In 2015 I'll have a sizable expense when we replace the roof on our condo. Depending on any repairs that need ot be done our share will be somewhere between $3,000-$5,000. The amount isn't that big a deal to us, especially since it's less than what we over-pay our mortgage each year. But how to prepare for it has us talking in circles.
At first, we stopped our biweekly contributions into our index fund and started putting a few hundred each month into a "roof" savings account, which earned a pitiful 0.5%. But now I'm thinking that's not such a great idea, since we can use our HELOC to pay for the roof at 3.4%, and then pay that back in 4-12 months depending on how big the ultimate bill is (costing us, by my calculations, $60-100 in interest depending on the total). Currently we have over $11k available in our HELOC.
My instinct has always been to save first and then buy something, but using the HELOC just seems to make sense - instead of saving now and earning next-to-nothing, i can continue my DCA contributions to my index fund, and then pay back the HELOC by either not making those contributions later or by paying slightly less to my mortgage each month (we already overpay). My job is super-stable, since I'm in the 2nd year of a guaranteed 3 year contract, so I'm not worried about loosing my income.
Am I missing anything obvious about this strategy?
