Downsizing a budget can be painful for anyone. However, homeowners involved in home remodeling projects must be realistic about what they plan to spend and then try hard to stay within budget. Preparing to remodel a home and planning to buy a car are situations that have similarities. Both in a remodeling job and a car purchase, you have an idea of what options you prefer, but if you actually choose everything that you like, your spending may go through the roof. Fortunately, a remodeling budget can be stretched, with excellent and stylish results.
A great way is to use “plastic” to pay for your remodeling project. Denver remodeling contractors state that a vast number of fairly wealthy clients have been deferring renovation expenses on their credit cards. And it’s not just those insignificant jobs, but for renovations that run in excess of $100,000.
It is all apart of a strategy to accumulate a vast number of credit-card reward points that can easily be redeemed for certain items such as VIP packages to sporting events and exotic vacations. Since money has to be spent on home remodeling, the homeowners often say, they would like to get something in return – a perk that normally cash does not offer.
Greg Cave says he has put over $1 million on his American Express (US:AXP) card over the past four years to pay for a kitchen remodel, landscaping and a customized lighting system for his home in Parker, Texas. Cave, a 48-year-old owner of a computer-consulting firm, says he pays credit-card balances in full every month while earning points, which he and his partner have redeemed for trips. Earlier this month they took a week long vacation in St. Thomas that was paid for by some of those points. “If I’m just going to write a check at the end of the month, why not get those extra points?”
Indeed, people who make major credit-card purchases can earn elite-level perks. The rewards vary by issuer but include yacht cruises with views of the America’s Cup sailing race, four-night packages to the Sundance Film Festival in Utah, and access to private events with athletes, designers and celebrity chefs. Or, depending on the card, they can earn cash back at a rate-often 1% to 2% of their total purchases, which is higher than what many bank deposit accounts offer.
Expensive household improvements result in points racking up. In 2012, homeowners will spend approximately $120.7 billion on remodeling, an amount that is 5.9% higher than in 2011 and the highest in 5 years, as reported by the Joint Center for Housing Studies of Harvard University. While most homeowners pay remodeling companies via personal check, credit cards come in second place. The National Association of the Remodeling Industry reports that 28% of remodeling companies are being paid with plastic.
Credit cards are the top choice of payment for customers who are renovating their high-priced homes, according to Mel Orellana, VP of financial operations at Prime Home Improvements, a renovation company located in White Plains, New York. Increased business is happening at specialty firms as well. Darren Kammer, president of DK Automation of Plano, Texas, a company which specializes in systems that control home lighting, says that credit-card payments have become more routine over the past year.
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Author: Jim DowdThis author has published 5 articles so far.