In the last year, the coronavirus pandemic shifted the way many people work. Millions of students went to online learning and millions of adults started working from home. A Pew study showed that as of December, an estimated 71% of Americans work from home, while only 20% of working adults did so before the pandemic began.
This significant upswing in work-from-home duties has created a problem for people who previously didn't have to worry about funding a home office remodel. While working on the couch or at the kitchen table is an option, doing that long-term isn't productive or comfortable, especially if you have roommates, pets or kids.
Tips for funding a home office
Funding a home office can be tricky but here are a few ways you may be able to get the space you need without breaking the bank.
- Use your savings
- Personal loan or home improvement loan
- Home equity line of credit (HELOC)
- Use a 0% credit card
- Consider a small business loan
1. Use your savings: If you have money set aside, accessing your savings account to fund your home office could be the cheapest option. But you'll want to set a budget to avoid overspending and draining money you may need later. You can avoid overspending by hitting up thrift stores or local sellers for used furniture and repurposing items you already have.
If you're tight on funds, you won't be able to build a new space but you could repurpose a closet or nook on a budget.
2. Personal loan or home improvement loan: To pay for your new home office space, you might consider a personal loan or a loan targeted to home improvement. You can get personal loans for varying amounts, like $500 or $5,000. A personal loan also offers a range of options, from funding equipment purchases to small expansions.
But remember that expenses paid with a personal loan are not tax-deductible, even if you use the money for home improvements. Home improvements are tax-deductible with loans that use your home as security.
If you want to get the best rates, you'll need a good credit score. You can explore your personal loan options by visiting Credible to compare rates and lenders.
3. Home equity line of credit (HELOC): If you have equity in your home, you may be able to access some of that with a home equity line of credit. A HELOC operates like a credit card but uses your home as collateral. When considering a HELOC, keep in mind that you should only borrow what you know you can manage to pay back. If you use the money to make improvements to your home, these expenses could be tax deductible if the improvements increase the value of your home.
As of April 23, the average 15-year fixed-rate mortgage refinance rate was 2.250%.
Like many personal loans, HELOCs are primarily used for home remodels, improvements or to cover an emergency expense. If you want to learn more about how you can leverage your home's equity, visit Credible to see what options are available to you.
4. Use a 0% credit card: You could qualify for 0% interest on some credit cards. Aside from using savings, this could offer the least expensive option for creating an office space if you pay the card off before the promotional rate ends. When you apply for this type of card, read the fine print, as some cards charge you back interest on any amount you haven't paid off when the promotional interest rate ends. Don't forget to read the terms of service for a universal default clause. This clause could negate your promotional rate if you make a late payment.
To learn more about 0% APR credit cards — which enable you to avoid paying interest charges for up to 18 months in some cases — check out Credible's partners and what they have to offer.
5. Consider a small business loan: If you run an at-home business or you're a small business owner working from home, you may qualify for a loan with lower interest rates. You could also be eligible for an emergency grant from the Small Business Administration. Visit the SBA's website for more details on how to apply.
Don't forget you can also visit Credible to get in touch with experienced loan officers and have your loan questions answered.
Working from home has benefits but creating a workspace that allows you to be productive can help bring a bit of normalcy to your day. There are options for every type of budget. Look around your home and develop a plan that will help you stay focused and stay on budget.
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