Re: Using HELOC for monthly bills

Anonymous · ‎10-11-2008

Has anyone ever heard of using your HELOC as your "main" method of paying monthly bills?

Someone posted this idea on a non-financial board I am on. She said that her son pays a HUGE portion of his monthly income onto his HELOC, leaving really only enough in his regular checking for cash use, then he uses the HELOC to pay his regular mortgage, credit card(s)?, monthly bills, etc.

I've been trying to work through how this would work to save you money. She claimed that he had ALOT of cc debt, and was able to maximize his payments by doing this, thus reducing the balances & interest quickly. Any ideas?

MattH · ‎10-11-2008

@Anonymous wrote:
Has anyone ever heard of using your HELOC as your "main" method of paying monthly bills?

Someone posted this idea on a non-financial board I am on. She said that her son pays a HUGE portion of his monthly income onto his HELOC, leaving really only enough in his regular checking for cash use, then he uses the HELOC to pay his regular mortgage, credit card(s)?, monthly bills, etc.

I've been trying to work through how this would work to save you money. She claimed that he had ALOT of cc debt, and was able to maximize his payments by doing this, thus reducing the balances & interest quickly. Any ideas?

This is complicated. Some plans might make sense for some people, but there are also many scams. Here are some pages to get you started thinking about the issues here, on the EXCELLENT site of the "Mortgage Professor," a retired Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania:

Link 1

Link 2

Link 3

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Junejer · ‎10-11-2008

MattH wrote:

@Anonymous wrote:
Has anyone ever heard of using your HELOC as your "main" method of paying monthly bills?

Someone posted this idea on a non-financial board I am on. She said that her son pays a HUGE portion of his monthly income onto his HELOC, leaving really only enough in his regular checking for cash use, then he uses the HELOC to pay his regular mortgage, credit card(s)?, monthly bills, etc.

I've been trying to work through how this would work to save you money. She claimed that he had ALOT of cc debt, and was able to maximize his payments by doing this, thus reducing the balances & interest quickly. Any ideas?
This is complicated. Some plans might make sense for some people, but there are also many scams. Here are some pages to get you started thinking about the issues here, on the EXCELLENT site of the "Mortgage Professor," a retired Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania:

Link 1
Link 2
Link 3

I, for one, am on that plan. I will pay off my 30 year mortgage in 9 years on this program and will save over $600,000 in interest over the life of the loan. Let's see $3,500 vs. $600,000, hmmmm.

That professor DID oversimplify the program and needs to take a closer look. Many very smart people in the financial industry are touting this program. The first thing that people cry is scam when they don't understand a thing. OP, talk to someone who is using the program, let them run YOUR analysis and show you the program live so that you can see it for yourself. It slays me how people offer up information, regardless of how erroneous, without knowing the first thing about the program. Sheeesh!