# Go into debt to save money?



## square one (Jan 19, 2010)

What would you do?

After getting out of debt a couple years back, hubby and I have been saving up for an inground pool/backyard reno. We'd been planning on waiting til next spring for the big splurge, with the plan to have saved $35,000 of the $49,000 price and putting the rest on LOC or such which would be paid off within about 4 months. Today we have about $18,000 saved.
The pool builder has offered to reduce the price by $4700 if we install it this fall, their 'slow' time. This is much more than the cost of financing the difference for the next 9 months, so I'm thinking it is the most cost-effective way to go. On the other hand, we've been in an anti-debt mindset for awhile now and it is hard to think about going into debt that much again.

Curious what others would do...


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## square one (Jan 19, 2010)

For additional info, we are very disciplined with where our money goes, and expect by next summer to have the debt reduced to what it would have been in the first plan, with 4 months left til it is paid off. And we feel we can afford it, as we would continue to put aside the same amount every month that we've been doing for the past year to reach the present savings of 18,000.


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## Jon_Snow (May 20, 2009)

Nobody knows the details of your own financial picture like you do, so if it makes sense, go for it.

But here's the BUT.... sounds to me like you are really trying to convince yourself that this is a good decision. You seem proud to have gotten out of debt a few years ago, yet you want to drop 50k on a pool and take on debt again. I remember somewhere a while back that you said you had been laid off from your job... unless you have since found a new job, that is another thing to think about.

But here I am, an extreme saver, with thoughts of retiring at 45, trying to give advice to someone who is likely choosing to live life to its fullest NOW...


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## andrewf (Mar 1, 2010)

Sounds like you've already built a pretty solid case to convince yourself, and if your options are to buy this fall or buy in the spring, it sounds like the fall is the better deal. I guess you could ask yourself whether you could wait until next fall and get the same deal, but be able to finance it out of pocket.

Are you confident about the income over the next year? That is a fair amount of debt if you don't have emergency savings, etc.


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## Max (Apr 4, 2009)

If you are truly committed to spending money you dont have on the pool, and must spend this money now to get the discount, then yes, saving 10% off the cost, would be worth taking out debt at market rate of 4-5% over a 1 year term.

However, the question seems to be more about whether or not you need a pool rather than whether or not the financing is a good idea. Despite your comments, I have to question your spending habits where you would go back into debt to buy a luxury item like a pool when you are still struggling to come up with emergency savings. Think deeply about how much you value the pool.


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## Square Root (Jan 30, 2010)

Pool not much use in the winter. 10% doesn't seem that great to me. Times are pretty uncertain- I would wait.


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## the-royal-mail (Dec 11, 2009)

Do you have a rainy day cash savings fund (NOT RRSP) in place already?


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## Four Pillars (Apr 5, 2009)

You can get the same deal next fall, so don't think it's a "one time deal".


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## Jungle (Feb 17, 2010)

If this is what you want to spend 50G on, then I would tell him you'll sign if they lower it another $1000-1500 and then finance the rest on a 0% credit card. You get 15 months to pay it back. Total cost is a 1% transfer fee over 15 months. You can transfer the money to your chequing account. You can probably get at least 10G.


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## the-royal-mail (Dec 11, 2009)

Also, have you shopped around and checked the reputation of the builder? There were some horror stories shown on TV lately, with some crooked deals involving inground pool installations gone sour. Maybe on Marketplace or some such show?


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## Jungle (Feb 17, 2010)

the-royal-mail said:


> Also, have you shopped around and checked the reputation of the builder? There were some horror stories shown on TV lately, with some crooked deals involving inground pool installations gone sour. Maybe on Marketplace or some such show?


+1. Watch out leaving deposits with contractors. The neighbour and I spoke of an old story at my rental property. The previous owner gave deposit for contractor to build a fence. Contractor dropped of wood, took deposit and never returned. Later, the wood was stolen as well. (by the contractor no doubt)


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## square one (Jan 19, 2010)

Thanks for the many replies. Jon- great memory; yes I was laid off in the spring and chose to stay home with the kids until school starts. I am starting work at the end of sept. That said, we can afford it based on my husband's salary alone. To clarify, the $18,000 savings is in our 'pool account', the account we specifically set up for this specific splurge. Separately, we have emergency cash savings, an RSP, an RESP, a mortgage balance of only $64,000 and both have DB pension plans. So, the question is not so much can we afford it, but rather making this decision based on the emotional 'debt is bad' side vs. the math-brain 'we'll come out ahead in the end' side. We learned today that if we use part of our 'mortgage cash account' the amount borrowed would be at the same rate as our mortgage, currently 2%. This definitely sways us towards the 'let's do it' side, especially since we are confident it will be paid down by the end of 2011.
As an aside, we have shopped around well and are making our final choice based mostly on word-of-mouth recommendations and reputation as this builder is a smaller company that has been doing this for 20 yrs. We actually know at least 5 other families who've had their pool built by these people over the past 8 yrs. We would have gone with this company even if they were more pricey to avoid a nightmare scenario.
Also, we decided a while back that we would put in the pool next summer at the latest. It is important to us to, as one poster put it, live well with the quality of life we want while we're still young (40ish...that's young, right?) and while our kids can enjoy the pool. We are definitely people who think things out for a long time before spending money, and make sure we spend our money on things that are most valuable to us. I absolutely respect others' opinions that a pool is a lavish unnecessary expenditure, and am totally confident that this will be worth it to us.


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## the-royal-mail (Dec 11, 2009)

Sounds to me like you're probably fine and will get a lot of enjoyment out of this. Your savings are well fortified in case something happens after you've signed up for the pool. My ONLY concern at this point is as Jungle and I said above. Check and double check reputation, google the contractor name, do research, watch out for the downpayment requests etc etc.


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## Four Pillars (Apr 5, 2009)

Go for it - you sound like you're in good shape.

And yes, 40ish is definitely young!

Not exactly related to the OP question, but this post has an interesting look at the costs of running a pool:

http://michaeljamesmoney.blogspot.com/2010/08/costs-of-in-ground-pool.html


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## kcowan (Jul 1, 2010)

We put in a pool when our kids were 11 and 9. It was used for 7 years. Then it became an expensive pond except for the occasional dip by us. We also had a jacuzzi.

I would say to go for it, but make sure you amortize the costs over 8 years and don't expect to recoup any of the investment when you sell the house. It might actually reduce the price you get for the house. But it is a true lifestyle investment (unlike a new kitchen).


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## square one (Jan 19, 2010)

kcowan said:


> We put in a pool when our kids were 11 and 9. It was used for 7 years. Then it became an expensive pond except for the occasional dip by us. We also had a jacuzzi.
> 
> I would say to go for it, but make sure you amortize the costs over 8 years and don't expect to recoup any of the investment when you sell the house. It might actually reduce the price you get for the house. But it is a true lifestyle investment (unlike a new kitchen).



We plan to stay in this house for the next 20 yrs, and do not expect it to increase the resell value of the house. A pool narrows down the 'pool' of potential buyers. This is definitely an investment in our quality of life.


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## dilbert789 (Apr 20, 2010)

If the amount of money you will save will be less than the extra interest paid, I'd say go for it. Also after seeing a neighbor have a pool installed and miss several weeks of prime swimming time because the installer was busy with other clients I would definitely recommend putting the pool in in the fall and then you don't have to wait for them to finish before you can swim next summer.


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## Ihatetaxes (May 5, 2010)

I have a pool and I am in in almost every day all summer long with the kids and its fantastic. I would say GO FOR IT!!!


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## crazyjackcsa (Aug 8, 2010)

Is your yard big enough to go above, or on ground? While traditionally smaller, and don't hold the "WOW" factor, they are a fair bit cheaper.


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## square one (Jan 19, 2010)

We want the deep end with the diving board, and the esthetics too, which is why we decided to go inground. We've made the decision to go for it. We plan to use it daily, and over the next 20 yrs figure it will have been well worth it. Thanks for all the comments!


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## kcowan (Jul 1, 2010)

square one said:


> We plan to use it daily!


The first year of our in-ground pool, we left the gas heater on at 85 during September and got a bill for $600. After that we turned it on during the weekend only. There was insufficient interest during the week once school started. This was north of Unionville, Cachet Estates, so the evenings were cooler than further south under the greenhouse dome.


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## humble_pie (Jun 7, 2009)

square one i don't know the ages of your kids, but recently i was visiting friends who've just bought a house with huge garden & swimming pool.

their children are 13 and 9. No sooner did they get home from day camp than 6 of their friends phoned, wanting to come over to play/swim. The mother said yes to the visits but no to swimming, because she would have had to abandon her guests & sit lifeguard duty with 8 active kids in the pool.

the youngsters arrived anyhow & all went down to the lower level playrooms after juice & snacks. I was amazed to see how tall 13-year-old girls are, and how they look 14 and 15, while 13-year-old boys are still mostly shorter & look more like 12. All this will change enormously over the next 2 or 3 years, as the boys' growth spurts begin. The youngsters were all very polite & outrageously appealing.

later i realized how that pool investment is worth its weight in diamonds. It will always serve as a mecca for the young sons of the family & their friends. Instead of wondering where her 14-and-15-year-olds are & what they're doing, the parents will know that everyone is right outside in the backyard, having a healthy, wholesome time together. With all the worrisome things that can happen to teenagers today, there's no price to be put on wellbeing & security like this.


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## kcowan (Jul 1, 2010)

+1

Plus it is fun to apply for lifeguard duty and observe all those well-developed young people.


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## Jon_Snow (May 20, 2009)

Okay, that last post was just a little creepy.


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## steve41 (Apr 18, 2009)

Someone who posts their net worth for all to see... now _that's_ creepy!


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## Jon_Snow (May 20, 2009)

How so, Steve?


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## steve41 (Apr 18, 2009)

Sorry, I just had to throw that in. Maybe its a generational or cultural thing, but to let anyone see your NW.... geez my parents wouldn't even divulge their NW to me, their child. To go from there to publishing it for all the world to see seems incredibly vain if you _are_ HNW, or 'creepy' if you aren't.

Its like having a sticker on your car that says 'my other car is a Ferrari' when it is. Tacky, creepy... whatever.


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## Jon_Snow (May 20, 2009)

Fair enough, Steve. It never had occured to me to track NW until I started following the better financial blogs, such as our own Frugal Trader's Million Dollar Journey, in which every month he forensically breaks down his net worth, and his strategies for improving his financial picture. Off the top of my head, I can think of about a half dozen money bloggers that divulge their net worth for all the world to see. Frankly, seeing how others increase their own NW is fascinating to me, and posting mine publically has the strange effect of helping to keep me on track. Creepy or not, I will continue to do so. 

Sorry to hijack thread.


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## kcowan (Jul 1, 2010)

The thing about NW is that to some it might be impressive whereas to others it is a pittance. It is like posting your height and weight. What does that have to do with financial strategy? How did it come about?


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