I have $50,00 in savings. Should I pay off our $15,000 credit card debt or start a remodel on my kitchen?

Question

I can always pay the debt after my tax refund also...

Answer 1

Pay your debts

Answer 2

I hope you meant $50,000 and not $50.00 in savings. Otherwise you won't be doing much of either.

Take a look at the interest rate on your credit cards...probably around 18-20%. This means you are LOSING a lot of money each month by having that debt.

You should try to pay off the debt as quickly as possible. Then any money left can be used to remodel your kitchen.

If you do not have the money to do both, you may want to consider getting a second mortgage or extending the first one. You may be able to get a $25,000 mortgage that will pay off the $15,000 on the cards, and then leave you $10,000 for the kitchen remodel. The interest rate on a mortgage will be much lower than the credit card companies will give you. Even a personal line of credit has to be better than them.

Word of advice: If you have $15,000 in debt on credit cards, you may be having bigger problems down the road. Do yourself a favor and stop relying on the cards. Pay them off, cut them up, or do whatever you can to reduce that debt, even if it means waiting a year or two to renovate...You will be glad you did.

Answer 3

It would probably be wise to pay off your credit card debt first, and then after you receive your tax refund you can start the remodeling of your kitchen. After you remodel your kitchen, and pay off your debt you might consider placing any remaining funds into a higher interest bearing product. I know most savings accounts don't pay much interest so depending on what you have left you might want to consider a moneymarket account. It's very similar to a savings account with the ability to withdraw funds, and doesn't lock up your money the way a CD would but it earns a higher interest rate.

Answer 4

Do you plan to sell the house soon? A kitchen remodel, if done in line with the market value of the property, and assuming you sell soon, would give you a very good return in increasing the sales price of the property. If you plan to stay there for a year or more, pay off any debt you can first - that reduces the interest you are paying to someone else; effectively, giving money away. You need to stop giving your money away as soon as possible.

Answer 5

I have seen myself in the same situation and now that I look back I really beleive that you should pay off your debt first, alot of people put debt on the bottom of their lists when its time to pay off.....but years ago when I decided to do that i didnt know the importance of credit and now that I have a child and need my credit to buy a home or etc....I wish I would have paid off the debt instead of buying alot of other stuff that really didnt need to be bought righ tnow, Think about it this way,Pay your debt and with the taxes then remodel.

Answer 6

If you've got that much in credit card debt, you should pay it off if you can - it's costing you a fortune in interest. Even waiting a couple months for your tax refund would cost a lot of interest.

And if you're getting $15,000 as a refund, you should adjust your withholding to avoid giving Uncle Sam a large interest-free loan every year.

Answer 7

Pay the credit card off first because you are paying interest on that money and then after you get your tax refund remodel your kitchen.

Answer 8

I would pay off the credit card and wait for the tax refund to do the remodel.

$50,000 is an awful lot for a kitchen remodel.

Can you get another estimate, modify your plan a bit or wait until there is a sale somewhere?

Answer 9

Pay off the debt first. Next you might want a new car, and if you do your kitchen now while telling yourself that you can always pay the debt later, you will keep telling yourself that. I know that is probably not the answer you really want to hear...but this way it is off your back and while your kitchen isn't beautiful, at least you will be stress free.

Answer 10

The interest rate on your credit cards will eat your lunch. Why not pay them off 1st- then you can remodel with a clean slate and use your refund with your remaining savings to do your kitchen. It's nice to have options. Love you!

Answer 11

Pay off the credit card debt first and foremost, then cut it up. If you remodle your kitchen it's going to cost you alot of $$$ but it can be added to the cost basis in your home to lower any capital gains you might incur when you decide to sell it.
Paying off debt is the smartest way to go....always.
*If you need additional finances to finish your kitchen project take out a second or home equity line of credit and that way you can deduct the interest paid.