Author Topic: Do you always do what is financially better at the moment?  (Read 4068 times)

Insanity

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Full disclosure - I am an engineer at heart.

My wife and I are re-doing the kitchen and dining room (as well as adding on a deck).  They are becoming one room.

We are looking at a significant cost, obviously.   So there are two questions:
1) It is being recommended by the contractor to upgrade our 100A service.  An electrician friend is saying it isn't necessary.  Our circuit breaker box is maxed out (essentially).  So, that leads me to think it is questionable, but even if it wasn't needed wouldn't it be wise to do it now?

2) Our house was built in the sixties.  Currently, the proposal doesn't include upgrading the electrical / insulation in the dining room since not all of the drywall is coming down.  I wanted that added in. Again, why not bring it to code?

Both of these are about a $4K-$5K add on in cost.  Is this something that is worth doing now or is it something that should be held off on? Obviously, if the electrical ends up being a requirement we have our answer for that one.

As for the remodel itself - I wanted to do it when we first moved in.  Money is now tighter, and while this major remodel probably doesn't have to be done, this is a house we intend on living in for 10- 15 years, minimum (barring lottery winning or somehow getting FI).  We are taking a loan from a family member due to home valuations and HELOCs being restricted.  Also using that money to pay off my wife's car loan (mine is paid for). So, we are taking on a considerable amount of debt for this - but ultimately adding value to our home.

Thanks.




RewardTraveler

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Re: Do you always do what is financially better at the moment?
« Reply #1 on: May 10, 2013, 02:40:58 PM »
If you hold off on the repairs, how much will they cost to do down the road?

swick

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Re: Do you always do what is financially better at the moment?
« Reply #2 on: May 10, 2013, 02:51:27 PM »
Don't know if it is a problem where you live, but you should at least be finding out if you have aluminum or copper wiring, and if you have aluminum, if it is pig-tailed with the proper records on file.

If not, you are putting your investment and yourselves in a lot of danger and if you do have an electrical fire. If your insurance policy doesn't have it on record that you have aluminum wiring, and your house burns down due to electrical, they might not pay your claim.

Don't know how common it is where you are, but our town which was built in the 60's has had such major issues that they won't even sell you insurance unless you can prove that the electrical is up to code.

Done by Forty

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Re: Do you always do what is financially better at the moment?
« Reply #3 on: May 10, 2013, 02:56:06 PM »
Given the fact that there's a car loan in the mix, a loan from a family member, possibly a home value that isn't in line with your mortgage (?), and money is tight, I would not do the renovation now.  If this is a safety issue, then doing the electrical work to make the home safe should be on the table, but I wouldn't include cosmetic renovations at this time.
« Last Edit: May 10, 2013, 04:31:29 PM by Done by Forty »

Insanity

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Re: Do you always do what is financially better at the moment?
« Reply #4 on: May 10, 2013, 03:03:35 PM »
Given the fact that there's a car loan in the mix, a loan from a family member, and possibly a home value that isn't in line with your mortgage (?), and money is tight, I would not do the renovation now.  If this is a safety issue, then doing the electrical work to make the home safe should be on the table, but I wouldn't include cosmetic renovations at this time.

there is work that already has to be done.  The vinyl floor is starting to come up, the appliances are in need of replacement (so I'm hoping there some lowering of energy bills as a result of that since they are probably the original ones), and there is potential mold in the ceiling (and already electrical issues with the lights in the ceiling, lack of closure between the soffit and the attic next to it so that some of the cabinets are freezing in the winter). 

This is why I wanted to get it done 8 years ago when we moved in (my wife and I were sans kids and both worked).  Unfortunately, we are passed the point of holding off.  There's enough safety concern in the kitchen that a significant amount of work needs to be done.  Again, we are probably doing a little more than we have to, but if you are already going to do so much doesn't it pay to do it in one shot?

I wish I knew how much the repairs would cost down the line :-/  But it's hard to say.


Spork

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Re: Do you always do what is financially better at the moment?
« Reply #5 on: May 10, 2013, 03:07:40 PM »

I hate debt.  If it were me and money were tight, I'd live with it.  In my last house the intended renovations dribbled over about 12 years.

That said: when it comes to infrastructure (like electrical/structural/plumbing/insulation) I tend to bite those off early -- especially if things are opened up anyway.  These are things I don't like to cut corners on. 

Done by Forty

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Re: Do you always do what is financially better at the moment?
« Reply #6 on: May 10, 2013, 03:09:39 PM »
It sounds like you're already down the path -- best of luck and certainly proceed in the way you think is optimal. 

swick

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Re: Do you always do what is financially better at the moment?
« Reply #7 on: May 10, 2013, 03:22:59 PM »
Structure and mold definitely need to be addressed, things like appliances (depending on what they are) should probably come second, especially if it is the "nice to have's" Like a dishwasher.

One thing you might want to do is see if there are any Habitat for Humanity building yards (or similarly run recycled home building supply centres) in your area. Ours has all the fixings including many energy-star appliances for next to nothing because people upgrade so often. Also a really good deal can be found on building materials and tools too.

RewardTraveler

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Re: Do you always do what is financially better at the moment?
« Reply #8 on: May 10, 2013, 03:55:42 PM »
Again, we are probably doing a little more than we have to, but if you are already going to do so much doesn't it pay to do it in one shot?

I wish I knew how much the repairs would cost down the line :-/  But it's hard to say.

These two sentences seem to be the heart of the issue.  I don't think you can answer your first question without at least trying to estimate what it would cost when you're not already doing construction.  It's an easy call if you're looking to move an outlet 6 inches and you already have an electrician in there for other stuff.  You wouldn't call an electrician for the job normally, but he's already there and the marginal cost is pretty low.  It might only cost you an additional $20 vs $220 if you scheduled a call just for that.

What you're talking about is a relatively major undertaking.  You could be saving $200 (combining service calls) or you could be saving $5000 (it may be necessary to rip out all the drywall that you're putting up as part of your renovation).  I think it makes sense to at least try and ballpark the synergies of doing it all at once.

Since you're borrowing to pay for the improvements you can look at your savings by holding off as the interest you're not paying.  If you do the repair now and it will take you 5 years to pay it off at, say, 10% interest you could be looking at $5000 in expenses and $2500 in interest.

Will you save $2500 by doing everything at once?  It probably makes sense to try and do a break-even analysis.

Rural

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Re: Do you always do what is financially better at the moment?
« Reply #9 on: May 11, 2013, 05:48:33 AM »
I'd hold off on everything personally, but if you do go ahead, keep in mind that the person telling you there's no need to upgrade the electric is the electrician, the expert. The person wanting to do that, too is the general contractor who will profit from it.

mm1970

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Re: Do you always do what is financially better at the moment?
« Reply #10 on: May 11, 2013, 08:37:55 AM »
Personally, I would do the upgrades now because it sounds like they are necessary.

But I would cut corners where possible in the rest of the remodel.

Our house was built in 1947.  We remodeled the kitchen when we moved in.  We added a dishwasher.  Due to the same issues with electrical (our circuit breaker almost maxed out), we hired someone to put in a new line for the dishwasher.  We discussed upgrading the full electrical, but the electrician said unless we were adding a bunch more, we'd be fine for now.

For the rest of the kitchen though, it was DIY.  So are you an engineer at heart, really?  The kitchen is a galley style and had a sink and lower cabinets and upper cabinets on one side, and nothing on the other (no appliances either).

My husband built lower and upper cabinets for the other side to go around the newly-installed appliances.  He pulled out the lower cabinets (which were too short to allow a dishwasher) and built new cabinets on the sink side.  We reused the cabinet faces/ drawers that were here, and ordered new ones on-line and stained to match.  He tiled the counters and installed a fan over the stove.

By "built new cabinets" I mean built them from scratch, not using pre-fab.  He paid $8 for an adult ed class at the local HS which gave him access to the large tools. 

All in all I'd say the remodel cost $1000-$2000 or so for the cabinets, a few hundred for the doors/faces, $1000 for the tile.  The appliances were extra, but we tend to go reliable low-end (Hotpoint oven, Kenmore fridge and dishwasher).  The whole thing was maybe $5k or $6k (this was in 2004-2007).

When you talk about redoing kitchens, if you are paying someone else, they can get really expensive really quickly.

totoro

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Re: Do you always do what is financially better at the moment?
« Reply #11 on: May 11, 2013, 09:05:02 AM »
If you are going to be there for 10-15 years and you have a family member willing to provide you a loan I would do everything now BUT do these things:

1. get several quotes - they can be really really different - our electrical quotes varied by up to $2000
2. buy second-hand newish energy efficient appliances - you will easily save $2000 doing this and you can start looking now.  Our dishwasher was $200, fridge $250 and stove $300 - all almost new but white and not silver (they had been replaced by the owners with silver - which I think will be dated soon)
3. buy second-hand cabinets if you can.  Habitat for Humanity usually has lots.  Go for solid wood like oak.  Of course, if your wife wants something new I can understand this, but really there are so many nice solid oak cabinets out there from kitchen renos and if you add great pulls they look really good - we spent $350 for our oak cabinets second-hand which included a sink.  if you don't like oak you can have them sprayed or stained before putting them in.
4. spend money to get nice countertops - they make a visual difference that is significant - you could tile them yourself if you wanted - I don't like tile but it would be cheaper