consolidated debt and secured credit

HELOC Replaces Savings

Debt Consolidation and Credit Card Counseling

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HELOC is a good emergency alternative to savings

Homeowners who have trouble saving should consider a home equity line of credit
 

Americans are notoriously poor savers. There’s no getting around that. While a few people manage to put aside cash for emergency situations or retirement, the vast majority of people in the United States live from paycheck to paycheck. Others, such as the large number of people who use payday loans to get by, cannot even manage that. Judging from the nearly ten thousand dollars in credit card debt that each American household currently has, the lack of savings in this country is rampant. The high price of gasoline hasn’t helped, either. With prices at a record $3 per gallon, the average household has about $100 less per month available in disposable cash than just a year ago.

 
Savings

That is unfortunate, as one never knows when an emergency will strike. Financial advisors recommend that everyone maintain a savings account with somewhere between three and six months’ worth of household expenses. That way, should a temporary job loss, unexpected illness, or accident strike, you will have the money to tide you over until your finances become healthy again. If you don’t have the money put aside, hard times could become harder.

There is an alternative solution for those who cannot manage to save money. If you are one of the nearly 70% of people in this country who owns their own home, you have the option of applying for a home equity line of credit. A line of credit, also known as a HELOC, is a loan against the equity in your property. Your equity is the portion of the value of your property that you own. If the house is worth $200,000 and you owe $100,000 on your mortgage, you have $100,000 in equity. You can use that $100,000 that you own by applying for a home equity line of credit.

A HELOC isn’t like other loans; you don’t get a check when you fill out the paperwork. Instead, you get a checkbook or a debit card. The amount granted for the loan is your limit. The interest rate is variable and the payment plans are flexible, as with a credit card. In many cases, you can apply for a HELOC without having to pay any fees at all. Once it has been granted, you have a ready-made emergency fund. Should an unexpected financial disaster come your way, you will have thousands of dollars available to you in a pinch. All you have to do is use the card or the check. But the best part is that if you do not need the money, you don’t have to pay anything. 

 

 

 

 

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