Wise Bread | Personal Finance and Frugal Living Forums

First, you're not a alone. A lot of people are doing just the same thing, and a lot of financial advisors agree that it makes no sense to save money at 5% while borrowing money at 8%.

The reason I don't like depending on credit as as emergency fund is that it depends on the credit system continuing to function smoothly. I haven't heard of any HELOC accounts getting closed during the recent credit squeeze related to the subprime lending--but that's just the sort of thing that can happen in a credit squeeze.

With banks having trouble selling their loans and property values dropping, they could decide to just get out of the HELOC business. Short of that, they might tighten up on their credit standards--and close only the HELOCs of people who might need the money. Either way, it's likely to happen just when you need the money the most.

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