All Forum Posts by: Charles Craig

Basic facts :

Primary mortgage. Equals 200k

Salary equals 5k.

Total monthly expenses equals 3k

HELOC equals 20k in second position

So lets start this off.

First let's pull 10k out of the HELOC and put it on the principle of the 1st mortgage.

First mortgage = 190k

Heloc= 10k balance

Month 1

Then let's put your entire paycheck in the HELOC acct. This accomplishes paying the minimum payment on the HELOC.

HELOC= 5k balance

Now let's pay your expenses from your HELOC.

HELOC = 8k balance 5k(balance)+3k(expenses)

Month 1 balance

Primary mortgage 190k owed

HELOC 8k owed

Total debt 198k owed

Month 2

Put the entire paycheck in the HELOC

HELOC balance 3k owed (8k-5k)

Pay expenses of 3k

Mortgage Balance 190k

HELOC balance of 6k owed (3k+3k)

Total debt is 196k

Month 3

Pay expenses 3k

HELOC =9k

Put entire check in the HELOC

HELOC = 4k

Mortgage Balance owed 190k

HELOC = 4k

Total owed 194k

Rinse and repeat......

In month 5 your heloc balance owed will be 0.

Month 6

So in month 6 you put 10k from your heloc on the principle of your primary mortgage.

Primary mortgage Balance 180k.

HELOC balance is 10k

Total owed is 190k

Put your entire paycheck in the HELOC

HELOC balance. 5k

pay your expenses 3k

HELOC balance is 8k

Primary mortgage Balance is 180k

Total debt 188k

Month 7

Put entire paycheck in the HELOC 5k

HELOC = 3k

Pay your expenses 3k

HELOC balance is 6k

Mortgage Balance is 180

Total debt is 186k

At the end of one year your principle balance will be 180k . Not bad for living the same lifestyle and still have access to some cash.

Rinse and repeat until your debt is gone

It really is that simple.

The extra open credit (10k) on the HELOC above the 10k in this case is used as an emergency fund.

@Charles Craig, good for you. However, I can almost guarantee that as you go along, well before your mortgage/HELOC is paid out, you will find an excuse to borrow against it again.

Therefore, it will not have worked!

(But my point would be: why should it work anyway? There'll always be opportunities to make more profit than your HELOCs Interest would cost you, so why wouldn't you take 'em?)

Think of how much investing you won't be allowing yourself, because of your (theoretical) "discipline" of always paying every excess dollar back into your HELOC! [Time for a re-think?]...

We aren't in the area but we are mentors and have a client in KC, not too far from you.  If we can be of any assistance, let me know.

@Charles Craig here is Wichita in a nutshell. If you are looking to flip a property, I'd look in the suburbs, Andover, Goddard, Maize, maybe Derby, Park City, or Valley Center. Granted real estate is super expensive right now in the suburbs as it is a major seller's market- if it were me and I were to do a flip in the suburbs I would buy one in November when no one else is looking and fix it up by March/May. The first three suburb cities I listed are Tier 1 school districts. If you are into buy and hold I would consider most of Wichita working class, though the east side of Wichita can be considered upper middle, many put their kids in private schools as the school districts aren't the best aside from the suburban schools. The area that can be considered D class in my opinion is around 13th and Grove to 21st and Grove, 13 and Oliver... that section of town. There are great deals to be had in that area though if you know what you are doing. BP recommends you start with a C class neighborhood. You can easily get a good rental in a C class area in Wichita 40k or below. I hope that helps a little bit.