it sticks. We’re keeping the cards open since they’re a good safety net for emergencies, but seriously… just for emergencies!
Ok… and for cash back points too. We’re going to keep using them regularly, but only for things we can pay off immediately after purchase with money we already have in the bank!
2. Pay for a home appraisal to remove the mortgage insurance from our main mortgage. It is a small fee, but it will pay for itself through the saved money within about a year. We elected to do this to get rid of the mortgage insurance instead of getting a cash-out refinance because of our exceptionally low interest rate on our main mortgage, which we don’t want to lose! Better to pay the higher interest rate only on the equity loan rather than the whole mortgage, and we can get rid of the PMI anyway!
3. Home improvement project – This is a combo item – financial investment and lifestyle improvement.
The plan is to blow out the big window between our kitchen table and our backyard so we can actually access our outdoor space, and then build a deck. We had originally planned a quite elaborate deck, french doors, and plumbing natural gas to the BBQ. But we’ve revised to a more realistically sized deck, a slider, and no natural gas line. It’ll still be wonderful, and it should improve our enjoyment of the house as well as add some value to the home.
4. We paid off my car! Together with paying off the credit card, our monthly bills are significantly lower, theoretically enabling us to more successfully live within our means.
These were tricky to pull the trigger on, as they needed to be impactful enough that they would be worth borrowing money from ourselves (plus interest!) to do them. But we feel we created a good list of things that will really make a difference in our lives.
1. Lasik eye surgery for me! No more glasses! I could write a novel about why I am looking forward to tossing my glasses in the trash, but I think you could probably guess my reasons!
2. Purchasing another car. This new car will be Kyle’s “daily driver” so his fancy, gas-guzzling racecar can sit in the garage (sigh… I knew this was coming from the moment I met car-loving Kyle).
I took some convincing, and I still wish Kyle’s gear-head tendencies didn’t require this, but the thought here is that 1) we will save money on gas, and 2) Kyle can stop putting 17k miles a year on his “future collector’s item”, therefore avoiding expensive repairs and declining value, in favor of putting those miles on a very simple car, mechanically speaking, so future maintenance should be straightforward and (hopefully) easy on the wallet.
This, of course, predicts that the racecar will actually increase in value someday due to its rarity. Time will tell, but either way, Kyle loves that car and this plan preserves it.
He already has a deposit down on his new-to-him car, and he will be flying to LA this coming weekend to purchase it and drive it home. It is (I kid you not) our third Ford Focus! We already own two (Kyle’s RS and my Titanium), and now Kyle is purchasing a 2004 Focus SVT. It has only 48k miles on it (only 3.5k miles a year! wow!) and seems to have been well maintained. Plus it fits the requirement of being a “nuts and bolts” car, hopefully inexpensive to maintain.
3. New wardrobe for Kyle. He recently expressed that his closet seemed to be full of things that didn’t fit, referring both to physical fit and style fit. It has been many, many years since Kyle did a huge overhaul, and a lot has changed since the last time. So he’s overdue!
Overall, we’re super excited about the plans, but also hoping that we’ve been thoughtful and careful enough so as not to cause ourselves any issues.