As you plan next year’s remodeling projects, you might be debating how to pay for them. Should you use cash or finance them? The answer is not always easy, but here’s what to think about:

1. The remodeling cost. Certainly, if you’re planning to spend $1,000 or less, it’s a good idea to pay for some or all of the remodeling in cash (assuming this won’t leave you without any emergency funds). If this seems like a stretch, can you delay the project for 3 to 6 months and save money somehow? You’ll feel better using some cash and knowing your home improvement financing is not getting out of hand.
2. The size of the project. If this is a major kitchen remodeling, you likely will need some home improvement financing. Home equity loans or lines of credit are good, as they carry a low interest rate and typically are tax deductible. They are harder to come by these days, so shop around. Even so, perhaps you can pay for the faucet and sink with cash. Every little bit helps.
3. The length of the remodeling. If this is a project that will be completed over several months or even a year, home improvement financing can help you manage the costs and hold onto your savings for emergencies. You don’t want to spend your $10,000 nest egg on remodeling and then have to tap into a home equity loan to pay for furnace repairs.

Keep Home Improvement Financing Handy

Regardless the size of the remodeling project, make sure you have some home improvement financing on hand. A line of credit is ideal, as it allows you to write checks when you need them. If your $1,000 project turns into a $2,500 one, at least you should have funds to access. Just don’t go crazy–you do have to pay it back one day.