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Ask Dave

Home Equity Line as Emergency Fund?

Does it really make sense to use a line of credit as your emergency fund?

QUESTION: Tim is working on his debt snowball and has one or two month’s worth of expenses for emergency savings.  He’s not worried about emergencies because he has a line of credit that he would use.  Is a line of credit a good emergency fund?

ANSWER: Do you really think it’s a good idea to go into debt in the middle of an emergency?  A line of credit is not a good emergency fund.  You should have cash available – three to six month’s worth of expenses.  Then pay your house off and invest in real estate.  You’ve got to do this in the right order.
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Want to Buy a House With Confidence?

Want to Buy a House With Confidence and Peace of Mind?
 

Want to Buy a House With Confidence and Peace of Mind?