Should I pay off my HELOC with my savings?

[Anonymous]

I have a 79K heloc at 4.25% (variable; just went from 4% to 4.25 Dec. 15). Should I use my savings (around 70K currently sitting in cash accounts) to pay it off? Other data: my partner works for a start-up that is not very stable so we built up our savings last year; I expect a bonus of around 30K pre-tax in Jan. or Feb, my partner expects a $16K gift from his parents soon.

[Anonymous]

Any other debt?

[Anonymous]

50K student loan at 2.5 percent and car loan of 30 k at 2.75 percent. Current income around $360K

[Anonymous]

IF the 70k is sitting in cash, I would pay it off. It doesn't mean you can't access it later if you have an emergency.

I'm in a similar situation and will probably pay mine off in the next couple of months.

[Anonymous]

Anonymous wrote:IF the 70k is sitting in cash, I would pay it off. It doesn't mean you can't access it later if you have an emergency.

I'm in a similar situation and will probably pay mine off in the next couple of months.

Agree. Pay it off, keep maybe up to $10k in cash for current bills. Make sure you have easy access to your HELOC (checks)
DISCLAIMER: do it only if you can stick to your budget, and don't treat your HELOC as ATM when you're short on cash.

[Anonymous]

Our financial advisor said that it the bank could change the rules on the HELOC at any time, so given the precariousness of my partner's job, suggested we hold onto the savings (he suggested nine months of savings which we roughly have; I have another 26K in municipal bonds). But it doesn't sound like you all think that's the case? No worries about raiding the HELOC; we wouldn't touch it unless there was truly an emergency and we would go right back to building our savings and paying off the other debt, albeit perhaps the other debt would be paid down a little more slowly.

[Anonymous]

If your partner's job is potentially at risk, perhaps look at cutting your spending now to both bulk up savings and reduce the debt? Your income is pretty high to have that much debt.

[Anonymous]

Why do you have a car loan at your income level?

[Anonymous]

To clarify - you have a Heloc but not a first mortgage? I would pay off the HELOC over next six months trying to conserve cash as much as possible.

[Anonymous]

Yeah, we have a mortgage too. Not sure how much is left, but 3400 a month at 3.5% interest.

I knew I was going to get questions about the car loan. We just got a car over the summer (previously we paid cash and drove pretty old cars). Interest rate was 2.78% so my partner just wanted to finance while we continued to build savings.

Partner was previously running his own business which didn't go great so we really just built our savings back up over the previous year. Also, in 2013-14, I paid off all of my higher interest student loans and we bought our house. Income increase and savings increase has all been since 2016.