Finding the Money
Where are you going to get the money to pay for your part of this wedding, anyway? Years ago, it was common to hear about families saving for their daughters' weddings — nowadays, a bridal fund is more likely to be something a daughter only hopes exists. If you're short an entire fund for the wedding, but you're planning on writing at least a check or two to cover some of the costs, you might have some ideas swirling around in your mind. Are they feasible?
Keep the House
Refinancing is probably not the best idea, unless you were planning on doing so before your daughter's engagement. Here's why: When you refinance your home, you get a check (and a lower mortgage rate — at least temporarily), which is great if you have big bills to pay (bills related to a wedding, for example) — but you're trading the equity you already have. In most cases, you're essentially starting from square one, as though you just bought the house.
This is just fine if you're not planning on selling anytime soon (you can kiss your profit goodbye if you try to sell right away), and if you don't fall into the habit of cashing in on your home's value every time you spend a little too much money here or there.
Home Equity Loans
Home equity loans can be lifesavers … or they can come back to haunt you. In this transaction, homeowners can borrow a percentage of the value of their home to pay off higher-interest loans or large debts. The interest on the loan is usually tax deductible. Again, this may be a good way to go if you're careful with your money to begin with, but it isn't recommended to borrow against your home to pay off your wedding debt.
Folks who refinance to pay off bills trade their equity in their home for a quick payoff elsewhere … which can lead to spending trouble if you're quick to say, “Well, I'm out of debt. Guess I can afford to spend some more!”
The advantage is that you're paying less interest on your wedding debt right now. The downside is that you're paying off this loan for thirty years. Also, if the loan exceeds 100 percent of the value of your home, the interest is not tax deductible, which means you've entered into a standard loan. If you fall behind on your payments for whatever reason, you might find yourself packing your bags.
Cash or Credit?
So, is it advisable, then, to pay cash for a wedding? Believe it or not, it isn't — at least not literally. While it is smart to set a budget and a spending limit while simultaneously deciding which areas of the wedding are priority issues (does your daughter want stretch limos for the wedding party and the families, or would she rather spend that money on an open bar?), it's not wise to hand over cold hard cash to pay the bills.
Whenever possible, try to pay deposits by credit card — but keep track of what you're spending. Once you give cash or a check to a vendor, your money is out of your hands — and if there's a problem in the future (say, the caterer decides he'd rather use your money to take a vacation instead of feeding your daughter's wedding guests), it's very possible that you'll never see a refund.
Conversely, if you've used your plastic, your credit card company will help you fight any bogus charges. The chances of your being reunited with your dough are much better in this instance. And of course, always, always get a receipt and put it away safely.