How a CFP® Finances a Home Project
on Jan 31, 2025
My kitchen was in desperate need of a makeover. The cabinets were over 25 years old, the appliances were about 10 years old, and the original layout had a few problem areas that needed fixing. My husband and I had spent 11+ years dealing with private school tuition for our sons, so we finally had some breathing room in our budget to tackle this deferred home maintenance. In June 2024, I embarked on a full kitchen remodel, hoping it would be done by the Christmas holidays (keep reading to the end to find out if it was done in time). Here is how I paid cash for most of the project and financed a small portion at 0% interest.
- Project Budget: My first order of business was to contact contractors, cabinet makers, and designers to help me understand how much it would cost to get the kitchen I envisioned. Once I had a good idea of the project cost, it was time to determine if we could pay for it. I was willing to postpone the project if we had not saved enough. With interest rates on the higher side, I did not want to add interest to the project costs.
- Cash: Once we started considering a kitchen remodel, we began funneling all discretionary funds into our high-yield savings account. My husband also paused his employee stock purchase plan contributions so we could direct those dollars to high-yield savings too.
- Financing: We could finance our new appliances with 0% financing for 12 months. Be sure to review the details of these offers carefully. If you carry a balance beyond the 12-month promotional period, the interest rates can be extremely high! I figured out how much I would have to pay monthly so that we would pay off the appliances in 11 months. Now we are using monthly cash flow to pay for the appliances!
- Cash Flow: We immediately tightened our discretionary spending due to the home project, cutting back on unnecessary shopping and going out. I set up an outdoor kitchen area so we could continue to eat most meals at home, it was fun like backyard camping! These efforts meant that we were able to put project purchases on the credit cards and pay them off each month.
- Investments: We purchased some iBonds a few years ago when interest rates were much more attractive, so we cashed them in to pay for some of the projects. In addition, my husband had company stock with long-term capital gains, so we sold some shares at a favorable tax rate to increase our cash for the project.
There always seem to be some home projects that need to get done …it comes alongside home ownership! That is why I highly recommend planning for home projects and saving up as much as you can. Do your research before starting so you can comfortably pay for the project. Be flexible, you should expect cost overruns and perhaps waiting to build up savings is the best strategy. If you need help creating a plan for a home project we can help!
My kitchen remodel was 99.9% done by Christmas (one kitchen cabinet door had to be re-ordered several times and, as of this writing, is still not installed). Here are my before and after pictures.
