Indore Stock：What❼the best way to pay for home renovations？

The Mint app has shut down as of Jan. 1, 2024. For alternatives, check out CNBC Select❼ranking of the best budgeting apps.

Since the onset of the coronavirus pandemic, renovations have become a higher priority for people, as we❻ all spending much more time at home. A recent study from Groundworks Companies found that 20% of homeowners plan to use their tax refunds for home improvements this year, compared to just 10% in 2019.

In the past, the plan to "one day" turn the spare bedroom into an office or add a deck to your backyard might have been lower on the priority list than, say, taking a memorable family vacationIndore Stock. But now, as people adapt to having the whole family work, play and go to school under the same roof, home renovations feel like less of a luxury and more of an immediate need.

When financing such large projects, be it a new kitchen or an upgraded basement-turned-schoolroom, you usually have the option to pay cash, finance the costs with a loan or use a credit card and earn rewards.

Select spoke with two financial experts to get their take on how to select the best payment method for your budget.

Los AngelesCash, credit or loan? Cash

New homeowner and Albert financial planner Mark Reyes recently renovated his backyard. Reyes and his wife chose the project as their first major undertaking after the coronavirus hit, and they hope that having a nice outdoor space will allow them to see more of friends and family safely in 2021.

The couple paid for the project in cash, even though they could have used a rewards credit card to earn points or miles.

Paying in cash ensures that you can actually afford the purchases you❻ making, and you don❽get stuck with what Reyes calls "toxic" (or high-interest) debt. It requires some patience, as most people need several months or years to save up the money to pay for a renovation, considering the low-end average cost of a kitchen remodel is $10,000.

Cash is also usually preferred when you❻ hiring local contractors, which was important to Reyes given how hard the recession has hit small business owners. Paying in cash (or check/e-check) often costs contractors fewer processing fees, and they are often able to access the money faster.

To get a jump-start on saving, sign up for a budgeting app like Mint or PocketGuard that lets you create specific savings goals. Deposit your cash into a higher-yield option like the Ally Online Savings Account, which offers above-average interest rates on all balances, no minimums and zero monthly fees.

But before you decide to drop a lot of cash on a home improvement, Reyes suggests asking yourself a few questions to make sure you❻ not getting in over your head:Is there room in your current budget to afford a one-time or recurring payment? Even if you pay cash, projects can take months, so map out your spending plan according to the payment schedule your contractor lays out for you.Do you still have enough in your emergency fund? Even though Reyes advocates using cash for home improvements, he does not recommend pulling from your emergency fund to cover these kinds of costsPune Investment. Make sure you have at least three to six months✩orth of cash put aside before you drop thousands on a major project.Is your debt under control? If you have high-interest debt hanging over your head, but a large pot of cash to spend on a home improvement project, it❼probably in your best interest to hit "pause" on the project and pay the debt off first. (Here❼how much credit card debt can cost you if you only pay the minimum.)

If you meet these requirements, Reyes says that you can confidently move forward with the project, especially if the purchase or project will improve your lifestyle.

Jaipur Wealth Management