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Tap the HELOC?
Old 04-03-2009, 07:44 AM   #1
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Tap the HELOC?

We're the proud owners of a new heat pump system to the tune of $6500 (Uncle Sugar will kick in $1500 against next year's taxes). We charged it to our Amex, which we always pay off in full to avoid interest and get the cashback, but to do that this month we'll need to a) pay it with $$ from our portfolio (probably the MM or short-term bond) or b)tap our heloc at prime rate & pay that off in x months - this would probably require trimming DW's monthly 403b contributions until the heloc is paid off.

Pros/cons? Other ideas? None of these options would present a difficulty, we're just loking for the most rational approach.

I still don't get it...
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Old 04-03-2009, 07:46 AM   #2
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How's your household job/income security situation?

"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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Old 04-03-2009, 07:48 AM   #3
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Don't use the HELOC unless you need it. The HELOC is a GREAT TOOL if one of you loses your job or has large unforeseen medical bills or whatnot.

MM and short-term bonds aren't paying much now anyway, wheras the savings in energy bills using a heat pump will more than pay back the interest you will "lose" on the MM or short-term bonds........
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)

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Old 04-03-2009, 09:52 AM   #4
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Can you "EARN" more leaving the money you would withdraw versus the HELOC withdrawal? We are currently using a HELOC while we wait for CD's to mature and then paying down the HELOC. HELOC is interest only is 2.75% (prime rate -.5% and variable) and the CD's are earning 5.78% - makes sense at these rates to me. Of course since the HELOC is "variable" the interest rate could jump rather quickly (about 15 months ago the Prime was about 6%) but if it holds through 2009 the HELOC will be down to a 0 balance.
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Old 04-03-2009, 11:19 AM   #5
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Geothermal is awsome when it works. Not so much when it breaks.

My water to water unit blew the mother board in January. 3 weeks later the part was available for install.

Hopefully Obama's 30% tax credits will bring this technology into prime-time. Until then, have a back-up plan ready. FWIW, I had to put an electric hot water heater in as back-up (add another year n'half to the pay-back time!).
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Alternate financing??
Old 04-03-2009, 01:40 PM   #6
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Alternate financing??

I had one installed in Jan '06. Minnesota subsidizes the interest on loans from the power company (2.9%), so I financed the whole works. I figure my fuel savings more than pay the loan payments.
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Old 04-03-2009, 03:40 PM   #7
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Sounds like a portfolio hit either way, either lump sum or reduced 403b. I'd go for the slower hit to the 403b just to keep options open and volatility down. You can pay off the HELOC anytime. The interest should be deductable if you can itemize. And you can pay off more or less of the HELOC depending on what the market is doing.

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