MY MORTGAGE IS 230000.I HAVe 30000 LINE OF CREDIT. I have 70000 in 401k. No liquid cash..do I save up 3months emergency fund or pay off line of credit. I make 90000 a year. Im married my kids are all in early 20s.
Terry Says: I’d like to help — but I’m not quite sure I understand your situation! Have you taken down — ie, already borrowed $30,000 on a home equity loan? If so, are you aware that when rates rise, the payment will likely go up — and that if it is an “interest-only” line of credit, you are going to be on the hook for a balloon payment at some point in the future?
If that describes your situation, then you really have to start saving money from your salary — while making the regular payments on your existing line of credit. This should be a high priority for you as you approach retirement — even while you are still contributing to your 40l(k) enough to get the match, if there is one, and future tax-deferred growth on your retirement funds.
Please write back if I haven’t diagnosed your situation correctly.