3 Powerful Reasons to Pay Off Debt Before RenovationsJul 21, 2017
Home renovations are a growing trend in Alberta with residents expecting to spend more than $1.8 billion on improvements. Home reno spending is up by 25 per cent compared to last year. Renovations can add beauty, function and even add value to your home. But renovations can also place a strain on your finances, especially if you neglect other financial priorities like paying off debt or putting money aside for retirement.
According to the results from a recent BDO poll…
- One in five homeowners planning renos say that they won’t save enough for retirement.
- Almost one-quarter won’t pay down debt as fast as they should.
- If their home renovations go over budget, 15 per cent plan to take on more debt.
Do you plan to use credit to fund some of your home renovations — even though you already have existing debt?
Before you apply for a line of credit or take out a second mortgage, stop and read these three powerful reasons to pay off debt before doing home renovations:
- Less debt means more opportunities to save
Think about how much you pay each month toward your debts. Now think about how much money you could put toward savings each month if you were able to pay off that debt.
If you’re not paying down debt as fast as you’d like to there are debt relief options that can help.
Credit card consolidation and debt consolidation can help simplify your debt payments. Check out this earlier debt consolidation blog about these options and what to look out for.
- You’ll probably spend less on your renovations if you pay with cash
As you pay off debt, you can increase your contributions to a home renovation savings fund to cover the cost of your repairs. The BDO poll found that homeowners paying cash for renovations actually plan to spend less ($13,239) than those relying on debt to help cover costs ($20,744). How can we explain the difference? There’s a good chance that those who save up ahead of time are more likely to know the costs of repairs, set a budget and stick to it.
- Less debt and more savings gives you a cushion when unexpected costs arise
One in three Canadian homeowners say their biggest renovation fear is uncovering larger, more costly problems. Pay off your existing debt before you renovate and build up an emergency fund will help you face this situation unafraid.
What are your feelings about paying off debt before a home renovation? Join the conversation with the hashtags #HomeReno #DebtSolutions