YOUR WIFE IS RIGHT. I FACED THE SAME DECISION SOME YEARS AGO. I
DECIDED AGAINST THE LOAN AND DECIDED TO BUILD THE FUND OVER THREE YEARS
THROUGH RUTHLESS COST CUTTING AND SAVING. IT WAS REMARKABLE HOW MUCH
MONEY YOU HEMORRAGE WHEN YOU DONT WATCH YOUR PENNIES. TRY THAT FIRST.
IF YOU CAN SAVE A MONTH OR TWO'S EXPENSES PER YEAR, YOU SHOULD BE WE:LL
ON YOUR WAY.

Bob wrote:
- quote -

In article <boLZb.28414$ac.5279447[at]news4.srv.hcvlny.cv.net> , Bob
<linybob[at]hotmail.com> writes:

- quote -

I agree with John about a home equity loan as a contingency. A credit card
could help in a short period. However, I recommend savings instead of available
credit when feasable.

What I have read is that one should have the equivalent of 3 to 6 months of
_living_ _expenses_ in an emergency fund. (My preference is 6 months.) I have
lately heard longer recommendations, such as Suze Orman now recommending the
equivalent of 8 months of living expenses. (That "living expenses" would
include what you need to pay the minimums on existing debts.)

I definitely recommend that you do NOT borrow to fund your emergency fund.

Rather, I recommend saving some money from each paycheck to build up an
emergency fund. When someone on Morningstar had asked how long it took to fund
a fully-funded emergency fund once it became a financial priority, the bulk of
the replies were in the 2-4 year range.

Many people can save at least a little once it becomes a priority, but often it
is easier if the process is automated. For example, I started with a payroll
deduction feeding a savings account at my credit union. Later, when my employer
changed payroll systems, I had my credit union divert part of each payroll
direct deposit to my money market account at the same credit union. Many
financial institutions can also do direct debit, which is how I handle my
taxable investments.

But in any case, I would NOT recommend borrowing to fund a savings account.

In article <boLZb.28414$ac.5279447[at]news4.srv.hcvlny.cv.net> , Bob
<linybob[at]hotmail.com> writes:

- quote -

I agree with John about a home equity loan as a contingency. A credit card
could help in a short period. However, I recommend savings instead of available
credit when feasable.

What I have read is that one should have the equivalent of 3 to 6 months of
_living_ _expenses_ in an emergency fund. (My preference is 6 months.) I have
lately heard longer recommendations, such as Suze Orman now recommending the
equivalent of 8 months of living expenses. (That "living expenses" would
include what you need to pay the minimums on existing debts.)

I definitely recommend that you do NOT borrow to fund your emergency fund.

Rather, I recommend saving some money from each paycheck to build up an
emergency fund. When someone on Morningstar had asked how long it took to fund
a fully-funded emergency fund once it became a financial priority, the bulk of
the replies were in the 2-4 year range.

Many people can save at least a little once it becomes a priority, but often it
is easier if the process is automated. For example, I started with a payroll
deduction feeding a savings account at my credit union. Later, when my employer
changed payroll systems, I had my credit union divert part of each payroll
direct deposit to my money market account at the same credit union. Many
financial institutions can also do direct debit, which is how I handle my
taxable investments.

But in any case, I would NOT recommend borrowing to fund a savings account.

In article <boLZb.28414$ac.5279447[at]news4.srv.hcvlny.cv.net> , Bob
<linybob[at]hotmail.com> writes:

- quote -

I agree with John about a home equity loan as a contingency. A credit card
could help in a short period. However, I recommend savings instead of available
credit when feasable.

What I have read is that one should have the equivalent of 3 to 6 months of
_living_ _expenses_ in an emergency fund. (My preference is 6 months.) I have
lately heard longer recommendations, such as Suze Orman now recommending the
equivalent of 8 months of living expenses. (That "living expenses" would
include what you need to pay the minimums on existing debts.)

I definitely recommend that you do NOT borrow to fund your emergency fund.

Rather, I recommend saving some money from each paycheck to build up an
emergency fund. When someone on Morningstar had asked how long it took to fund
a fully-funded emergency fund once it became a financial priority, the bulk of
the replies were in the 2-4 year range.

Many people can save at least a little once it becomes a priority, but often it
is easier if the process is automated. For example, I started with a payroll
deduction feeding a savings account at my credit union. Later, when my employer
changed payroll systems, I had my credit union divert part of each payroll
direct deposit to my money market account at the same credit union. Many
financial institutions can also do direct debit, which is how I handle my
taxable investments.

But in any case, I would NOT recommend borrowing to fund a savings account.

Mark A. Young

In article <boLZb.28414$ac.5279447[at]news4.srv.hcvlny.cv.net> , Bob
<linybob[at]hotmail.com> wrote:

- quote -

No, it doesn't make any sense to do this. Sure, you fund your emergency
fund, but you have also just added a hefty monthly payment and you had
to mortgage your family house to do it. That is kind of silly.

What you might want to do is open a home equity line of credit, but
do not draw any money from it. That way, if you ever need it, you
are already approved and ready to go, all you have to do is write
a check. If you do find yourself layed off, it might be too late
to get a home equity loan or line of credit, so have it ready to
go in advance. The biggest problem here is avoiding the urge to
tap into it to buy toys.

In the mean time, you need to take a close look at your monthly
budget. If you don't have an emergency fund now, that means that
you are spending everything you make. That is not a good plan for
getting ahead. Consider what would happen when you get 65 and
retire and have no savings? Especially if social security is broke
by then, how are you going to eat? Even dog food costs a buck a
can these days.

You need to seriously cut down the spending and start saving. This
is your wake up call, sort of your kick in the assets. Do it now
or risk not having anything to eat when you are old and unable to
work any more. Your first goal is to get $1000 saved up and put
away. Then go for 3 months of salary. Once you get there, then
make sure you are fully funding your retirement options, have 6
months of salary put away, and have all of your non-house debts
paid off. That is a tall order, but it sure beats being a wage
slave (which is what you are when you spend everything you make).

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

Does it make any sense to take out a home equity loan in order to put the
proceeds into a savings account? My wife says that we should have 6 months
salary in savings just in case I ever got laid off.

I do not feel like I am in any danger of getting laid off - there are none
going on at work and I do a good job and my reviews are always very good -
but I suppose it *could* someday happen.

Given that - should we take out a home equity loan now and put it into some
sort of savings acount? For us, 6 months salary would be about 15% of the
total equity we have in our home. I've never heard of anyone doing this, but
we have no debt, so I guess if people take out loans to pay off credit
cards, we could take out a loan to put in savings... I don't know...