I am wondering why that is that the wallet goes negative when there's a cashflow problem for a few years but there is space available to either take from HELOC (smith manoeuvre) AND LOC.
It should allow you to borrow from an LOC if you haven’t set a withdrawal PRIORITY limit of 0, and you haven't reached the credit limit of the LOC. For an HELOC that is setup for the Smith Manoeuvre so it’s tied to mortgage loan and to an investment account, there usually is no additional credit to borrow from the way it’s done in the TIME MACHINE (it’ll all go to the investments). I’d be happy to check over your scenario if you would like me to.
Hi - I am having a similar issue. I have a HELOC set up with a limit of $500,000. Basically, the HELOC gets used for a while without the wallet, and then after a while the wallet starts being used, even though the HELOC is not at its limit.
Anyone have a suggestion? I'll probably try working around the cash flow issue without using the HELOC by lowerig my expenses for those years, but the more realistic scenario is probably using the HELOC. Thanks.
(The details, for anyone interested, are roughly: The HELOC starts being used in 2030, and gradually builds up to a balance of $330,000 by 2039 before we start to pay it off. Wallet is not used until 2042, where it has a balance of $1, while the HELOC is $315,000 (so, lots of room left). The wallet balance stays at $1 until 2048, when it starts to be used for ~$30,000/year for a while, reaching a balance of $141,000 by 2052. The HELOC in 2052 is at $240,000. Both are paid off by 2059.
I'm probably doing something wrong, but I've spent a couple hours on it, changing things around, and it's not obvious to me what the problem is.)
I'm wondering if you're not looking at the HELOC balance in Today's dollars? The limit is not indexed, and $500,000 will appear a lot lower that far in the future.
Check the values in Future dollars. If that's not the issue, just contact me and I can go over your scenario and results.
Ah - you were right, thanks. I've been looking at everything in current dollars because I find that more intuitive for numbers far in the future. For anyone else reading, if you get this issue with your HELOC, one thing you could try is to "link" your HELOC to the regular mortgage. As described in the ebook, this will increase the HELOC limit as your regular mortgage is paid down. To make this link, when you are entering the properties of the loan, there is a drop down menu: "If linked to term Loan, Select the loan". Just pick the relevant regular mortgage.
Great! And good point about the readvanceable mortgage.