How do you pay contractors/services?

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  #1  
Old 02-19-14, 10:05 AM
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How do you pay contractors/services?

This might sound like an odd question but I need to know if there is just "a better way"...

Relatively new first-time homeowner under 30. For home improvement/repair jobs that I've had the pros come out & take care of, I've been loading up my credit card because they want payment in full. The jobs I've had so far amount from $500 to around $3000. And these are things where a smaller independent contractor won't have some type of financing available. If it wasn't for these interest-free credit cards (which I'm approaching the promo deadline), I don't know what I would be doing.

So...how do you guys pay for something like a $1500 job to a small contractor (assuming you don't have $1500 in cash just laying around)? Is it typical to just do payment in full with "what you got"? Have no idea what I would do if for some reason I had an issue at the house that might cost $5k. I'm not necessarily poor or anything but I make under $40k (Chicago market). Aside from the down-payment on the car I finance, I've never had to pay for anything over around $800 all-at-once. Just need some ideas as I'm not to keen on finances.

Sorry if this is a dumb question.
 
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  #2  
Old 02-19-14, 10:35 AM
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It sounds like you're financing stuff on a credit card, which is generally not a good idea unless you had no other option and the work was not optional.

Personally, I pay for just about everything with a credit card but I pay the full balance every month. Credit cards do offer quite a bit of protection when you've paid with them (not debit cards, though).
 
  #3  
Old 02-19-14, 10:45 AM
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I've always been a save it up then pay sorta person so as a habit I avoid spending then paying it back later. So, I write contractors a check or pay the bill when the work's done. Around here most contractors do not accept credit cards and the ones that do charge an additional fee. Most do not have payment plans. Payment is expected when the work is done unless you negotiate up front.

Have you considered a second mortgage on the home for repairs & upgrades. Then you'd have the cash to work with and a rather fixed budget.

Be very careful hiring work that you cannot pay. In most states contractors have a very strong legal position and it is easy for them to attach a lien to your property. This lien is for any value they state has been added to your property. Even if the work is not completed you are liable for the work performed (notice I did not say anything about quality of work, whether or not if it's what you wanted or if you're satisfied). It's the contractor filing the lien so they state the value. It's up to you to fight or contest that value so they are in the driver's seat at that point. A situation best to avoid altogether.
 
  #4  
Old 02-19-14, 10:48 AM
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I also use my credit card extensively but make a point to pay them off in full each month! If I'm not mistaken, a lot of those no interest credit cards make you pay interest on all the money if they aren't paid off by the end of the promo

I've been fortunate that I've never had any big ticket surprises and have always been able to budget for or postpone repairs until I could. I have had customers that had to take out loans to pay me [or other trades] Unless arrangements are made prior to the work being done most contractors would be looking into getting a mechanics lien if they weren't paid for the job.
 
  #5  
Old 02-19-14, 03:30 PM
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I'm not sure what the problem is? Is it that they want all the money before the perform the work? Or is it that you don't have the money to give them? Well, if it is the second, then loans are the only way to make that work. Or you could come here and start doing things yourself. You will save a ton of money that way. Especially for smaller maintenance type jobs.

Welcome to the big leagues.
 
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