When Paul Logue decided to build a two-car garage behind his Columbus, Ohio, home, he knew exactly where he'd get the $13,000 for permits and construction.

He had secured a $20,000 home equity line of credit shortly after buying his home nearly four years ago.

Adding a garage had been in the back of Paul's mind ever since he moved in.

It was a hassle to dig his car out of heavy Midwestern snows, an increasing number of cars on the street were being broken into and Paul had nowhere to store lawn equipment and tools.

"It was one of those things I thought would make sense to do," he says.

But Paul hesitated because he didn't want another monthly payment. He was already aggressively paying down his mortgage as well as paying his credit card in full and making a car payment.

So, despite the obvious personal benefits the garage would bring, Paul decided to wait until his car was paid off, which would free up approximately $500 in his budget each month.

"I didn't want to have a car payment and a credit line and a mortgage and credit card," he says. "I don't like to extend myself with debt on a monthly basis if I can afford it."

Paul was finally able to build his garage last fall.

Through comparisons of other neighborhood homes with garages and similar size (three bedrooms, 1,300 square feet) he estimates it increased the value of his two-story home by $20,000.

Including appreciation, Paul figures his home is now worth $45,000 more than the $172,000 he paid for it.

His goal is to pay the line of credit off as quickly as possible by dedicating about $500 a month toward it -- much more than the minimum monthly payment would be. In only a year, he has managed to bring the $13,000 balance down nearly $5,000.

"Putting in a garage gave me some safety with my car and added value to the house," says Paul.

Paul offers these tips to using a home equity line of credit, or home equity loan, wisely:

• Don't leverage too much of the equity in your home. Given the instability of the housing market, try to keep at least 10% to 20% of your home's equity free if you can. "You don't want to owe more on your mortgages than your home might be worth," says Paul.
• Make sure you're not getting yourself in over your head debt-wise. Pay off other debt beforehand so you're not stretched too thin, he advises.
• Don't skip payments. A home equity loan is a lien on your home, and not something you want to default on. Not only can it wreck your credit, Paul notes, "the lender can put you into foreclosure."

By Darci Smith

Interest.com Contributing Editor