| Don't use Home equity or credit cards as an emergency fund |
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littleroc02us
Moderator
Cash: $ 384.35
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Joined: 09 Feb 2009
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| Don't use Home equity or credit cards as an emergency fund |
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The worst thing you can do is use a Home equity loan as an emergency fund for the following reasons:
1. If your remaining mortgage principle of $125,000 on an original amount of $200,000 and your home equity loan amount is $50,000 you right back where you started.
2. Should you lose your job and cannot make the payments they can take your house and you would have to forclose or short sale.
3. Credit score would be killed for 3-7 years.
The second worst idea is to use Credit cards as a backup:
1. You are stacking on greater debt. If you lost or job, the car blew up or you needed medical treatment, your debt would soar.
2. If you did lose your job and weren't able to pay off the debt, your credit score would be effected and you wouldn't be able to borrow money which is a good thing.
* The best idea is to stop spending money you don't have and to save for emergencies up to 3-6 months. If you already have money set aside then when that emergency does come along you will be able to handle it with ease and not go further into debt.
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Wed Aug 19, 2009 5:36 pm |
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daquimo
New Member
Cash: $ 1.40
Posts: 7
Joined: 14 Apr 2009
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| agreed |
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I have to agree with you on cutting unnecessary spending and deciding between needs and wants when considering a purchase.
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Fri Oct 09, 2009 6:53 pm |
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