Should we take out HELOC for emergency expenses?

[Anonymous]

What is your actual household income?

[Anonymous]

Anonymous wrote:What is your actual household income?

$200K

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Isn't your tax payment included in your PITI? You usually don't pay it yourself.

In any event, yes, I'd apply for a HELOC if you can get one.

I second the question about the taxes.

OP here. Instead of escrowing the tax payment, we pay it all at the end of the year. I know PITI refers to monthly expense so perhaps I conveyed it wrong. Was just trying to make the point that if you were to look at our overall situation, our PITI is 35% of income. We are stretched but it's not an outrageous percentage.

But PITI is not 35 percent of your income. PII is 35 percent, plus whatever your taxes are. PITI is probably closer to 40 percent of gross, isn't it?

You are living beyond your means.

Actually I calculated PITI on net income, not gross. My mistake. For gross, our PITI is actually 22%. Mortgage=$2,228. Insurance=$130. Tax=$1,250. Total=$3,608. Income=$200K. PITI is then 22%.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Isn't your tax payment included in your PITI? You usually don't pay it yourself.

In any event, yes, I'd apply for a HELOC if you can get one.

I second the question about the taxes.

OP here. Instead of escrowing the tax payment, we pay it all at the end of the year. I know PITI refers to monthly expense so perhaps I conveyed it wrong. Was just trying to make the point that if you were to look at our overall situation, our PITI is 35% of income. We are stretched but it's not an outrageous percentage.

But PITI is not 35 percent of your income. PII is 35 percent, plus whatever your taxes are. PITI is probably closer to 40 percent of gross, isn't it?

You are living beyond your means.

Actually I calculated PITI on net income, not gross. My mistake. For gross, our PITI is actually 22%. Mortgage=$2,228. Insurance=$130. Tax=$1,250. Total=$3,608. Income=$200K. PITI is then 22%.

NP: then why are you having trouble paying everything? Are you not setting aside $1250/mo specifically for taxes? It should be separate from regular savings.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Isn't your tax payment included in your PITI? You usually don't pay it yourself.

In any event, yes, I'd apply for a HELOC if you can get one.

I second the question about the taxes.

OP here. Instead of escrowing the tax payment, we pay it all at the end of the year. I know PITI refers to monthly expense so perhaps I conveyed it wrong. Was just trying to make the point that if you were to look at our overall situation, our PITI is 35% of income. We are stretched but it's not an outrageous percentage.

But PITI is not 35 percent of your income. PII is 35 percent, plus whatever your taxes are. PITI is probably closer to 40 percent of gross, isn't it?

You are living beyond your means.

Actually I calculated PITI on net income, not gross. My mistake. For gross, our PITI is actually 22%. Mortgage=$2,228. Insurance=$130. Tax=$1,250. Total=$3,608. Income=$200K. PITI is then 22%.

NP: then why are you having trouble paying everything? Are you not setting aside $1250/mo specifically for taxes? It should be separate from regular savings.

We haven't in the past. DH received the same sizable bonus every year for over 10 years. We would pay tax from that. That is no longer happening. I know I'll get ripped to shreds on here for paying tax out of a bonus but when it had been consistent for so long, we included it as part of our overall income. Now we need to have a separate savings for the tax each month. Additionally, we have had a lot of big expenses over the last few years from building the new house, private school for 2 kids, daycare for 1 child, part-time nanny, 2 cars, etc. We are definitely living beyond our means. That's why I'm on here. All these major expenses combined with not as much income has led us to this predicament and why I was seeking feedback here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Isn't your tax payment included in your PITI? You usually don't pay it yourself.

In any event, yes, I'd apply for a HELOC if you can get one.

I second the question about the taxes.

OP here. Instead of escrowing the tax payment, we pay it all at the end of the year. I know PITI refers to monthly expense so perhaps I conveyed it wrong. Was just trying to make the point that if you were to look at our overall situation, our PITI is 35% of income. We are stretched but it's not an outrageous percentage.

But PITI is not 35 percent of your income. PII is 35 percent, plus whatever your taxes are. PITI is probably closer to 40 percent of gross, isn't it?

You are living beyond your means.

Actually I calculated PITI on net income, not gross. My mistake. For gross, our PITI is actually 22%. Mortgage=$2,228. Insurance=$130. Tax=$1,250. Total=$3,608. Income=$200K. PITI is then 22%.

NP: then why are you having trouble paying everything? Are you not setting aside $1250/mo specifically for taxes? It should be separate from regular savings.

We haven't in the past. DH received the same sizable bonus every year for over 10 years. We would pay tax from that. That is no longer happening. I know I'll get ripped to shreds on here for paying tax out of a bonus but when it had been consistent for so long, we included it as part of our overall income. Now we need to have a separate savings for the tax each month. Additionally, we have had a lot of big expenses over the last few years from building the new house, private school for 2 kids, daycare for 1 child, part-time nanny, 2 cars, etc. We are definitely living beyond our means. That's why I'm on here. All these major expenses combined with not as much income has led us to this predicament and why I was seeking feedback here.

Ok - that's good you're going to start doing it. Do you both work? I ask because of daycare and part-time nanny. Why do you have a nanny if 2 children are in school and one is in daycare? Is it like an afternoon sitter when the older children get out if school? Now that they're in public, can you do after-care, instead? If you also se the nanny for summers and limit camps, I can understand why you'd want to keep the nanny.

I think it's ok to put a HELOC in place, but I'd be hesitant to use it, it can be a slippery slope.

[Anonymous]

^^^ sorry for typos