$30k home reno purchase --> alternative ways to pay for it?

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unknownENG
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Joined: Tue Jan 30, 2018 8:59 pm

$30k home reno purchase --> alternative ways to pay for it?

Post by unknownENG »

Looking for advice here. I've got a big purchase coming up (hard wood floors) ~$30k. Looking for interesting advice on ways to finance this other than just writing a check.

I certainly can move stuff around and write a check for it but wondering if there's a better arbitrage out there, or sign up for a bunch of credit cards and churn it for points?

I've got a
- healthy 401k at Fidelity (no margin account setup yet)
- large HSA invested at Fidelity (receipts for ~$25k in healthcare over last 10 years that have not been reimbursed)
- several large IRA's at Vanguard (no margin account setup yet)
- large crypto account (could be loaned against)
- healthy after-tax MMA at Vanguard (no margin account setup yet)
- large CashValue Whole Life policy to loan against (policy loans @ 4%, Direct Recognition, 3.35% dividend = 0.65% net rate)
- Large HELOC to loan against (3.25%)


Any advice? I'd love to work out some interesting strategy.
psteinx
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Re: $30k home reno purchase --> alternative ways to pay for it?

Post by psteinx »

1) Depending on who you're buying from, they may not allow payment by CC, especially for such a large amount, or may put a surcharge on.

2) If you *CAN* pay by CC, of course there are standard cashback cards of 1 to ~2.6%.

3) Or you can realize more by using signup bonuses and other more special one-time methods. See CC bonus threads here on this forum or on other forums for commentary on current options. Downsides - hassle, limits on # of signups allowed, etc.

Otherwise, pay by check (why bother with a loan?), using due caution to ensure good delivery.
terran
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Re: $30k home reno purchase --> alternative ways to pay for it?

Post by terran »

Margin isn't allowed on retirement accounts. You might be able to take a loan (meaning the investments are sold and distributed to you, then you pay it back) from your 401(k) depending on the rules for your plan, but I wouldn't.
tashnewbie
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Re: $30k home reno purchase --> alternative ways to pay for it?

Post by tashnewbie »

I would just keep it simple and pay from the "healthy after-tax MMA at Vanguard" assuming it had a sufficient amount.

Borrowing against the whole life policy might be a decent option because of the low net rate (0.65%), but I don't have any knowledge of or experience doing that. Might not be worth the hassle.
wineandplaya
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Re: $30k home reno purchase --> alternative ways to pay for it?

Post by wineandplaya »

If you end up putting it on your HELOC, you could consider opening up a long 0 % APR CC with decent reward rate. I did this with Chase Freedom and Wells Fargo Active Cash cards, to pay down a HELOC that we had opened in order to accelerate our mortgage payoff. I then shifted every day expenses to these cards, while rapidly paying down the HELOC. If I'll reach the end of the end of the 0 % APR period while still carrying a CC balance (unlikely), I can move the debt back to the HELOC for lower interest. My credit score tanked as a result, but hey, I'm saving a couple of hundred bucks in interest :) Obviously assumes that you are very disciplined with your finances. This approach avoids paying a balance transfer fee.
regularguy455
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Re: $30k home reno purchase --> alternative ways to pay for it?

Post by regularguy455 »

My personal opinion - Sell the crypto to cover the cost. Bonus points if they accept it as payment.
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lthenderson
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Re: $30k home reno purchase --> alternative ways to pay for it?

Post by lthenderson »

For a reference, just put hardwood throughout my house two years ago. I bought about $3k worth of solid hardwood flooring, $250 worth of tools and fasteners, installed it myself over a month working on it in spare time and as I shifted furniture back and forth. Paid cash. Not everyone's cup of tea but was well worth the cost savings for me.
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Bogle7
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Re: $30k home reno purchase --> alternative ways to pay for it?

Post by Bogle7 »

HELOC
Old fart who does three index stock funds, baby.
Topic Author
unknownENG
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Re: $30k home reno purchase --> alternative ways to pay for it?

Post by unknownENG »

Edit: Sorry, I meant I have a healthy after-tax investment account @ Vanguard, not just an MMA. so a lot of equities that potentially could be margined.

UPDATE


- so there's a 3% CC fee...ouch.

- there's no seller financing

So that leaves either:
- paying cash
- CC +3% immediately
- HELOC @ 3.25%
- Life Insurance Loan @ 0.65% (net)
- setup a margin account with my after-tax accounts
Topic Author
unknownENG
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Joined: Tue Jan 30, 2018 8:59 pm

Re: $30k home reno purchase --> alternative ways to pay for it?

Post by unknownENG »

wineandplaya wrote: Tue Nov 30, 2021 3:02 pm If you end up putting it on your HELOC, you could consider opening up a long 0 % APR CC with decent reward rate. I did this with Chase Freedom and Wells Fargo Active Cash cards, to pay down a HELOC that we had opened in order to accelerate our mortgage payoff. I then shifted every day expenses to these cards, while rapidly paying down the HELOC. If I'll reach the end of the end of the 0 % APR period while still carrying a CC balance (unlikely), I can move the debt back to the HELOC for lower interest. My credit score tanked as a result, but hey, I'm saving a couple of hundred bucks in interest :) Obviously assumes that you are very disciplined with your finances. This approach avoids paying a balance transfer fee.
What state are you in? You can pay off HELOC w/ a CC?
Topic Author
unknownENG
Posts: 75
Joined: Tue Jan 30, 2018 8:59 pm

Re: $30k home reno purchase --> alternative ways to pay for it?

Post by unknownENG »

tashnewbie wrote: Tue Nov 30, 2021 2:30 pm I would just keep it simple and pay from the "healthy after-tax MMA at Vanguard" assuming it had a sufficient amount.

Borrowing against the whole life policy might be a decent option because of the low net rate (0.65%), but I don't have any knowledge of or experience doing that. Might not be worth the hassle.
I think its pretty easy. Basically just call them up and they issue a check against my Cash Value. That $30k will then be separated in my account as 'loaned value that earns a lower dividend rate while carrying a loan rate.

seems like the cheapest money avail.
wineandplaya
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Re: $30k home reno purchase --> alternative ways to pay for it?

Post by wineandplaya »

unknownENG wrote: Wed Dec 01, 2021 2:12 pm
wineandplaya wrote: Tue Nov 30, 2021 3:02 pm If you end up putting it on your HELOC, you could consider opening up a long 0 % APR CC with decent reward rate. I did this with Chase Freedom and Wells Fargo Active Cash cards, to pay down a HELOC that we had opened in order to accelerate our mortgage payoff. I then shifted every day expenses to these cards, while rapidly paying down the HELOC. If I'll reach the end of the end of the 0 % APR period while still carrying a CC balance (unlikely), I can move the debt back to the HELOC for lower interest. My credit score tanked as a result, but hey, I'm saving a couple of hundred bucks in interest :) Obviously assumes that you are very disciplined with your finances. This approach avoids paying a balance transfer fee.
What state are you in? You can pay off HELOC w/ a CC?
I don't pay off the HELOC with the CC. I mean that I put say $5k/mo on mine and my spouse's 0 % APR CCs, doing minimal payments only, while also paying down my HELOC with $5k/mo.
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whodidntante
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Re: $30k home reno purchase --> alternative ways to pay for it?

Post by whodidntante »

Crypto loan or margin at IB would be the cheapest money. To pull money out of a margin account, it needs to be a taxable account. So-called "limited margin" in a tax-advantaged account does not allow this.

You can get the money at about 1% if you do it at the right place and with the right promo. I wouldn't push my luck on a crypto loan though. Crypto might be the most volatile asset class, not that I maintain a list. Also, crypto staking rates for proof of stake and securities lending rates to institutions are really high right now. So the true cost of a crypto loan is not 1%, but the spread on what you could have earned versus what you now pay. For example, ETH is earning about 6% and stable coins around 10%.
Valuethinker
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Re: $30k home reno purchase --> alternative ways to pay for it?

Post by Valuethinker »

unknownENG wrote: Tue Nov 30, 2021 11:54 am Looking for advice here. I've got a big purchase coming up (hard wood floors) ~$30k. Looking for interesting advice on ways to finance this other than just writing a check.

I certainly can move stuff around and write a check for it but wondering if there's a better arbitrage out there, or sign up for a bunch of credit cards and churn it for points?

I've got a
- healthy 401k at Fidelity (no margin account setup yet)
- large HSA invested at Fidelity (receipts for ~$25k in healthcare over last 10 years that have not been reimbursed)
- several large IRA's at Vanguard (no margin account setup yet)
- large crypto account (could be loaned against)
- healthy after-tax MMA at Vanguard (no margin account setup yet)
- large CashValue Whole Life policy to loan against (policy loans @ 4%, Direct Recognition, 3.35% dividend = 0.65% net rate)
- Large HELOC to loan against (3.25%)


Any advice? I'd love to work out some interesting strategy.
Sell some crypto.

I would always caution against investing on margin. Because you are then "short volatility". In other words, if the market value moves down too much, the market provider cashes you out. They are "long volatility". And they have much deeper pockets than any individual investor.

If you can find a source of credit, such as a home mortgage, which cannot be called due to stock market volatility, then you can consider a leveraged strategy. Tax will play an important part in figuring out whether, in the long run, that's a good idea.
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