Reply to How big is your heloc line of credit???

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Don't have one. Don't want one. Not interested in taking out debt against my home. [/quote]

a line of credit isn't debt unless you spend it.  we have one in case of dire emergency - its nice knowing its available if we need it.[/quote]

Going into debt against my home during a time of dire emergency is scarier to me than the other options (pulling from retirement/Roth principle, credit cards, etc). When I'm in the midst of a crisis, the last thing I want to do is put my house on the line. [/quote]

You don't understand finances very well, do you? Having a HELOC is just like having a mortgage. If you had a mortgage, you had debt against your home.  Was that so scary?[/quote]

We paid off our mortgage very quickly and don't intend to go back into debt on the house. It wasn't "scary" to have a mortgage, but it was something that was always a "What if we lost a job?" question. So I wouldn't choose to go back into that. Cash in the bank helps me sleep at night. [/quote]

It's okay if you feel that way, but it's irrational. The benefit of a HELOC is that the rates are fairly low and usually very stable. I'm the one who has a 500k unused HELOC as emergency fund. The benefit of this is that it gives me another option for quickly accessing a large amount of money. Of course I would never take out a HELOC and incur interest expense unless I needed it. But say I found myself in that situation, having to make the tough choice of liquidating an asset during unfavorable markets, or incurring hefty transaction costs selling something in an accelerated time frame - these can be avoided if I simply use the HELOC as a cushion, a low cost temporary gap funding method that allow me to have more time to gain more favorable asset liquidation returns. This is the very definition of an Emergency fund: money you need due to time constraints, not due to lack of net worth. Cash in the bank is what keeps me up at night: that's dead money not making a return.

[quote]
To the PP who got a HELOC, foreclosed, bought the condos, etc - you have a much bigger tolerance for risk and upheaval than I do. And I guess it paid off. Although it seems unethical to have used essentially "stolen" money to do that transaction, I'm surprised they couldn't go after you on that. [/quote]

[/quote]

Totally agree. The people who say "I don't ever want debt because debt is evil" do not understand that debt can be used as a tool.  I cannot imagine not being able to sleep at night just because I have a mortgage. That's a bit over the top in irrational fear. Even without a mortgage, if a person loses his job, he still has to pay real estate taxes and insurance on his home.  BTW, you can have cash in the bank AND have a HELOC.  The two aren't mutually exclusive.[/quote]

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