I have first hand experience with having a HELOC. How scary it can be and how stupid you feel later. My wife and I were (WERE) living beyond our means. Not by much really. Never to a point where we even thought we were out of control. A few years ago a friend kept telling my wife that we should take out a HELOC. Have it sitting there for emergencies. They had bought their cars with theirs, to write off the interest. Anyway, we did take out one and the rate was really, really low. Like 3% AT THE START. We started using it, little bits at a time. Even paid off some other higher interest fixed rate loans (stupid), and of course the credit cards, thinking that we were saving money and could write off the interest. Ok, so then rates started going up and we had this $30K monster that was growing, staring at use each month. It was really upsetting. For one, I realized that why they heck would we want a HELOC for emergencies? I mean, if you are having trouble, you don’t want more debt. We should have been growing our savings for emergencies. Anyway, we buckled down and got the friggin loan paid off. It was tough. I went to close it and the bank says that I would have to pay a penalty unless I waited another year. So I closed it later. The things are a trap. Now we have things paid off and even with that, even with just utilities and incidental stuff, we struggle to save. I know now that we should have been living off one salary all the time. So, in case one salary was lost, we could keep going without much upset. We always paid our bills on time, but it was sometimes a juggling act. If the upcoming ARMs and HELOCs are all resetting, rates rising, people are going to really struggle. I’m sure most families are blindly going along as we did. Not thinking about the what if’s. Not planning even six months down the road. They will probably be blindsided. Sorry, I ramble.
