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 percent and up. We could borrow from our credit union, borrow against my 401(k) at 2 percent above prime, or put it on a credit card (16.99 percent). 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 borrowing 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.
