Proper use of home equity LOC

[Jec]

Hi everyone.

I guess the stupid question asked is the one that I never got up the nerve to ask until now. Is there any proper way to utilalize a home equity LOC? I mean should we use it to pay down debt, buy gold, play the stock market, buy groceries, or do nothing? Emergency use would be great. Just not too sure. Or maybe we could buy some cheap property? Ours is set up to pay only 1% of what we use and then converts into a loan at the going rate after 10 years. I just feel if we have this kind of leverage, there might be a better way to use it with the coming crisis. Any of your thoughts would be much appreciated.

-Jec

[SnoDog]

I'm not a big fan of any kind of home equity loan, but I admit I'm more conservative than most. If you cant pay it back they can take your house. And I certainly wouldnt open one up to buy gold or play the stock market.

[Nova]

I agree SnoDog. Why gamble with your house?

I'd say, cut your lifestyle (if possible.) I hate to make predictions. But based on what has gone on so far, the value of the dollar relative to gold & other currencies will fall further. So expect higher prices on anything that requires oil/gas (which is pretty much all consumer goods.) And particularly higher prices on food. So I'd stockpile food (which you can always use.) But fund it from cutting expenses.

[jds6958]

Hi everyone.

I guess the stupid question asked is the one that I never got up the nerve to ask until now. Is there any proper way to utilalize a home equity LOC? I mean should we use it to pay down debt, buy gold, play the stock market, buy groceries, or do nothing? Emergency use would be great. Just not too sure. Or maybe we could buy some cheap property? Ours is set up to pay only 1% of what we use and then converts into a loan at the going rate after 10 years. I just feel if we have this kind of leverage, there might be a better way to use it with the coming crisis. Any of your thoughts would be much appreciated.

-Jec

I did pull out equity myself and I placed it into hard assets. It made sense for me. I would not recommend the markets. I am in the markets just to short these financial entities into oblivion for fun, something to make me smile while the world is going to chaos and threatens psychological depression. Other than that, the stock markets willl eat most alive until inflation takes over, then it is a whole different type of monster.

Pray about it.

[Cameron]

I would protect my house first and foremost. If you default on your credit cards all you will get is threatening letters and phone calls. But if you default on your mortgage, you could have a serious problem.

Can you cancel the line of credit before you start the march into further debt?

If too late to do that, I would just let it be and use it only in a bonafide emergency, such as getting through a job loss or other financial emergency. Then just use as little as possible and pay it off as soon as you can.

I would not use it for luxuries or to buy a car or to take a vacation. If you have to borrow for these things you are already over extended and need to cut back. You can buy a dependable five year old luxury car for a fraction of what a new one costs, pay cash for it, have no car payment and put the maximum liability on it for a song.

I would repeat three times....No new debt! No new debt! No new debt!

[can4christ]

Hi everyone.

I guess the stupid question asked is the one that I never got up the nerve to ask until now. Is there any proper way to utilalize a home equity LOC? I mean should we use it to pay down debt, buy gold, play the stock market, buy groceries, or do nothing? Emergency use would be great. Just not too sure. Or maybe we could buy some cheap property? Ours is set up to pay only 1% of what we use and then converts into a loan at the going rate after 10 years. I just feel if we have this kind of leverage, there might be a better way to use it with the coming crisis. Any of your thoughts would be much appreciated.

-Jec




That is exactly the problem with the economy now, people borrowing against their homes are now going to lose them. What if in 10 years the going rate is 15% or 18% can you afford that? I remember when home loans were in the 20% range.

Just paying down debt is not really paying down debt it is moving the debt. Get on a written budget, see where your money is going, have a baby emergency fund of $1000.00 instead of using credit cards, cut those up now.
For help with getting started.

http://www.daveramsey.com/etc/cms/index.cfm?intContentID=2867

We did it, it took us three and a half years to be debt free including our house.