Suggestions on how to pay for kitchen?

nyrgirl35March 4, 2013

Just curious as to suggestions on how to pay for remodeled kitchen! Save up to pay for entire cost? Home equity loan? Did anyone pay for majority then put appliance on a sears/lowes credit card no interest for a year? Just trying to figure out best option, or if anyone else has any other ideas?

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We put money aside for several years while we researched, planned, dealt with other issues, and researched some more.

    Bookmark   March 4, 2013 at 9:12PM
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Cash works best - don't go into debt for a kitchen remodel.

    Bookmark   March 4, 2013 at 9:13PM
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Sophie Wheeler

Cash is always best. Ask all of those people who cashed out their equity during the boom and now are horribly under water or lost their homes.

    Bookmark   March 4, 2013 at 9:22PM
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Cash only in this household. We started a separate "house projects" savings account as soon as we bought the house seven years ago, and created a prioritized to-do list based on the inspection and our goals. We put away a little each month, and part of all tax returns, birthday/Christmas gifts from parents, etc. SO glad we went that way. Roof, chimneys, new electrical and other infrastructure came first. Other projects done, we had enough saved to start the DIY kitchen remodel in September 2011. But in gutting the space, we found structural problems that ate up the whole kitchen remodel savings account. We've got wonderful new windows, siding, a beam that actually holds up the second story, etc., but no flooring, cabinets or appliances. So we're saving again, and in the extra time have improved our floor plan, learned lots from the GW gurus, found good deals on salvaged materials, etc. If we'd gone into debt to begin with, we'd still have no kitchen but we'd have the stress of loan repayments and a mortgage broker pressuring us to finish the project on their timeline. Create a budget you can live with (plus 30% for the unexpected), and put a little away each month. Good luck, and have fun!

    Bookmark   March 4, 2013 at 9:35PM
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We also saved for it. Last time we did it we tried to buy appliances, sink, faucet, etc on sale if we could. Or with a credit card if they gave a discount or no pay for 6 mos deal, but always paid in full before accruing any interest. No way would I carry a balance or take a loan. For us no home remodel is worth going in debt for.

    Bookmark   March 4, 2013 at 9:49PM
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Add me in as another who saved up and paid cash. The added bonus of doing it this way was that my budget for a kitchen remodel was "x" amount so while there were obviously temptations along the way to break the bank, the budget guided my choices.

    Bookmark   March 4, 2013 at 10:28PM
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Depends on how much you are planning to spend. We put the appliances and other major supplies on credit card. The contractor costs we paid cash.

    Bookmark   March 4, 2013 at 10:29PM
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save for it. period.

    Bookmark   March 4, 2013 at 10:41PM
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Although we could have paid cash, we chose to refinance the house at a low rate
we had one more payment to go but the low interest rates were too tempting
We still have the cash if the situation changes.
We talked to several analysts who recommended this stategy whether we were remodeling or not
For any future remodels, we self fund our home equity loan instead of going through the bank
The board of directors must approve all major projects(over $100)
The board is my DH and myself

    Bookmark   March 4, 2013 at 10:42PM
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save for it. period.

    Bookmark   March 4, 2013 at 10:43PM
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Cash. One of the benefits is that it keeps you from spending more than you can. When the cash is gone, it's gone!

    Bookmark   March 4, 2013 at 10:47PM
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Not everyone has the means to pay for the reno w/ cash.

We paid ~1/3 w/ cash, 1/3 w/ cc (we get 1% cash back) which we pay off monthly, and remaining 1/3 on equity line (w/ rate of prime minus 1.01%, and we get to write it off).

My friend paid for her 5figures reno w/ cash and cc.

My other friend paid for her 6figures by refinancing, paying it off over the next 30 years.

You have to do what works for you.

    Bookmark   March 4, 2013 at 10:53PM
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Cash only here.

    Bookmark   March 4, 2013 at 11:00PM
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I'm refinancing for mine, but I would have refinanced anyway - I'm going from 4.25% to 2.75% (both 15 years). I'm getting $25K to pay for the kitchen (custom cabinets, countertops, flooring, electric - no new appliances). Our appraisal came in more than twice the amount of the new mortgage, and the increase in monthly payment is $63.

    Bookmark   March 4, 2013 at 11:33PM
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Kinda like A2gemini. We could have liquidated some mutual funds that we have been saving for just such an occasion, but decided to instead refinance at the very low rates available and take some cash out. I am not sorry we did this, but I do admit that it facilitated a bit of upward "scope creep" in the project.

    Bookmark   March 4, 2013 at 11:54PM
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Cash or credit card with balance paid each month to get miles

This post was edited by ctycdm on Thu, Mar 7, 13 at 9:43

    Bookmark   March 5, 2013 at 12:26AM
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We'd been paying cash out of pocket for all our renovations. Then, when looking at rates, we realized we needed to refinance. By refinancing the loan down to 2.625% (15 yr term) and taking cash out, we essentially get a very low net rate (when the tax deduction is considered at our marginal rate) and pay little incremental out of pocket. However, we are fortunate to have a lot of equity due to the length of time we have been in the house. The appraisal came in over 3 times the final loan value, giving us plenty of buffer in case of another downturn. It was a no-brainer to take out the money and invest the cash.

The biggest downside? As cited earlier, you become less sensitive to scope creep because it is paper money to some degree. We're also trying to use cash to pay for the less permanent items, like furniture and window treatments, to help keep some discipline in check.

This post was edited by gooster on Tue, Mar 5, 13 at 2:41

    Bookmark   March 5, 2013 at 12:27AM
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We just bought so refinancing would make zero sense for us. We are saving to pay cash without dipping into the emergency fund. It will be a while as there are more urgent house projects first. We did buy a new induction range (2k) and a new refrigerator (around $500) as the existing 1960s electric range had a non-functioning oven and there was no fridge. Otherwise the original 1926 kitchen complete with icebox and sans dishwasher will have to do for a few years.

    Bookmark   March 5, 2013 at 1:08AM
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We had been saving to do kitchen in prior home for a few years, then moved so we put that cash plus some of the gain from old house into or new kitchen. So i guess technically we used part cash, part equity. But our new mortgage rate was much lower, and we got a great deal on our new house (kitchen and everything else was outdated compared to neighborhood/market). Paying cash helped us limit project creep, but we still dipped a bit into our other reno savings, so master bath will now wait a bit.

    Bookmark   March 5, 2013 at 7:01AM
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I will have to admit to some upward creep also - but my DH loves to show off the items that raised the cost....
I have since infused the "home equity loan" to bring it back to baseline.
Now, we can start to tackle the baths.

    Bookmark   March 5, 2013 at 10:21AM
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I also refinanced and took some money out. I have a lot of equity, but I only plan on living here another couple of years.

So I took out a 5/1 adjustable (2.75%), and have a strict budget (20K) which so far I'm staying within. I'm doing Ikea (having someone assemble and install), and not getting my dream appliances, but still getting good quality. The biggest splurge will be the Quartz counter tops.

My kitchen badly needs to be remodeled if I'm going to sell, and at least I'll have a couple of years to enjoy it.


    Bookmark   March 5, 2013 at 10:29AM
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We just did a major remodel of our house (took the top off and put it back on higher) two years ago, so we have maxed out the amount of debt we're comfortable with. The small kitchen reno we're doing is something we've been saving for since and we're paying cash now. If we hadn't had the loan from the other renovation I would have considered a home equity line of credit or loan for the kitchen.

    Bookmark   March 5, 2013 at 10:47AM
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I wonder if anyone is going to admit it if they went into major debt here!

We did what a2gemini did for half of it. The other half, we paid cash.

This was for a whole-house reno.

This post was edited by drbeanie2000 on Tue, Mar 5, 13 at 12:23

    Bookmark   March 5, 2013 at 12:11PM
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We did a whole house reno and saved for years. We did 1/2 cash and 1/2 home finance but we had already paid off our mortgage. It took us 3 years to pay off the loan. The whole house reno was in the 6 figures. If it was just a kitchen reno we would have done that with cash and would not have borrowed for that.

    Bookmark   March 5, 2013 at 12:17PM
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Debbi Branka

I've been in debt - for many years! Since we bought our current home 3.5 years ago, we have paid cash (or 0% financing) for everything. Our kitchen was an insurance renovation, but we upgraded many things and paid cash for those too. About 1.5 years after the kitchen reno, we had the island designed and built (again with cash). We're at the beginning stage of finishing our basement now. That may go in phases as we only have about 1/2 the necessary cash saved up for that. It's ok - it's such a breath of fresh air to not owe credit card companies!!

    Bookmark   March 5, 2013 at 12:40PM
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Cash - saved up for it.

    Bookmark   March 5, 2013 at 3:12PM
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We generally pay cash as we go, which is easy when you are mostly DIY. We will charge things if we know we can pay it off in the near future or within a 0% promotional period, etc. I do currently have maybe $6k on such 0% cards.

I did underestimate our bathrooms reno and had to put some materials for the bathrooms on a non-0% card in August. We have just paid that off with the tax refund. We converted one full and one 1/2 baths to 2 full baths by moving a wall. These are our only baths, so I wasn't really inclined to wait and save up after they were demolished. The project was sorely needed - you could see the rot on the subfloor from the basement, and we need it done before we start having kids :)

Finishing the kitchen is our next project. All the electric, plumbing etc. is done and the appliances are in, so it's functioning but we have cobbled the rest together with the old cabinetry, plywood counters, etc. DH wants to build the new cabinets himself so I expect we should be able to pay cash as we go by buying the materials for next cabinet as he finishes the last. SHOULD being the operative word of course..

    Bookmark   March 5, 2013 at 4:53PM
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Primarily cash. As others have said, it really does help with avoiding scope 'creep'... as dollars on paper don't seem to be as scary...

The other advantage of waiting until we had the money, in our case 15 years...(did I scare you off...LOL), was that we actually then had the money to do a much better quality job that we would have if we'd done it when we first bought our house. Kids have left home, and this reno (almost complete house gut and redo) could last us till we're in the ol' folks home.

Having said that, we built our previous house , so kitchen along with everything else was part of the mortgage. Today's interest rates are so low, that I can see financing as a very tempting long as you keep in mind your home's value...realistic improved market value with the reno, and the total cost of financing along with any present mortgage/loans you may have.

    Bookmark   March 5, 2013 at 5:10PM
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We took out a remodeling loan based upon the after-remodel appraisal of the house. We had bought the house from an estate on a very desirable street in our town and got a good deal on it. The after-remodel appraisal gave us more equity in the house than we had when we first purchased it. It kept us to a very strict budget, which was good. We snuck in contingency funds (which the bank technically didn't allow for) to cover any surprises, especially since our house is so old. We lucked out, though, and there were no real surprises, so we ended up with extra left over....of course, I used some of it to upgrade some things. :)

This was a lucky situation for us, though, finding the (almost) worst house in a great neighborhood. If it hadn't been the case, we would have saved up cash for the remodel and split up the projects as we had the money. We need to paint the house this year, and waited until we had the cash to do it.

    Bookmark   March 5, 2013 at 5:28PM
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I have a credit card that gives me mileage. I would pay some on that as long as I paid the amount off at the end of the month.

If I was going to sell in a few years, and I knew that remodeling the kitchen would add to the value of the house (it would in my case), then I would consider either a home equity loan or refinancing my mortgage (I have good equity) since the rates are very low right now.

If an appliance store did a deal with 0% interest for 1 year or some such, I would do it if I knew I could pay it off in that years time.

    Bookmark   March 5, 2013 at 6:03PM
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We saved up for several years and bought a wreck of a house at about half the price of a livable house in the same neighborhood. We borrowed the entire purchase price from my parents so we did not have to deal with a remodeling loan, and used the money we had saved for a down payment as our renovation funds. We then refinanced the house to repay my parents. The whole process was both extremely fun and extremely stressful, but I would do it all over again in a heartbeat.
I think the best way to pay for a renovation is cash, however, if you have a lot of equity in your home, and are comfortable making your mortgage payments then taking out a home equity loan is fine. As for other creative ways to pay for a reno the only one I can think of is taking on a second job temporarily. Obviously this only works if one has the time, but it is a great way to save up some money quickly.

    Bookmark   March 6, 2013 at 2:08AM
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We saved up the cash for the job, but are putting everything we possibly can on the credit cards and paying the credit card bill in full each month. It was a bit shocking to see an 11k credit card bill last month, but I earn points and frequent flyer miles on the card so this kitchen reno is helping my wife and I go on vacation when its all over!

    Bookmark   March 6, 2013 at 8:03AM
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We charge every single thing on a credit card that pays back between 1-2%, then pay it off every month. At the end of the year, we get a hefty cash-back reward.

    Bookmark   March 6, 2013 at 9:40AM
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Yes - the credit card gig worked great also - we pay it off every month and I had numerous free flights to visit DM during the reno.
Some places will give a cash discount and others don't take credit at all.

    Bookmark   March 6, 2013 at 10:11AM
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We are right in the middle of our remodel. Here's what we're doing. We saved for a long time. We didn't do anything other than some DIY to the cosmetics of our kitchen (painted cabinets ourselves, laid a peel and stick floor ,hardware..) for 10 years knowing it would eventually be ripped out.

For our new kitchen here is what we've done:
We paid cash for our GC - at the negotiation phase, be sure to let them know if you intend to pay cash because they might knock the price down a bit.

We got our cabinets from Home Depot who gave us 12 months interest free financing. We have the money set aside to pay those in full but decided to finance them at 0% because in the meantime,my own money can earn interest in the bank.

Appliances we put on our credit card for Disney points but paid them off right away (just did it for the points).

Paid for granite and fabricator in cash.

Little things like bar stools, light fixtures, cabinet hardware we bought a little at a time and put on our debit card since that stuff was only a couple hundred bucks here and there.

A few words of advise:

1. Don't do ANYTHING you can't pay for now. It's not worth a new kitchen that you can't afford to enjoy. You'll be sorry and the housing market is not dependable.

2. Don't pay in advance for anything in full - hold your final payments until work is completed to your 100% satisfaction Otherwise you'll have no leverage to get it fixed.

3. Don't skimp on the important things - the definition of what is important is different for everyone - some might say high-end appliances while others might not care as much as that as they do about custom or solid wood (not MDF) cabinetry. Make your list and agree to it with your partner before you start.

4. Have FUN with it!!

Good luck!!!!

    Bookmark   March 6, 2013 at 10:32AM
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robo (z6a)

We have no mortgage but are taking a line of credit backed by home equity to remodel the kitchen and baths. It was either that or buy a more expensive house and get a mortgage, either way we know where we're comfortable. At least this way we can redo to our taste. But yes, scope creep is proving to be a problem!

Our house has already appreciated past our remodel budget as is, although of course things can change with the market. I also want to stay in this house for a loooong time. Definitely don't want to live here forever with a terrible kitchen then remodel for the next person to enjoy!

    Bookmark   March 6, 2013 at 11:05AM
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Suzi AKA DesertDance Zone 9b

I'm with the cash people.

Unfortunately, I didn't know, and refinanced, took cash out, and did some remodel. Now upside down in the house, and the kicker is I have to pay taxes on that cash I took out!!

Be careful. Be wiser than I was!

    Bookmark   March 6, 2013 at 1:52PM
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We had a home equity loan just in case.... it had a zero balance. I got so afraid of the mistakes the banks were making repossessing houses with no issues that I closed the equity loan. I don't want to owe anything to them. They even make mistakes with the wrong address and come in and take everything so I am not completely safe. But I feel I feel a little safer.

    Bookmark   March 6, 2013 at 2:00PM
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Saved, paid cash to the contractor and for appliances, flooring and miscellaneous other items used credit card to get points and paid off balance in full each month.

I waited 20 years for my dream kitchen, but as with everything in our house, it's all ours. No mortgage and every bit of upgrade on the place was done when we had the money to cover the cost. We just installed impact windows; saved till we could get exactly what we wanted, top quality and custom designed and the entire house is now safer from whatever hurricanes may come our way here in Miami.

The joy and peace of mind of not owing a dime on your home cannot be overstated.

    Bookmark   March 6, 2013 at 8:34PM
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We have a savings account separate from retirement funds. It's for emergency use as well as things like the kitchen. We can probably pay about half without touching it, then use that for the rest. Of course my Amazon cc gives me points I can use at checkout on Amazon, so between that and the extra protection the cc provides I will put most things on that and pay it off each month.

We made sure to buy a nice house well below what we could afford. That allows us a mortgage less than most rent, contributions to retirement accounts, and enough left over for almost anything our modest hearts desire plus saving. We both grew up with little money, so spending comes hard to us. I'm even reluctant to spend from the savings account, but that's why we have it, and we invested it well (about 40% was due to growth).

    Bookmark   March 6, 2013 at 10:02PM
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We have done many different remodels over the years and have paid for it many different ways.
HELOC, refinance and cash. I have done it all.

I have paid off the loans several times and refinanced again for other reasons several times.

The most important thing in this is that I have a very firm budget on the housing cost. My housing cost will not exceed 2.0 to 2.5 times my income. I also made sure that I would not have a mortgage in my retirement. Right now, I have no mortgage. I am 50. I have enough money put away for my kid college tuition. I would not be able to do this if I bought into a house that costs 4x my income which I see folks in my income brackets do.

I see the price creep when you use loan to remodel your home. All of sudden, you get a house that is 4x your salary. You may be able to live in it and afford it but it comes at a cost to your other financial obligations. To me this is the big number you need to keep in mind not necessarily how you pay for it.

If you pay cash and by forcing yourself to save, you don't creep up the price ladder. So that is the advantage.

As long as you don't over extend yourself, there is an argument to be made that you want to do the remodel sooner than later so that you an actually enjoy it as long as possible. I would rather do the remodel and pay it off in three years rather than save for three years and do the remodel. That is just me.

    Bookmark   March 6, 2013 at 10:21PM
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I'm avoiding price creep by refinancing first, getting enough cash out to cover the budget as it stands. We added under cabinet lighting when the cabinetmaker's bid came out less than expected.

    Bookmark   March 7, 2013 at 9:43AM
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My first response was getting kind of long so I cut this out, but I want to chime back in that we did a 203k loan at first. This is a rehabilitation loan where the bank gives you a mortgage for the post-reno value of your home. At closing the seller is paid the purchase price and the bank holds the remaining funds in escrow, to be released to you AFTER you have completed the project. Of course, they have their own inspector to confirm this. We were required to do this type of loan because FHA would not give us a mortgage otherwise.

We had what we thought was enough cash on hand after closing to finish the first few projects, get that inspected and have the bank release the funds for those, then use that cash to do the next few projects.

Unfortunately we did succumb to scope creep at this point and do work not on the bank's approved items - the main thing was to move the kitchen into another room before we laid the new floors. The issue with that was there were a lot of hidden costs (plumbing, electrical) that quickly ate up our cash and (DIY) while not actually allowing us to get to finish a project for which the bank would give funds.

So, we ended up borrowing money from parents and running up credit cards. I knew I could pay this off using tax returns and the funds from the bank, but there were a few stressful months there with $10k credit card invoices.

Just think about your upcoming finances.. we were first time homebuyers and bought the biggest (3bed/1.5 ba), worst house on a nice block that we could afford, with the thought that we wouldn't have to move for years, if at all. However, all the work that has to be done to make it livable has delayed any wedding plans, kid plans, new car purchases, and additional retirement savings for at least a couple of years. I can see the end of it now, but that just sucks. If I could do it over again I would go for a nice, finished starter home, or buy this place and just do the cosmetic makeover (which was the original plan) and move when we couldn't deal with the kitchen anymore.

    Bookmark   March 7, 2013 at 10:30AM
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Like many others here, I paid my GC in cash (i.e., by check). How else does one pay a contractor? Over time, with interest?

    Bookmark   March 7, 2013 at 10:44AM
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In addition to paying for items with a credit card and earning points/cash back/frequent flyer miles another way to save a little bit of money is to use online shopping portals. By using online shopping portals to access online stores I have saved 3-5% (and sometimes more!) on almost everything I have purchased for my kitchen.

The way online shopping portals work is you go to the portal site. On that site you will find a list of retailers associated with the portal. Find the name of the retailer you wish to make the purchase from and click the link. It will take you to the retailer's site where you complete the purchase just like you had typed the url of the retailer's site into your browser. A few days later your account at the portal is credited with whatever % cash back the portal has arranged with the retailer.

The best known online portal is Upromise which allows the cash back to be put toward student loans or a 529 plan, but there are tons more. Every airline has a shopping portal that offer frequent flyer miles and most credit card companies have a portal that offers points.

A great site to find out which shopping portal a particular retailer participates in is

I've saved over $500 on my renovation this way. Not using an shopping portal is just throwing away money.

    Bookmark   March 7, 2013 at 11:06AM
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