My husband and I can't agree on how to pay for work that we need to have done by a contrator.?

Question

My husband's mother died in March and we inherited her home. Since there is no mortgage payment, we are planning to move into it. However, there is a lot of work that needs to be done. One  of the first things is a retaining wall between his and the neighbors property that is falling down and needs to be re-done.   We talked with a contractor who gave us a bid of around $10,000 to take to wall down, excavate part of the back yard, put in gravel to make an off-street parking spot for our second car, build a new retaining wall and put up a privacy fence between the two houses. We are having trouble agreeing on what would be the best way to pay for it (with our economy the way it is today)
Details:
1. We have no personal debt, owe no credit cards, no loan payments, and now have no rent or mortgage payments. Our only bills are the routine monthly utility bills. 
2. Our combined take home income is $3400 a month.
3.  We have approximately $5000 in savings.
4. His mother left him about $50,000 in an IRA, a money market account, savings bonds and life insurance.
5.  We both drive cars that have over 100,000 miles on them and are 9 and 10 years old, and he found out last week that his needs transmission work, so I think it would be better to replace the car instead of paying the estimated $2000 it will take to fix it. 

I honestly don't want to touch the money that his mother left him, but would like to leave that for retirement savings.

In this, economy, I think we need to leave the savings account alone.

I know we could afford a home improvement loan payment, but would that be the best thing to do?

Anyone have any good suggestions or advice on what, in our situation, would be the best way to pay for the work that needs to be done?

Thanks for your imput.

Anonymous · Accepted Answer

Compare the interest you get on the savings account vs the interest you would have to pay to the bank if you take a loan.

If the interest on a loan is higher, it makes more sense to borrow it from yourself - take it from the savings account and make a strict plan of how you are going to put it back there in monthly installments, and stick to it.

Credit cards usually have way too high interest rates and should be used only in emergency if all the other ways are already used, and only for really critical stuff.

Pax · Answer

I'm guessing that you're looking for confirmation of one of your ideas.  If I were in your situation having a combined savings of $55,000, no debts and your income levels and 2 old cars.  I would first think about the transporation since that is how you get to work to earn the $3,400 a month.  I would look into replacing the car that needs the repairs with a reasonably priced used car, which you can get a used car loan to do.  As far as the $10,000 expense for the retention wall, I'd pull the money from the IRA....don't take out a second loan at this time.  Once you've paid off the car loan, you can then take the monies designated for that loan and open a ROTH IRA since you don't want to incur further taxes on monies that have already gone through taxation.

Marsha · Answer

I recommend posting this in the financial advise section where someone more familiar with this could give you better advice.  
I work in the industry myself and have found that it is best that you visit worth your personal banker to discuss your goals and options.  This is typically a free service at your bank and can customize a game plan.....home improvement loans, IRA, savings, credit, etc..
Good luck!

daisymayNY · Answer

do the work as you can pay cash  for it.
don;t take any loans out or touch  ira;s 
thats my opinion

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My husband and I can't agree on how to pay for work that we need to have done by a contrator.?

4 Answers