Creating A Healthy Household Budget

Hello, my name is Jerome Silas. Welcome to my website about creating and following a healthy household budget. When I was in college, I tried to create a smart budget to save all the pennies I could after paying my bills. Unfortunately, I jumped in too fast and created a budget that was impossible to follow for the long term. Through the years, I have learned all about the methods that work best while creating and following a budget. I would like to share those methods with you all to help everyone create a healthy household budget. Thanks for your time.

Paying Off Credit Cards With Home Equity Lines Of Credit: What You Should Know

Finance & Money Blog

When faced with a tough financial situation, you may be tempted to file for bankruptcy. If you own your own home and have some equity in it, then you could apply for home equity lines of credit instead. Even though you may feel like you are robbing Peter to pay Paul, just about any viable solution is often better than bankruptcy. Still, there are some things you should know about home equity lines of credit.

You Cannot Borrow More until You Have Paid off the First Loan

Some people put themselves in a vicious circle of borrowing an equity loan to pay off credit cards and then charging up credit cards again thinking that they will just get another equity loan. That is not how it works. Your initial equity loan is based on how much you asked to borrow and how much equity is available for you to borrow against. Even if you increase the equity in your home over the next five years, you cannot request another equity line of credit until you have paid off the first one.

If You Are Paying off Credit Cards, Get the Lowest Interest Rate Possible

If you are going to use your home equity loan to pay off your credit cards, make sure you get the lowest interest rate possible. While just about any home equity loan would have a lower interest rate than most credit cards, you may be spending a decade or more paying off the equity loan. That interest adds up quickly, and a higher interest rate on your equity line of credit may cost you almost as much as keeping the credit cards.

If You Are Paying off Credit Cards, Cut Them up and Cancel Them

As tempting as it might be to keep your credit cards after you have paid them off with the home equity loan, do not. Cut them up and cancel them. The main reason why you applied for a home equity line of credit was to reduce your debt and stay out of bankruptcy.

It makes absolutely no sense to borrow against your home's equity to pay off debt and then rack up thousands of dollars more of debt, putting yourself and your family in a much, much worse situation. If you had filed for bankruptcy, you would have had to cut up and cancel the cards anyway. A home equity line of credit, such as from General Electric Credit Union, is your fresh financial start without the credit score-scarring effects of bankruptcy, so do it right.


9 June 2017