HELOC = home equity line of creditI am fiscally responsible, but I don't ever know what a heloc is.
Cindy I am happy about your son
We have to stay away from HELOC because now that we are retired we have no income and it will be a difficult process. We had no income in 2017.
We hold one year's expense worth of money in our checking account and one year's in our savings account. If needed I can email my wealth manager to get a line of credit against my investments which will get completed within a couple of days. If we have unexpected spending, he will sell some of our investments.
I've never explored a line of credit against investments. What's the interest rate?
Selling investments results in a taxable event which means that you must sell more to cover taxes to get the money that you actually need. We use the HELOC for short term major expenses (such as adding Solar) or minor home improvements with a goal to pay off within 5 - 10 years vs. 30 years. Our HELOC is prime + 0 so with the write-off is almost free money.
No earned income or no total income?We have to stay away from HELOC because now that we are retired we have no income and it will be a difficult process. We had no income in 2017.
No earned income and hardly any total income. Let's put it this way, I qualified for both premium subsidies and lowest share of cost for a silver plan under ACA last year.No earned income or no total income?
Thank you. We are always worried, but he seems to have gotten out of the darkness of addiction.I am fiscally responsible, but I don't ever know what a heloc is.
Cindy I am happy about your son
One-income households do benefit greatly by not having to pay federal income taxes. It's great for them, and I applaud the government for not charging them anything.
Not everyone is as responsible as you with regards to debt. We have always paid off our credit cards in full each month, even when I was fresh out of university and that was when I first got a credit card. Did we have a loan early in our lives? Yes. But when one can afford to pay off and not a carry a loan, one should not have a loan. That is our mantra. Loans and debts can get out of control. Someone mentioned investments returns of 11% in 2017 and loan interest is way below that. But if the stock market is upside down, then not only one has a loan but sinking investments, that is too much stress that I want on myself.I don't understand being terrified of debt. It has its use. For those of us without generous benefactors, it is how we finance education and reliable wheels (even for used cars I have generally taken at least a short term loan). I also have a home, which would not have been possible without debt. I've never run the numbers on how many decades of renting it would have taken to have cash for a house. Without the education and reliable car, it would certainly have taken even longer.
I'm scared of tornadoes and spiders, but not debt instruments. Numbers have never been scary to me, just temporary mileposts along the way.
I don't understand being terrified of debt. It has its use. For those of us without generous benefactors, it is how we finance education and reliable wheels (even for used cars I have generally taken at least a short term loan). I also have a home, which would not have been possible without debt. I've never run the numbers on how many decades of renting it would have taken to have cash for a house. Without the education and reliable car, it would certainly have taken even longer.
I'm scared of tornadoes and spiders, but not debt instruments. Numbers have never been scary to me, just temporary mileposts along the way.
It depends on how high that single income is. If one's AGI is lower than all their credits, deductions and exemptions, then they would end up paying no income tax. It would be easier for a single income household to have its income offset by credits, deductions and exemptions than that of a multiple income household.This varies widely.
I was married in a one-income household and did indeed pay income taxes. I am now divorced in a one-income household and most definitely pay income taxes. My elderly mother is a one-income household and pays taxes on her pension and SS.
Govt charges everyone. Some folks qualify for exemptions, deductions and credits that may offset tax owed, but there is no exclusion for one-income households.
Since we don't have earned income anymore, whether it is HELOC or LOC against investments, they still need to be paid off through selling investments unless we can raise money in other ways.
Merrill Lynch's line of credit (LMA) against investment link here: https://www.ml.com/solutions/lma-account.html
The rate is not as good as HELOC but I also get a 0.5% discount against their regular LMA rate as they are also my money manager. When I borrowed against it for 4 months last year, my rate was around 4%. The only reason why I used LMA was that I would have cash to repay it after my home was sold. Otherwise if we need money, we would just ask the financial advisor to sell off some of our investments.
The terms would vary depending on the bank/investment house. I do not believe there is a maximum size as it fluctuates day by day depending on the value of the investment account. I think mine was about 2/3 of the value of the account. I don't believe there is a time limit on when it must be paid. Each month it would show the amount of interest accrued. I think that has to be paid off each month, much like HELOC. I did not check with my financial advisor as I simply paid it off with money from my checking account.4% is a great rate. Prime (used for Heloc) is now at 4.5% (up from 3.75) from our bank. How long do you have to repay investment loans? What is the max size of such loans? I will have to look into this.
The terms would vary depending on the bank/investment house. I do not believe there is a maximum size as it fluctuates day by day depending on the value of the investment account. I think mine was about 2/3 of the value of the account. I don't believe there is a time limit on when it must be paid. Each month it would show the amount of interest accrued. I think that has to be paid off each month, much like HELOC. I did not check with my financial advisor as I simply paid it off with money from my checking account.
Sure, I get it, but that's not terror. You seem to fall into the Healthy Respect category for the good and bad debt. That's Awareness, a good thing that is unfortunately not generally taught except by experience.Not everyone is as responsible as you with regards to debt. We have always paid off our credit cards in full each month, even when I was fresh out of university and that was when I first got a credit card. Did we have a loan early in our lives? Yes. But when one can afford to pay off and not a carry a loan, one should not have a loan. That is our mantra. Loans and debts can get out of control. Someone mentioned that investments returns of 11% in 2017 and loan interest is way below that. But if the stock market is upside down, then not only one has a loan but sinking investments, that is too much stress that I want on myself.
HELOC lending ratio is higher because value of home is seen as being less volatile than the stock market, although as we have seen in the 2008 housing crash that value of homes can be just as volatile.Our HELOC can be up to 90% of appraised value. You only pay interest. It can be an adjustable or fixed rate.
It brings to mind what our current financial advisor said. We had our account transferred over to him after our move. In the first meeting he said, ok, you no longer have income and it will be a while before you both have income coming in to cover your expenses. How are you going to fund it? We explained to him about the plan to pull a chunk of money out here and there. Then he said he was impressed that we had no debt entering into retirement. He said a majority of his clients still had debts when they entered retirement and in his opinion not a good place to be in. Obviously he was talking about small potatoes like us and not like those megabucks folks who use debt to create more wealth.I think your last sentence is key. Many people retirement age like the idea of being debt-free for peace of mind.
I agree, I never heard that said before. My daughter has been raising her three boys alone with no child support and she still gets taxedThis varies widely.
I was married in a one-income household and did indeed pay income taxes. I am now divorced in a one-income household and most definitely pay income taxes. My elderly mother is a one-income household and pays taxes on her pension and SS.
Govt charges everyone. Some folks qualify for exemptions, deductions and credits that may offset tax owed, but there is no exclusion for one-income households.
When my mother in law was still alive her accountant told me that most retirees have no savings and don't leave an estate.It brings to mind what our current financial advisor said. We had our account transferred over to him after our move. In the first meeting he said, ok, you no longer have income and it will be a while before you both have income coming in to cover your expenses. How are you going to fund it? We explained to him about the plan to pull a chunk of money out here and there. Then he said he was impressed that we had no debt entering into retirement. He said a majority of his clients still had debts when they entered retirement and in his opinion not a good place to be in. Obviously he was talking about small potatoes like us and not like those megabucks folks who use debt to create more wealth.
When my mother in law was still alive her accountant told me that most retirees have no savings and don't leave an estate.
It is sad. Whether one has savings or not is dependent on so many factors, opportunities to make more money than from hand to mouth, life's fortunes/mis-fortunes, wisdom, inherently a saver or a spender...When my mother in law was still alive her accountant told me that most retirees have no savings and don't leave an estate.