FREE NEWSLETTER
I’ve never seen this in any financial column anywhere:
I’ve told all my kids and anyone else who’ll listen to setup a HELOC on their home “just in case”. You never know when you’ll need cash, like when you’ve lost your job, and if you ARE jobless you won’t be ABLE to get a HELOC.
Notice I didn’t say Home Equity Loan. There is a difference between the two. I won’t go into that here, you can research that yourself.
A HELOC is a MUCH cheaper way to borrow money than using a credit card or a car title loan AND it costs you nothing to setup and keep “on the shelf”.
Another resource is to setup a whole life insurance policy but only with a non-direct recognition MUTUAL company. They buildup cash valve fast that you can use for emergencies if needed. If you research “infinite banking” you can learn about this.
We used a HELOC to build our current home on some acreage we had previously purchased. The HELOC had a fixed rate of 3.4% and no fees. It helped provide a smooth transition from our old home to our new home. The HELOC was paid off as part of the closing on our old home.
I once had a HELOC. I considered it to be strategic debt. I never used it, but it was there if I needed it. At the tme the bank offered 0 fees, which made it attractive. The unused amount was used by credit companies to calculate my credit score, which was improved.
I currently have a HELOC with no annual fee. I don’t expect to use it, but it is a nice tool to have access to should some unforeseen circumstances arise. To borrow your term, it is strategic potential debt.
I’m hesitant to give blanket financial advice to anyone that I don’t know some details about. Especially concerning debt on their personal residence that could lead to foreclosure. That’s very questionable advice. With that being said, in our personal experience over the last 30 years, HELOC’s have been instrumental in achieving wealth and financial independence, while also recognizing and taking necessary actions to minimize the consequences of that debt if things go south. Debt is a tool that if not used safely and cautiously can cause widespread carnage. Be careful out there, they shoot real bullets and good luck to you.
Boy you really kicked a hornet’s nest here!
Debt is a pretty serious subject to many here. And I expect we’ve all known folks that have been hurt by their debt.
I had a HELOC for a long time, it was used to pay for a kitchen remodel. I was in no position to save up for it at the time. I retired the HELOC when I took out a second mortgage. That’s a long story…
IMHO, debt is a tool. Like any other tool there are right ways and wrong ways to use it. Generally, I’m opposed to debt, but I’ve