I'll admit it - I borrowed money for my new kitchen. I refinanced my mortgage from 4% to 2.375%, and got cash out for about $20K of my $30K project.

It's only been 6 months, but I love my new kitchen SO much - I'm glad I didn't wait until we had the cash. We'll live in this house for another 10 or 15 years, and we'll enjoy the kitchen every single day.

Had we left the reno at just the kitchen it would have been cash. However we had reno-creep, big time, and wound up moving out of the house for 6 months and doing a gut-job and complete home reno. Half was cash for which we had saved for a number of years and the other was a mortgage against our mortgage free house which we paid off in about 2 1/2 years.

Because of the unplanned reno-creep (OMG that is soooo very easy to become a victim of) we did nothing, no dinners out, no holidays, no extraneous spending until the unplanned mortgage was paid off. Am I glad we did it even though we didn't spend any money while paying it off - oh yea!

We paid off our house in 2010a nd my husband would completely lose it if I suggest ever going into debt again...for anything. We buy everything we can on our credit card for the rewards and pay it off every month. We are doing much of the work of the reno ourselves to save money because we have other projects we need to get done this year or next as well. Even when we did have a mortgage, there was no way in heck I would have gone into more debt to replace a kitchen that was working but not pretty.

Cash. My husband was a real prince about the whole kitchen renovation - I waited a long time for this kitchen, and he was on board with whatever I wanted - I bought high end appliances, custom built cabinets, and beautiful, expensive porcelain tiles from Italy.
He asked only one thing of me - that we have the cash ready and available before we start. And so we did. Ironically (in a good way) the year and a half that I was squirreling away cash in low interest rate bank accounts and short term CDs, the stock market sank like a stone, so we really came out way ahead than if we would have invested that money.
It was so liberating to buy things without that sickening feeling about getting us into debt with every nice thing I wanted. And besides that (I've had my new kitchen about 5 years now), it would be so depressing when the kitchen will slowly start to show it's age (so far it looks as good as new) if I were still paying it off while I start yearning for a newer and better kitchens.

OMG! this is so interesting!

Most everyone did some kind of cash, or cash + with the cash back and rebates.

I know 10 years ago I would and could have just charged it. Done. Anything I wanted.

What I also notice here is the majority didn't necessarily get their dream kitchen -- or even want to go that route. Most did what they wanted and could, planning not to lose their lives doing it.

So much for the Mystery Judgment Council who condemns any kitchen not made with a gudzillion dollars. Here's the proof: People do what they can, with wisdom (and coming here) and with good advice. Doesn't matter WHO is looking. Everyone deserves the opportunity to have been proud of completing a kitchen!

I applaud you -- and bow down to those who have a finished product. I plan to join you someday!

Cash, part of the reason it was a budget update.

Cash. We lived frugally and saved and I'm very proud that we were able to pay for a project like this in our 30s. It was painful writing those big checks though!

As so many others have said, a combination of cash, 0% financing on appliances, flooring and some needed furniture to fill the new space. Obtained a HELOC and have used it twice but paid back off very quickly. We purposely bought a lower priced home in VA in order to use the proceeds of the sale of our home in CT to renovate to our exact needs. It's amazing to have done the scope of this reno and be debt-free (not including primary mortgage, of course). Such an interesting topic. Thanks for the question, OP!

Mostly cash. We ended up carrying about 5k on my cc for a few months, but mostly because it fell near Christmas so I was spending more than normal which hindered our ability to pay it off. I got a TON of Amazon points, so I saved a lot that way too. As it accumulated, I used my points to get more stuff.

We cook a lot. We only order out 2-4 times a month. So if you add up what we saved vs the average for dining out, over the 10 years we were here we ate in enough to pay for the kitchen! Which now allows us to enjoy cooking more, and eat out less...

I did what similar to Annek did.
I have the cash to pay it off but used CC to pay to get points and then refinanced with cash back to pay off the credit cards.
Best of both worlds. - points for CC, higher interest on investments than mortgage

Half cash and half equity loan. I was also our GC and we did some of the work on our own. We love our reno kitchen and so far don't regret it. Our kitchen was 45 years old badly needed the reno.

I was very similar to annkh and a2gemini... had been paying cash to do the remodeling and then realized a cashout refinance down to 2.375% 15 yr was going to pay for a whole lot of remodeling. The key here is my loan to value ratio is still below 30%, so there was a lot of equity to tap. With the high marginal tax rate in California, the net financing cost is very low, and investing the cash instead is the better option.

No finished kitchen yet, but the two total gut bath renos we did (simultaneously) we saved up about half of the cash, then used no-interest financing at HD and the tile store for the rest. Everything for that was DIY except for the plumbing; otherwise we could not have afforded it. It was probably around $15k for both baths.

The kitchen has been super slow DIY and is not finished yet, so that's been cash as we go. We could continue that way as FH wants to build the cabinets, but he's got a lot of other things to do, trying to start a business, etc. so I am trying to take that off his plate. If so and we do RTA, it will probably again be cash + no-interest financing.

Also on a budget here, so had to save up cash mostly for the labor, bought items over the course of a year (or more) as the money became available.

What's most interesting to me about this topic is who is answering the question. Frankly, the people who are building showhouse kitchens (and can afford it) are not the ones answering. Almost every answer is from someone who was a) on a strict budget and/or was willing to b) compromise, c) save up in advance, d) change out part but not all of their kitchen, e) buy things on Craigslist, etc. Also, while the question was whether you used cash or credit to do your kitchen, no one has taken income into consideration. Not that I expect people to share their income on here LOL, but surely there are those who earn $40,000 a year and those who earn $400,000. There are so many more factors that go into the cash v. credit equation.

About half cash, half home equity -- basically taking the place of a small mortgage we budgeted for and didn't need. I know the frugal way would be to save up all cash and then do it, but I'll be honest, I wanted to enjoy a kitchen now, not re-do in ten years to sell the house. I'm lucky to have disposable income though! And I made a deal with my husband that I wanted the kitchen instead of a second car and insurance payments.

This is our second home and we bought knowing we'd need to upgrade kitchen and baths. I thought the income question was fair - we're DINKs and together we make almost double the median family income in our (fairly poor) area so we are comfortable but don't have, like, helicopter money. We have a lot of financial stability for various reasons (my government job, family help) which helped us make the plunge but also wanted to be reasonable and not overimprove for the area.

The big indulgence for us was moving the kitchen, which almost doubled our budget from if we had left the kitchen in its (unsatisfactory) location. Because that fundamental change ate up a lot of the budget, we went low budget on counters, tile, and didn't go for top of the line cabs, but are happy knowing we fixed the big stuff and can worry about the small stuff in the future.

Talk to me again after the next emergency expenditure though - this week it was a surprise need to refinish the hardwood floors on half the first floor!

To save cash: we are keeping mismatched stove, micro, bar fridge and dishwasher (will replace when they break), took advantage of contractor friend discounts for flooring, shopped early and stored stuff, got cheap lighting fixtures (the one thing I CAN diy when I want to replace), trolled kijiji and ebay for bargains, used IKEA butcherblock countertops and got quartz offcut for around the sink, used plain white field tile for most of the backsplash. We are not DIYers so our contractor is doing 99.9%.

Also to save money, I tried to plan everything VERY WELL in advance and communicate very clearly with our contractor, trying to minimize changes and re-dos. Somehow little things to redo still creep in here and there, though. And when the initial electrical quote almost made my eyeballs pop out of my head, I clawed way back on that and managed to cut it in half.

So far the reno creep includes floor refinishing, replacing our stair treads which was surprisingly pricey and...? We'll see what else sneaks in there.

This post was edited by robotropolis on Thu, Feb 13, 14 at 12:46

PS I tried to save money by DIYing our powder room but it turned out our contractor had to basically re-do the whole thing except assembling the vanity and installing the faucet! The floor I thought I could save had a big hole in the tile, the vanity didn't clear the baseboard, I decided I wanted to move the medicine cabinet I had already hung, the toilet my husband installed bumped into the door, etc. etc. So it was a good learning experience but didn't leave much cash in my pocket. Looks a lot better now that my contractor fixed everything.

Was proud of myself for one thing though - vanity was a bit too high for the plumbing so I replaced vanity feet with cute adjustable ones from Lee Valley all by myself...well, with some supervision.

This post was edited by robotropolis on Thu, Feb 13, 14 at 13:55

I saved until I had the budget plus scope creep. I paid for everything cash via cc. I haven't actually carried cash on me in forever. It's like water and has a tendency to run out of my hands, esp if it's less than a $20! I am diligent about paying any balance in full at the end of the month. I wanted to enjoy my kitchen free and clear.

Robo has a good point. We hired a GC which increases the cost of a job. My DH and I know that we are not DIY'ers. We have no illusions, we don;t pretend to know anything about anything when it comes to home renovations. I did cosmetic upgrades to our kitchen initially by repainting the cabinets, changing the hardware and changing light fixtures myself but the gut job we left to the pros.

We had leaking sinks throughout the house, 40 year old shag carpets, splitting lino, splitting cabinets, no counter space, wonky wiring, dripping plumbing and so it was time to call in the pros for a whole house reno.

I posted that we waited 17 years & paid cash but we didn't spend that 17 years just saving for the kitchen. We bought our house when it was 5 years old & it wasn't long before I wanted to replace the oak kitchen & pinkish formica. Replacing a 5 year old kitchen was unthinkable, as we had a whole house to decorate. Through the years, all the neighbors replaced their countertops with granite. I've always been willing to wait to get what I really want & I wanted to gut the whole kitchen. We finished our basement, replaced the cheap builders windows, new HVAC, paid for college, etc. Some of those expenses, we used a home eq loan, which we eventually paid off.
I thought I was getting a new kitchen 2 years ago but we walked that kitchen down the aisle (DD's wedding).
Anyway, I don't think there is anything wrong with using a low interest line of credit, knowing you'll be able to pay it off.

Another place we could have saved cash was going IKEA instead of custom cab place. I may not be handy but I can put together cabinet boxes like a pro. However, the idea gave my husband the creeps as the nearest IKEA is 1400km away, so we couldn't pop out and get a missing part or exchange a door front or anything like that. Plus we had a really tight space, so being able to customize the cab width down to the inch was very helpful.

This post was edited by robotropolis on Thu, Feb 13, 14 at 14:27

This *is* very interesting. I don't know how much you can infer about those who haven't responded. I think we are a diverse group as far as income and age go.

My late husband took out a life insurance policy to cover the mortgage so that, if something should happen to him, I could keep the house. Well, that happened. I consider myself extremely fortunate to have a roof over my head that is paid for and keeps me warm and dry, enough to eat, and a car that starts when I turn the key. And a daughter I adore.

I only buy what I can afford. At least that's the plan. If I need a new roof, I'm ready. It's unforeseen health issues that are the wild card.

I was brought up not to talk about money and how much you spend on stuff. However, here, among GW friends, I love hearing about how a lot can be done for relatively little $$$.

I paid cash. I had money. Now I have kitchen. Wish I could afford groceries!

I robbed a bank, stole a few cars and robbed a few neighbors. I also raided the kids bank account. I got caught though and am now in jail; so, it will be awhile before I get to enjoy the kitchen. :)

We have the cash due to finally selling my parent's house (they're deceased). But I'm wondering what the rates are on a home equity loan, if it makes sense to finance instead.

Being that we bought just before the real estate bubble burst, HELOC was not an option and we had no HE, and still have none, to speak of. It's a good thing we're not planning to sell anytime soon as we are at least a couple of leagues under the sea.

I didn't save much money cuz I kept going on GW reading about things I had to have.
Edit: robotropolis, cute picture of your cats.

This post was edited by romy718 on Thu, Feb 13, 14 at 16:56

We sold our old house and used the cash from that house to pay for the remodels of the kitchen, 2 bathrooms, laundry, sunroom, new gutters, etc. of the (run down) new house. Now, we blew through that cash in no time flat, so the master bath remodel and attic room addition with dormers that we had originally planned for will have to wait a few years until we have the cash for those projects. Or we might do a combo of cash and HE loan.

I'm just curious how anyone gets home loans? Maybe it's our area, but almost everyone I know has seen their property values drop by about 40%. It's been so bad, I have friends that are realtors and mortgage brokers and they can't even help people refinance their CC debt. Maybe it's just our area...but I've read it's been bad in many areas of the country.

Being in eastern Washington state, we never had the BIG real estate boom, but we sure have had the fall.

Oh, back to original question...I love a challenge, so it's paint and DIY for me :)

Lavender : I'm on the west coast of Canada and so you'll have to take my comments out of the equation. Our real estate never fell although my children wish it would do so.

I'm on the west coast of Canada and so you'll have to take my comments out of the equation. Our real estate never fell although my children wish it would do so

Likewise, I'm in an urban area on the west coast of the United States and although housing prices fell for awhile, they didn't fall by much (or maybe they just didn't go up quite as much, as opposed to actually falling). Home loans and refinancing is big business here.

You both are lucky! I talked to three mortgage brokers yesterday and a realtor (two are friends) and they're hoping something called HARP 3.0 goes through. Everyone seems to be concerned about the future of their businesses...and even so called 'sharks' or private money lenders (at 10% and up) will no longer loan money for an owner-occupied home. Only investment properties...

Ours was new construction and when I start thinking about what we financed v. paid for the majority of the kitchen was cash. Wow! I never really thought of it that way. Flooring and counters were financed. We paid cash for all the appliances, cabinetry, hardware, sinks, faucets, etc. Our mortgage rate is 2.62% and our investments are earning at a higher rate. There was no way we were going to invest anymore cash into the house at that low of a rate. Plus, our mortgage is short-term.

Where I was stupid is not getting a points credit card. Really screwed up on that one. My dear friend is flying 6 adults to Hawaii from Chicago-O'Hare with miles left over.

LOL, diyguyjr!

I, too, am surprised by how many are paying cash.

We refinanced our home, went from 4% to 2.875% for 10 years (we're nearly 20 years into our mortgage). We could have paid cash since I, like another poster, also inherited a nice chunk of change when my dad died over a year ago (my mom preceded him by 7 years and I'd so much rather they were still here to spend their money themselves). However, we chose to invest my inheritance instead. The return on that money has already been and should continue to be (all long term investments) higher than the interest rate on our home loan. We are, as a rule, pay as you go people - one credit card paid off each month - but both our financial adviser and a very dear friend who is as savvy about money as my parents' were said the same thing: refinance to pay for the remodeling, invest the cash. Oh, and keep your old vehicles (14 yrs and 11+ yrs) until they die. Okay by me, I'd rather a new kitchen than a new car any day!

As another wise poster wrote, each to their own. Pay cash or finance it, do whatever makes the best financial sense for you.

Cash only!!

Surprising results. I was expecting to pop in and be one of the only cash responses but it looks like there are a lot of us. We keep things simple - if you want something, save up and pay cash for it. The only exceptions we currently have are the mortgage (that would be a LOT of saving), and the note on one of our cars that we took out because the interest rate is far below the rate of return we've been getting on investments.

I refinanced at a fixed 2.75 and my investments are doing much better than that. I am making extra payments, and in addition, I can deduct interest. If that scenario changes, I will pay off the mortgage.

Cash ... We waited & saved for many years. It was my 50th birthday gift. And kept me busy, so I wouldn't think about my age :)

We paid cash, and made it into a game. We set pretty tough budget goals, and tried to beat those with each purchase. If you're up to it, you can negotiate the price of everything with cash, it opens up hidden discounts everywhere. We certainly did. We know that generally kitchen reno's don't pay you back fully, but our goal was to have ours ultimately make us money.

cash for most, HELOC for balance...mostly appliances...
with the HELOC u can claim the interest on your taxes...

didn't use c.c.....

DH was GC, brother did electrical, friend did plumbing-paid him in cash...so we saved with that...

really tried to save wherever we could and i am fine with using the HELOC, i love my kitchen and appliances and it was so worth it...

when u are using cash, i feel u think twice about how much u are spending, that strategy helped us...

i don't think we would have financed the whole thing, that's not how we roll....
i guess that's what makes everyone different...we all have our own way of doing things and what works for one may not work for another...

"keep your old vehicles (14 yrs and 11+ yrs) until they die. Okay by me, I'd rather a new kitchen than a new car any day!"

lisa, I hear ya. My car is 10 years old and I still love it (Honda CR-V). I take good care of it and have no desire to get a new one.

When I paid my car off 5-6 years ago, I took the $400/mo. and put it into savings each month. I didn't miss it and figure maybe one day I'll need a new car or have to make a repair on mine. It's added up nicely.

Construction loan - had the added advantage of regular bank inspections before funds were released so schedule was kept and things were done promptly. Had a great GC and that made a huge difference - did a demo of a sun room, used the space for an addition and then did a completely new kitchen.

"keep your old vehicles (14 yrs and 11+ yrs) until they die. Okay by me, I'd rather a new kitchen than a new car any day!"

Same here. We kept our '92 Volvo 960 going until December. It still looks great and because the transmission has issues it probably has next to no resale... I may actually buy a transmission and install it in my spare time and have the car rejoin the fleet.

I'm enjoying this post. To add some more detail as to why we paid cash...at the time, our property value was way down, so there was no equity.

My husband moved into the 2br/1ba house that I owned. We needed a 3rd br because we both have home offices and we wanted a second bathroom.

So we had a choice, spend the same amount of cash on a down payment or on an addition. If we moved, our mortgage and property taxes would have been higher. If we stayed put, we'd continue to have the same monthly expenses and some equity.

We now have the space we need, a home we love, close friends nearby and our mortgage didn't go up. We're at the point in life where planning for what we want in retirement is even more important and the decision to make a long term investment to stay in the house won out.

Since then, prices have gone up and we refinanced the interest rate down on the original mortgage balance so expenses are even more favorable. Our goal is to retire without a mortgage.

We are paying cash for our new kitchen and we started by paying the deposits (half of estimate) to the countertop guy (had to pick my marble slab) and the cabinet guy. I have spent HOURS and DAYS figuring out how to do the kitchen reno in several stages, which I believe will help me know what (upper cabinets for instance) I really need. So, doing the demolition, base cabinets, new range, knock down wall, move other 5' wall by 6", sink, peninsula, tape and float, and hopefully backsplash first. Later I will do range hood (having hookup and flue for hood done in first stage though), open shelving, backsplash (if can't do it earlier), upper cabinets (if I need). Lastly I will do floor. If something has to change with my plans, I may have to use our line of credit, but it shouldn't be more than $5000 or so and we will pay it off asap. Hate borrowing money. Also it helps that I found some of our kitchen floor tiles in the creek 15 years ago and saved them! They will replace the flooring where the island is getting removed.
P.S. My GC knows about this plan ahead of time and is being very understanding.

We used savings to pay for our remodel. The appliances, fixtures and anything else that could be purchased with a credit card went on the AMEX (for points and extended warranty), which is paid off each month to avoid fees. All of the appliances were floor models or "open box" items purchased when a local store went out of business. I shopped around to get the best deals on the plumbing and electrical fixtures.

Since others have mentioned cars, my parents taught me to buy late model used cars and then drive them 10+ years to get the most value from the purchase. We own one "luxury" car, but it is a 2000 model we bought in 2002 for 55% of the initial list price with only 11,000 miles on it. It has about 70,000 miles on it now (short commute to work).

We were fortunate enough to be gifted our house. We took out a home equity loan for about 15% of the value of the house to remodel. With 4 small children ranging from 1 to 6 years old, we prefer to keep cash on hand for emergencies.

I think the reason so many GWers pay mostly cash is that they are self-selected for taking care in their decisions about remodeling. They all want to get the most out of their remodel money too.

20K cash.... which I got through a cash out refinance. My interest rate did not go down much (.25%), but I did cut 1 1/2 years off the term of my loan and was able to get rid of my PMI, so my payment ended up only being $30 more than it was originally.