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Author: ddeitch Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76388  
Subject: Re: How to fund a 2001 contribution Date: 4/2/2002 3:52 PM
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Thanks for the advise.

>>If I were in your situation, though, I'd put my Roth investment in a money market investment, so that if by some reason I was unable to pay the mortgage back, I would be assured of being able to withdraw my principal to pay off the line.<<

I already have a 3K CD for use in emergencies, and have every reason to expect I can pay the equity line back.

>>If you do take out the loan, you are going to have to decrease your spending so you can pay:
- interest on the loan (around $80/month until you get the principal down)
- principal on the loan (however fast you want)
and so you can save money for your:
- 2002 IRA contribution (you have about 1 year left to make the $3000 contribution)
- 2003 IRA contribution (make the $3000 contribution as early as possible after 1/1/03)
<<

The draw should only add about $90/yr to the interest burden, but I agree and intend to pay of the principal by end of summer. I am saving elsewhere off paycheck to generate the '02 contribution.

>>A question to ask yourself: If you had contributed the $2000 from savings to the Roth, would you have then taken money from your HELOC to pay for a trip to disney world? <<

No, but I would probably put it on a credit card with a 6 month 0.0% introductory rate. The Spring Training trip (Braves) is the only vacation pleasure I get each year. But your point is a good one - a vacation is not a foolish thing for which to draw on an equity line.

Thanks again.
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