Home Equity Line of Credit to Pay Off Credit Card Debt: A Critical Warning

[@FinancialCoachJess]

If a person or business is encouraging you to get a heloc, ask them if they earn an affiliate amount from people they refer 🤫🤫

[@Thriveandsurvive2154]

Thanks!

[@FinancialCoachJess]

My very first super thanks on KZbin 🥹 thank you! 🙏🏻

[@TheBlackzilla]

HELOCs are not the problem. Most people have poor money management and live beyond their means with barely any money left over at the end of the month. For those who do know how to manage their money HELOC is just another tool and if utilize properly can have huge benefits

[@FinancialCoachJess]

Of course. Just like credit cards are a tool, debt is a tool, etc. my point is, predatory people are selling helocs to people who don't know the risks and it's being sold as a fix all. My goal is to explain the reality of the risks and how it can be a gamble that costs the borrower everything.

[@Pstmstr]

Great explanation Christy Vann with Vantastic Finances should watch this video.

[@FinancialCoachJess]

👀👀👀

[@dailylife6935]

So I’m about to take out a HELOC but now I’m thinking of a personal line of credit instead. Thank you. I was only going to do a 10k line and I have the money to pay it back if something were to go wrong I just don’t want to use my capital for lowering my mortgage debt or a car debt.

[@FinancialCoachJess]

You can make the decision for yourself, I just want you to have all the information first 😊

[@catvishplans]

Thank you for sharing. I have been watching a lot of velocity banking videos and I immediately exit when HELOC is used, or even a personal line. I know my history and it’s best to use the CC (multiple) I have now as my tool. 😅

[@FinancialCoachJess]

CC lenders are muchhhh more willing to work with you in an emergency. I would say you made the right choice of using unsecured debt 👍🏻

[@DebtfreeMike]

Yep. Christy Vann encouraged an elderly lady to pay over $2k in fees to get a heloc when she had the cash flow to pay off her debt faster and cheaper using debt snowball.

[@mostmost1]

​@@DebtfreeMike stop lying on people.

[@Pstmstr]

@@mostmost1true statement.

[@tomacton529]

Thank you for the video, I was looking into HELOC for credit card debt and this video laid it out perfectly. The HELOC will no longer ever be an option I’d consider. Thank you 🙏🏼

[@FinancialCoachJess]

I'm glad it was helpful! If you can find just a regular line of credit for debt consolidation, that could be a better fit! I know rates right now are high though 😮‍💨

[@tomacton529]

@@FinancialCoachJess I’m not in dire need, was just looking into the possibility, I’ll just stead fast and keep focusing using as much disposable income I can and keep getting the debt down.

[@FinancialCoachJess]

@tomacton529 sounds good. You got this! 🙌🏻 it's so worth it.

[@daisyibarra2143]

Thank you for being honest and for educating us.

[@FinancialCoachJess]

Thanks for watching!

[@lindaf6750]

I’m so glad I saw this video. I do velocity banking with a PLOC. I don’t care for HELOC. I don’t want to use my house as a bank. I also put a 3 months emergency funds before hitting velocity banking. Once the consumer debt and car payments are gone, I’ll increase it to 6 months, then tackle the mortgage. I should be done the credit cards by November and the car in September 2025

[@FinancialCoachJess]

Sounds like a great plan!! 🙌🏻 you got this!

[@myblueskye777]

In what way have you found the PLOC better than the HELOC?

[@FinancialCoachJess]

The risk!

[@ABCD-si7px]

What did you use for collateral?

[@lindaf6750]

@@ABCD-si7px there’s no collateral with a PLOC.

[@rebekahmeadows7261]

Had this convo today! And did research on using a home equity loan against our mortgage. Thank you for your advice!

[@FinancialCoachJess]

You're welcome! Hope you guys are doing well! 😊

[@Under510]

Your insights are really helpful!

[@FinancialCoachJess]

Thanks for watching and taking the time to comment! Glad it was helpful

[@abrahamrodriguez7296]

Thank you/ I was considering this to pay off debt. Nevermind.

[@FinancialCoachJess]

It's amazing that you want to pay off debt! I just think there are much better ways!

[@michaelcraig9227]

This video is sobering. I like Velocity Banking and have used a Heloc in the past. Your house is at risk however your mortgage is at risk too. Three hundred sixty payments is a lot of time for things to go wrong. I will say this , don’t max out the HELOC. Limit yourself to fifty percent. Be prudent. And if the full truth be told many people get into debt because of things they can control. I’m talking about their spending. It’s hard to save these folks from themselves. There is a lot in this video to think about.

[@FinancialCoachJess]

Mmm sobering is exactly what I was going for. Thank you! Great comment

[@Pstmstr]

360 payments is a long time. Paying extra to mortgage principal is the best way to solve that problem, not borrowing money at a higher interest rate thru VB

[@scottatjoy]

Good word

[@FinancialCoachJess]

Thank you for watching, Scott!

[@kingfekyefe9204]

saying people have no option when they are not able to pay their HELOC is rather extreme. First things happen in life all the time. We just need to learn how to manage. Second it is not as if one gets the HELOC and sits on a very high balance for a very long time. The idea is to start paying down the HELOC as fast as possible with the cash flow that is released from not having to pay minimum payments on numerous credit cards. Third HELOC for investments when the investments goes south is also very dangerous. What is being taught is not just the use of HELOC but also how to pay it down quickly thus minimizing the danger over time. Someone was paying $800 as minimum payments on $35k cc balances a month. After a year these balances were basically unchanged. Average rate on the Ccs was 29%. Moved the debt to 9.75% HELOC. Highest interest paid was about 300 for the first month. Released about 500 a month from the original 800 minimum payments to work down the principal.

[@FinancialCoachJess]

You can always find examples that it works out perfectly. Again like I said in the video it's going to work out the majority of the time, but not 100% of the time. It's a gamble, and I'm not going to be responsible for telling people to gamble with their house 🥴

[@JR-bx6kw]

I love the fact that you disclose later in your video that velocity banking is still viable for many. What I don't like is how you start your video telling people to STOP using helocs to pay off credit cards and other unsecured debt. By your own admission if it works for 9 out of 10 individuals you are encouraging 90% of people not to take what may be the best route to getting out of debt for them.

[@FinancialCoachJess]

If I had a crystal ball and could tell each individual person if a heloc was going to be beneficial to them...then I would just do that? Like I said in the video, it's a ROLL OF THE DICE🫣 it's a risk and the risk is BIG. Truly life changing. Marriage ending. And you want me to use my platform to tell people "it's probs fine"? 😑 I'm trying to warn people of the danger because there are too many people on KZbin completely ignoring the danger for likes and views. People are going to do what they want and that's fine, I just want them to have ALL the info and make an educated decision and not a one sided decision because someone sold them a cheap short cut that cost them everything.

[@matthewboone8406]

Weren't HELOCS safer during the housing crash in 2008? I heard they had 114x less default rate than reg. mortgages. If you're paycheck parking into your HELOC, you're never defaulting and ALWAYS paying down your loan. Also, that's why you NEVER get a second position, always a first. Easier to get too. If you do lose your job you can stay afloat using the equity in your home. As long as you have positive cash flow and aren't irresponsible, I believe the 1st position HELOC is the way to go. Unfortunately, most people are not disciplined. Your warning is fair, but let's educate ppl on how to utilize it properly rather than telling them to just not get it..?

[@FinancialCoachJess]

I don't think you watched the whole video because I do😆 it's ok. And I agree that first is totally different than second but most vb advocates and KZbinrs are talking about 2nd as most can't get a first

[@soulman7soulman732]

It’s obviously you are pro-heloc 🎲🎲

[@patrickdavenport9166]

@@FinancialCoachJess ALL velocity bankers I listen to ONLY recommend a First lien helps and not 2nd lien-Kwak Brothers, Vanntastic & Replace your mortgage. Denzel Rodrigues & Korean Atlanta mentorship 1st position helocs are just as safe as a mortgage

[@jonmay9302]

EXCELLENT!!!

[@FinancialCoachJess]

Thank you😊

[@michyshark]

Omg! Thank you. Someone with some common sense.

[@FinancialCoachJess]

Thanks for watching!

[@kbabyblue]

I loss 1 job and now Im thinking on getting a Heloc, now Im more confused than before

[@FinancialCoachJess]

I'm so sorry about your job loss. What are you confused about?

[@RedLeo-pf9yo]

I’m sorry, but I have to be blunt, I would never take a loan out of my house to pay a car or credit cards. You can have my credit cards if things go bad and you can have my car if things go bad. Because the truth is. As long as I have my house to live in, I can buy a $500 junker to get me from . A to point B. And if my credit cards are gone, then I can just pay for stuff in cash. But I definitely would not risk losing my home for me and my children !!!!!! that seems like common sense to me, but I can tell by the comments that apparently it is not common sense for everybody.

[@FinancialCoachJess]

You get it!

[@OakLawnSpeedShop]

Bottom line don’t use secured debt “your house” to payoff unsecured debt “credit card”

[@FinancialCoachJess]

You got it 👌🏻

[@OakLawnSpeedShop]

@@FinancialCoachJess was a mortgage lender for BOfA for ten years before the crash in 08’. I will never do or have a mortgage ever again. I lived conservatively when I was making bank. Not like the rest of my colleagues. We were making 200-300k a year. Most of my colleagues were living check to check in that earning environment. Not I said the fly. LOL

[@FinancialCoachJess]

Crazy!! Have you seen "the big short"? I was too young to realize what was going on but I love that movie and I think 08 is so interesting. We leverage our rentals but not our own house. So smart of you to see the light ahead of your colleagues.

[@rcoll60743]

If you can’t pay your first mortgage they will foreclose, so what’s the difference! There is nothing wrong with a heloc as long as you budget with sense and not run up debt again after you paid off your debts. Everybody have an opinion! It come down to the individual and how disciplined one’s are with spending.

[@Pstmstr]

She explained the risk perfectly. If people managed their finances they wouldn't be in large credit card debt. To move it to secured debt increases their risk if something happens to reduce their ability to pay debt.

[@FinancialCoachJess]

Good question. If someone has a car payment, house payment, and cc debt and something happens they can stop the cc payments or at least call the lender and they will work with them. If the same happens and instead of cc debt they have a heloc... they have no options.

[@rcoll60743]

@@FinancialCoachJess so when you have a 1st mortgage and you don’t pay or get behind you get a pass? you still lose the house! What I am saying respectfully saying a heloc give you time to pay all and some debt off so you will be in a better position to manage your obligations and go and not spend no more but budget and spend with sense going forward. Life happens to everyone, as long as you are living there will always be a possibility that something will happen! Thank you

[@FinancialCoachJess]

When something happens, you don't stop all payment to everything. You prioritize. House and car is first priority. Secured debt is first priority because it has to be. Unsecured is flexible

[@FinancialCoachJess]

Like I said in the video, if you can pay the debt off with a heloc, you can it off without a heloc 🤷🏻‍♀️ or use a regular line of credit.

[@MrAnderson74]

A credit card company can get a judgement against you in court and attach it to your home the same as a heloc. The major downside for a heloc vs unsecured debt is if you’re filing bankruptcy in a state with a large homestead exemption like 500k, you can keep your home and re affirm the debt and the unsecured debetors can’t touch the homes equity.

[@FinancialCoachJess]

This is just not true for average size credit card debts. 🤷🏻‍♀️

[@MrAnderson74]

@@FinancialCoachJess of course it is true, that’s why a HOMESTEAD EXEMPTION EXISTS. Do a little research, if they couldn’t attach the unsecured debt to your property there wouldn’t be a need for a homestead exemption.

[@FinancialCoachJess]

I said it's not true for the average size credit card debt.... and it's not.

[@MrAnderson74]

@@FinancialCoachJess what exactly in “average” CC debt 8k-10k? And no one is taking a heloc out for average cc debt, they’re taking it out large amounts. The average heloc closings are between 75k and 175k. The issues with helocs is people throw the CC debt on it and than run the CC back up and are financially ruined at that point becuase their DTI is negative. It doesn’t really have anything to do with attaching the home to the debt (although it is a talking point) because all assets can be attached to debt. Been in banking for 27 years.

[@FinancialCoachJess]

@MrAnderson74 I think you are out of touch with the average consumer. Yes, they absolutely are taking out a heloc for multiple cards between 8-10k but most of the time smaller debts too that would be much less threatening if left alone and went to collections where they could be negotiated at a later date. No credit card company is going to take a consumer to court for 8-10k. It would cost more in legal fees.... and they would be doing it nonstop. Much more efficient to sell the debt and eat the cost. Debt that is attached to assets always has more risk by definition. If you're going to default on debt, it's objectively better that it's unsecured debt. A consumer would have options which is what I explain throughout the video.

[@betitos11]

If they dont see it this way, theyre out of touch with reality or dont understand what they're doing💀💀🤣

[@FinancialCoachJess]

How do any of us know anything without first being taught? If they learn about helocs from someone who has a monetary incentive for the client to get a heloc this warning is often left out altogether.

[@FinancialCoachJess]

Have you seen the trendy videos encouraging people to take out helocs to pay off unsecured debt? 🫣 What's your opinion?

[@senojkj]

What you are warning about is NOT Velocity Banking. If you are just transferring the debt and making payments, then what you are saying is valid. The Velocity Banking way is to normally make credit payoffs in smaller chunks so this does not happen. Also what is missing is to plow all your income in to pay the HELOC off as quickly as possible. If you lose your job and can't quickly secure another, you are screwed in pretty quick order anyway.

[@FinancialCoachJess]

I really don't understand people saying "well if you lose your job you're screwed anyway" No you're not🤷🏻‍♀️ If you have ccs you can let them go to collections or call and ask for a grace period while you secure another job. If you have a heloc and can't make payments you lose your house. Those are not the same.

[@emmacox9506]

*Promo sm*

[@jamesmattice1518]

So because 1 out of 10 may loose every thing. The others should not take out a HELOC to pay off credit card debt. Just silly

[@FinancialCoachJess]

We can agree to disagree! And I think you missed my point that it's reckless of ME to advocate for helocs. As a professional in this space, I see a lot of KZbinrs doing a disservice to people and not disclosing the risks because they earn money by referring clients to helocs.

[@sharayarnold5335]

To make a video saying not to do something you did doesn’t make sense

[@FinancialCoachJess]

If you didn't understand the video, that's ok, we can agree to disagree!