Build Skymiles While You Fix Up the House

by Mack Bartlett

complete

Every year Americans spend millions and millions updating and repairing their homes. It’s our biggest asset (or liablility, depending on your perspective), and we take a lot of pride in its appearance. Home improvement isn’t cheap though. Let’s say you want to finish your basement so you have a new family room and a couple more bedrooms. You could easily spend $20,000 on the project.

The question is how are you going to pay for it? If I asked what is the financial tool most often used to pay for large-scale home remodeling, your quick answer would be probably be home equity loans. What would be the number two tool? Credit Cards.

We can could have en entirely separate conversation about whether you should go into a bunch of new debt for sake of an updated house. The short answer is probably no. The best thing for your financial health would be to save up for a while and pay cash for the improvements. But if you’re going to put the money into your home you should consider the best way to go about it.

Here’s my advice. Open the home equity loan. It’s a relatively low interest loan where the interest may even be tax deductible. But before you write those home equity checks, I’d advise adding one more step.

Get a credit card with  a large limit and a great rewards program. I have an American Express card with a Delta Skymiles rewards program. Every 25,000 skymiles gets you a round trip ticket anywhere in the continental United States. $1 spent gets you 1 skymile.

Now think about that $20,000 basement you’re putting in. Use the credit card to pay for all the materials and the pay it off with the home equity line before the statement comes due. That way you avoid the high interest rate on the credit card, but you got yourself most of the way to a free plane ticket while you were at it.

Not a bad deal, right? New basement, extra square footage, and a free trip to boot. I love my credit cards.


Related posts:

  1. Maximizing Credit Card Skymiles
  2. Top 3 Pitfalls of Refinancing Your House To Pay Off Your Credit Cards
  3. Top 5 Ways To Build Your Credit Score
  4. Credit Cards for Student Looking To Build Credit History
  5. How to Build Corporate Credit Fast
  6. The Best Credit Card Ever

2 Comments

  • By Gena Sells Sacramento, July 27, 2007 @ 1:58 pm

    Mack,
    Love the tip on getting two birds with one stone…love those miles!

    - Gena Riede

  • By kailani, July 29, 2007 @ 2:34 pm

    I use my credit cards for almost everything just to get the rewards. The trick is to pay them off every month, though. *wink*

    Thank you for sharing this with the Carnival of Family Life. Your post will be included in the July 30th edition at An Island Life.

Other links to this post

RSS feed for comments on this post. TrackBack URI

Leave a comment