[Nords]

Quote:

Originally Posted by growing_older Is this still a viable plan, if the bank may unilaterally change the agreement? I can see it would be safer to accumute the savings. But what are the chances I really need that much safety? Is it becoming common for banks to withhold HELOC?

Sure, should work great. If a bank does more than diddle with the last couple digits of the max balance then you can always join PenFed for their lower interest rates.

That "3-6 month's expenses" rule of thumb isn't much better than the "80% of pre-retirement expenses" canard.

In the first place, if you lose a job then you're not going to keep merrily spending at your old rate-- you're going to slam shut the wallet and probably make the 3-6 months' emergency fund last for nearly a year.

If you're retired, you're rarely going to have an expense that's over $10K... maybe to buy a used car or drill a new well or dig up your septic tank or check out of the emergency room. You'll probably see the rest of the big-ticket expenses (a new roof, higher property taxes, a kid's wedding) coming from a few months away.

A HELOC is a great way to write a check and have a month or two to figure out how to come up with the money. Meanwhile the emergency fund can be broken into smaller longer-term CDs (like PenFed, which breaks them down into amounts as small as $1000) which you can break into only if necessary and then only the ones that are needed.

Another advantage to having a credit union HELOC is that they're unlikely to diddle with the terms of the agreement.