Winter Is Coming … and We Need a Furnace!

Dear Cheapskate: We need a new furnace before next winter. We have saved some money but not enough to pay for it in full. The companies we’ve spoken to offer financing at outrageous interest rates of 17.99% and up. We could borrow from our credit union, borrow against my 401(k) at 2% above prime or put it on a credit card (16.99%). We don’t have enough equity to take out a home equity loan. Can you give some direction? — Name withheld

Dear N.W.: Is the furnace replacement an absolute necessity, or could you make it through one more winter while saving up the rest of the purchase price? Have you checked to see if your utility company or local governmental agencies have any special assistance programs to encourage homeowners to install more energy-efficient systems? I hate to see you go into debt for this, although to borrow for a home improvement is better than borrowing to pay for a wedding or vacation. By putting the money into your home, you are protecting the value of an appreciating asset.

If you determine you must borrow, a short-term loan from the credit union at the lowest rate possible is the best choice of those you’ve presented. I’m not in favor of borrowing against your 401(k); there are just too many risks and potential costs, particularly if you should leave that job before you repay the loan. I don’t like the credit card idea or company financing because of the outrageous interest rates.

Whatever you decide, consider selling things you no longer need and working as much overtime as possible to help raise additional cash so you can borrow even less. Then make a commitment to redirect the money you’ll save in utility bills into your repayment schedule so you pay the debt in record time.

Dear Cheapskate: I am thinking about filing for bankruptcy. I’ve actually already retained a bankruptcy attorney. I have recently divorced and resigned from my $60,000-a-year job to become a hair stylist. My problem is that I have $67,000 of unsecured debt. I do not want to go to an 8-to-5 job every day, because I am just plain tired. I am 40 and want a stay-at-home life. I will receive $40,000 from my job but want to keep it for retirement. I also want to go to school for computer programming in September. What should I do? I cannot possibly get on a debt payment plan, because I don’t have enough income to repay creditors. Is my only choice bankruptcy? — Angie C., Kansas

Dear Angie: Let’s see: You borrowed $67,000, spent it all and now you’re too tired to pay it back. You want the rest of us to pay your debts (creditors simply pass their losses on to the rest of their customers) so you can walk away from a $60,000-a-year job to stay home, do hair, stash $40,000 for your retirement and go back to school in your spare time. You don’t need a bankruptcy attorney, you need an integrity transplant. Life is tough, and the people who overcome adversity are those who are willing to take responsibility and do what’s right. My advice is that you get some industrial-strength vitamins and beg for your old job back.

Dear Cheapskate: I have a math problem: red item + white laundry = everything pink! Do you have any remedy short of chlorine bleach? — Cathy H., Ohio

Dear Cathy: Fill the bathtub with the hottest tap water available, plus one cup each of Cascade automatic dishwasher powder (or two auto dishwasher pods) and baking soda (or Super Washing Soda, if you have it). Stir it around with the handle of a broom or mop, add the items and continue stirring until everything is underwater. Allow to soak for at least three hours. Drain, rinse and rinse some more. Now rewash in the washer in a regular cycle. Those pink undies will be white like new! I once rescued my white Battenberg lace tablecloths and 24 napkins that had become hopelessly mildewed using this method; it works! In all the cleanup commotion following a bridal shower, the linens ended up in a plastic container with the wet dishtowels, shoved into a utility closet and forgotten. A week later I got the big surprise.