HELOC

Hello,
My husband is 57 and I am 56. As you know, at age 59 1/2 we can withdraw from our 401K and IRA accounts without early withdrawal penalty. At this time we are considering applying for a HELOC to cover expenses for home improvements and a trip to Italy. We don’t want to take a loan from our 401K or get an equity loan because we do not want the principal and interest payments or the early withdrawal penalties. We still have our 3rd child with us and are paying for private high school tuition etc. Since we only have to pay interest on a HELOC and can pay the principal as a balloon payment at the end of the term we know we’ll be able to payoff the principal in 2.5 years when my husband is 59.5. Our 401K’s are well funded and we’re looking for a $30,000 line of credit. Do you think this plan makes sense? Thanks for your advice!

Terry Says:  Are you kidding me??  Don’t improve your home, and don’t go to Italy!  You can’t afford it.  Wait until your last child finishes college and then reward yourselves.  The options you ask about are like asking what is the best way to commit financial suicide.