pay off cards or take heloc

[Jon Jonhson]

Hi ,

I was wondering what everyone would suggest in this situation;

I have 3 credit cards with significant debt

1- am ex with 14,823 at 20.99% =259/mo interest

2-am ex with 9,220 at 15.99%= 122.85/mo interest

3- visa with 6,900 at 15.99%= 91.94/mo interest

I attempted a flip that ended up becoming a rental and was left with much more debt then I expected. The interest alone is significant. I brought up the idea of getting a HELOC on the place to pay of said debt. The interest rate would be 7%. which would mean significantly less of my payment would go towards interest. Ive got 1,000 /month either way to pay toward this debt. Credit cards would mean approx total of 470$/month would go towards interest. Using a HELOC approx 180 would go towards interest. My CPA said I should not citing a lot of reasons that didn't make sense to me mainly he says I need to learn the lesson and I do not want to lose my equity in my place.

What are your thoughts? I see no downside to a HELOC. I feel I have an old school CPA who dosent get the idea of leverage.

[Nick C.]

The simplest way to look at this is 7% is less than the % your credit cards are at. This is an easy one.

I would definitely trade equity for consumer debt. What good is equity if you don't use it? It could be wiped out tomorrow anyway, you might as well get something good out of it while you have it.