Saturday Critical Actions – Get Ready to Remodel & Revisit Your Debts
(Of note, Mr. Clements increased from one critical action per week to two per week, which we’ll be bringing you on Saturdays from here on out.)
Welcome to the Saturday Critical Actions. Each Saturday we take the weekly actions from Jonathan Clements‘ blog Humble Dollar and “militarize” them for you. Jonathan Clements was a longtime personal finance columnist for The Wall Street Journal, and he offers great advice at the best price you can get…free. Here are this week’s critical actions:
GET READY TO REMODEL. This is the time of year when homeowners line up contractors for their spring remodeling projects. If you’ll need to borrow, consider setting up a home-equity line of credit. Planning to sell in the next few years? Stick with cosmetic improvements and avoid major projects, because you’re unlikely to recoup the cost.
If you want the Military Millions take on renting vs buying, check out this article from our Steps to Financial Security series. In the military, it often makes more sense to rent and you don’t renovate when you rent.
REVISIT YOUR DEBTS. Think of borrowed money as a negative investment: Instead of making you money, it’s costing you. If you have high-cost debt, paying it off—or replacing it with lower-cost debt—should be a top priority. What about lower-cost debt? That might also be worth paying off, especially if the alternative is to buy bonds or CDs in a taxable account.
I agree with his last sentence. When faced with my last debt, my mortgage (which was lower-cost debt) versus investing in bonds, I paid off the mortgage. Being debt free is financially freeing and I highly recommend it when possible.