Saving for Home Renovations

[Vic99]

Have a 1920 Dutch Gambrel.  Mostly love it, but of course there are plenty of things to throw money at.  Bought it 11 years ago and it will be paid off in 2 more.

We have about 15k saved for a kitchen remodel, but its in a money market only earning 0.5% interest.  We will continue to put some savings toward it.  Will remodel in 1-2 years from now . . . closer to one if my wife has her way. 

What do you reckon is the best vehicle to save for this with a year or two timeline?

[forummm]

If you're going to remodel for sure, just keep it where it is. If you're flexible, then you could put it in a balanced fund. If you're OK waiting for a few extra years if the market tanks, or just losing some of the money, then being more aggressive is OK. Otherwise keep it safe and boring.

[Khan]

A one year CD should yield about ~.85%(at least with my credit union).

[Kernel Fielding]

MySavingsDirect offers a 1.25% APY savings account, no minimum balance and no fees:

https://www.mysavingsdirect.com/MySavingsDirectWeb/index.jsp

[justajane]

Do an online search for rewards checking. We have one at the moment that is returning 2%. It was exclusively through my husband's company, but they still exist. Sometimes you have to jump through a few hoops (direct deposit, etc.), but in your case, this is probably the best you are going to do for a short-term, secure return. Have you looked into HELOCs? We had a 75K remodel that we paid half in cash, 10K with a family loan (paid off in about a year), and a 25K HELOC at about 3%. I'm just thinking how you could leverage your 15K in better ways - i.e. if that would gain more in the market than you would pay in interest for a HELOC. Of course, I would never recommend getting underwater on a home, but it's something to consider.


Also, can't a Mustachian remodel a kitchen for 15K? Are you waiting because you want to save more or because you just want to wait?

Edited to add that Ally is returning double what your current money market is.

[Vic99]

Thanks for the rates so far.  Willl look into them, but keep em coming.

We could do a remodel for 15k, but it would not be to my wife's liking.  We need about 25k I reckon, plus tomorrow I'm starting half bath, a doorway, and a basement staircase projects with my buddy.  So it's mostly money and partly time.  We need a year since last week I doubled our 401/403b contributions.  Going to take three months to make sure we can adjust appropriately.  I'm optismtic, but don't want trouble.

If I were more handy, I could easily do it for 15k, but having tried some of this before, I know my limitations.  Plus, my buddy is cheap, does good work, and a small amount of what he shows me actually sticks.

[Terrestrial]

Since this is 'discretionary remodel' money and not 'for sure need it in 2 years money'....you might consider P2P lending. MMM has written a bunch about it so I won't rehash it all.  I'll just say I've been using it for my 'intermediate term' savings needs the past few years and it's worked out pretty well so far.  I've always had a positive return after defaults, it's always been well above what i could expect to earn in this low rate environment on even the best savings accounts. That said there IS possible risk there, and 1-2 years may not be long enough term to bother with, but it's an idea.   

[bittheory]

Hey Vic, what did you decide? I'm in a similar situation, but we're looking to do this 5 years out or so, which makes me consider saving for it exclusively via Vanguard index funds. Still might be a little risky.

[TheAnonOne]

Since this is 'discretionary remodel' money and not 'for sure need it in 2 years money'....you might consider P2P lending. MMM has written a bunch about it so I won't rehash it all.  I'll just say I've been using it for my 'intermediate term' savings needs the past few years and it's worked out pretty well so far.  I've always had a positive return after defaults, it's always been well above what i could expect to earn in this low rate environment on even the best savings accounts. That said there IS possible risk there, and 1-2 years may not be long enough term to bother with, but it's an idea.

I do some lending club work, and while I have never tried yet, I would imagine it could be a bit of a headache to liquidate the account with any speed.

[Vic99]

Looking at My Savings Direct.  thanks all

[bittheory]

I'm in a similar boat, but we're at least 5 years out until we need the money so I'm considering half into MySavingsDirect and half into Vanguard LifeStrategy Conservative Growth Fund (VSCGX).

[index]

Investing any money you may use in 1-2 years is stupid.

The spread between mysavingsdirect and your current bank is .75%, about $110/yr on 15k. Is it really worth making $100 to set up a bank account you will just close in a year? Also the bank in question looks archaic. If you were to open an account at a bank you would actually use full time I would say go for it. If you are chasing $100 bills there are probably better uses of your time. 

[Vic99]

Made the switch to My Savings Direct yesterday.  Although it is meant for short term money, I plan to use it as a permanent account.  Might as well lose a bit less to inflation.  Also have a checking account with a local credit union, but their savings/money market interest is terrible.