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Dear Mary: We are homeowners with about $175,000 in equity, which we will need to buy a bigger house in the future. Our home needs some expensive improvements (new windows, updated kitchen, siding), none of which are urgent, but which will be necessary to sell. Is it better to save up each month until we can afford to pay cash for the improvements, spend from our emergency fund and repay later, or take out a home improvement loan? We hate to incur any debt or lose our equity, but I’m pretty sure that we won’t be able to save enough to pay cash. How are homeowners supposed to pay for home improvements? — Nicole L., email

Dear Nicole: Spending your equity should be your last option, certainly not the first. In fact, I wish you’d never learned that borrowing equity is even an option. I like your idea of saving up each month until you can afford windows, siding and a kitchen update. You won’t have big monthly payments on a home equity loan — and your equity will continue to grow, which, after all, is why it is called “homeownership.�

Rather than seeing this as one huge impossible situation, adopt the “sausage method.� You wouldn’t sit down and eat an entire sausage in one sitting, would you? You would cut a slice or two to enjoy, putting the rest away for later. Reduce your big home improvement challenge to manageable “slices.� For instance, decide what type of windows you need. Measure your most visible window and get a price. Start saving for that one item. That’s a reachable goal, and one that will make you excited.

Dear Mary: I have a lot of credit card debt as a result of stupid overspending. I have set up a budget for the purpose of paying down the debt. But still, my income is short each month. Upon the birth of our children, we’ve been contributing to UGMA (Uniform Gift to Minors Act) accounts to help pay for college. I have stopped the automatic investments, but realize there’s a lot of money sitting in those accounts — enough to pay a few credit card accounts in full. Am I allowed to do that, legally or ethically? I just do not know what to do. — Jeanne T., Michigan

Dear Jeanne: The laws that govern UGMA trust accounts vary by state. You need to speak with an attorney or CPA to learn if you have any options. Frankly, I am not hopeful that there is any provision for you to use those funds for your benefit. The point of the Uniform Gift to Minors Act is to give an irrevocable gift to a child that he can use once he becomes of legal age. However — and this may be the key for you — UGMA funds can be used to benefit the child while he is still a minor. Are you paying for beneficial things like music lessons or school tuition? You may be able to pay those expenses from the child’s UGMA account. That would free up your income so you can increase the amount that goes toward your debt each month. But don’t trust me on this. Check with an attorney or tax adviser.

Mary invites you to visit her at ,where this column is archived complete with links and resources for all recommended products and services. Mary invites questions and comments at , “Ask Mary.” This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of , a frugal living blog, and the author of the book “Debt-Proof Living.”