What to do when tenant pays extra?

[Shane H.]

I have a tenant that has been in my unit for two years and just signed another 1 year lease extension. Her dogs have chewed/torn up the carpet in the couple of rooms that were carpet instead of laminate. She has been paying me extra here and there to "save up" to replace the floors that were damaged. 

I have been putting any extra into a separate savings to let it build up until she has enough for the replacement flooring. But I am in need of opinions on the matter.

A) Carpet is definitely out for a replacement option. she needs to re-floor only about 250 SF, so we were thinking laminate would be the better option.

a) My original plan was to just ask her to save the equivalent of carpet replacement (since that is what was damaged) and then i would cover the difference in cost to upgrade to a more durable flooring. She does have a deposit on file, but that will likely be entirely eaten up with the other damages she has already (no pun intended). So this being said, should i take the risk to upgrade the flooring and likely have to replace again when she moves out due to animal scratches and tear up? 

B) She is still in the process of saving up, and on the off chance she doesn't save up enough by the time she decides to move out, how do i handle those funds? Technically speaking they are not part of her original deposit, but likely her dog's damages will be greater than her original deposit.

I know it sounds like she is a bad tenant, but i promise that given the location of this unit and the fact that it is only a 525sf house on a 600sf lot, i am ecstatic to have her as a tenant for these last couple of years. Yes her dogs have done damage, but the damage is already done and is not getting worse. So the longer she stays, the longer i have before i need to go repair it all. She is also paying a $50 a month "pet rent" each month, so again, while the repair costs are static at this point, the longer she stays there the more I will have set aside for those repairs.

Thanks everyone!