Is it ever OK to go into debt? I know what I'm about to write is contrary to everything I’ve pretty much ever posted but, as much as it pains me to say, we'll be taking on a substantial amount of debt soon. I’ve realized that there are emergencies and then there are EMERGENCIES! We recently learned that we have mold in our home (fortunately, non-toxic mold). It’s in our basement, our attic and in our kitchen cabinets. While every home has some mold, our house has levels that require remediation. Do we have enough money in our emergency fund to handle mold remediation and to replace the cabinets in our kitchen? NOPE! So what are we supposed to do?
Fortunately, we recently refinanced our home so our bank had a recent appraisal and all of the documentation needed for us to take out a Home Equity Line of Credit. Because of our low debt levels and great credit scores, our bank was more than willing to lend us the money, and quickly. 5 business days after applying for the loan we were signing the paper work. The home equity line will allow us to remediate the mold and repair the attic so the mold will not grow back.
So now that the mold issue was “paid for” how were we to pay for a new kitchen? We shopped around for the right kitchen AND the right financing options. We asked friends and family about their experiences with certain companies and we decided that Lowes was the best option for us. We would be able to have a new kitchen installed and finance it at a low rate. We were even able to save close to 20% because we used their financing options. Little do they know we’ll have this paid off quickly! Sometime after Thanksgiving, we’ll have a brand new kitchen and our house will be mold free.
Wow, we’re going to be in debt up to our eyeballs! How the heck are we supposed get back to being debt free? Simple, with a plan! Andrea and I sat down and looked at our budget and started cutting. We pretty much cut anything that wasn’t necessary. For example, our whole family took Tae Kwon Do twice a week. Now, only the boys will take Tae Kwon Do and only once a week at that (we didn’t want to pull them completely out because we feel the martial arts are very important for our kids). We determined our monthly payments, the exact amount we would have payoff and figured we could pay off this mountain of debt we’ve just gotten ourselves into as pretty quickly, relatively speaking. In a year and a half, we plan to be exactly where we were before we found out we had mold. Considering the obstacle in front of us, not too bad.
This has been an overwhelming experience from the beginning when you consider the possible health ramification and our financial philosophy. We have a nice chunk of change in the bank but not nearly enough to pay for all of the work we need to have done. After taking it all in, and it took some time, I’ve come to the conclusion that this is a blessing in disguise. How so you ask? Well, we got lax; we became comfortable; we became unwilling to cut because, well, we could afford it. We didn’t have any debt other than the house, so why not take Tae Kwon Do? Why not re-arrange the house and buy a new TV? Why not inflate the budget categories a little? We lost focus! This situation has helped us refocus our financial life and we’ll be better off, in the long run, for it! It’s helped me to learn to be flexible. Yes, it’s good to be debt free, but as I said at the beginning, there are emergencies and then there are EMERGENCIES! I had to learn to not take it as a personal failure; that I let my family down. It’s been overwhelming, but we’ll come out stronger on the other side!
So, is it ever ok to go into debt? Right now, we have no choice.