Setting up an Emergency Fund Using a HELOC

Steven — Mon, 28 Jan 2008 04:51:41 +0000

Most financial advisors recommend keeping an emergency fund of 3 to 6 months salary. If you, like most, don’t have that money on hand, saving it during a bear market can prove quite problematic. One great option for those who do not have an emergency fund but own a home is a Home Equity Line Of Credit or HELOC. A HELOC, like a home equity loan, requires property to be pledged as security for the loan. However, unlike a home equity loan, the borrower is not issued the entire sum up front; instead, the borrower is able to draw on those funds as necessary typically using special checks, or in some cases, using a credit card. So, a HELOC allows you to apply now for the loan while in a strong financial situation, and then use the funds only in the event you need them. Many consumers believe keeping an emergency fund is unnecessary because they have credit cards; a HELOC is a better option than a credit card in an emergency because its interest rate should be lower and in most cases the interest is tax deductible.

How Long to Double Your Money?

Steven — Fri, 11 Jan 2008 09:47:03 +0000

How can you find out how long it will take to double your money when you invest it at a certain interest rate? The answer is surprisingly simple using what investment professionals call the 72 rule which simply states:

To find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.

The “rule” is remarkably accurate, as long as the interest rate is less than about twenty percent; at higher rates the error starts to become significant. You can also run it backwards: if you want to double your money in six years, just divide 6 into 72 to find that it will require an interest rate of about 12 percent.

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Setting up an Emergency Fund Using a HELOC

How Long to Double Your Money?