When Should You AVOID Using the HELOC Strategy?

Oh, that's easy. One, no discipline. And what I mean by no discipline is if you feel like you would have the tendency to tap into the equity of your home to buy liabilities, then that's one good reason not to. Another good reason, probably the best reason not to, is you're not financially prepared for it. So this isn't an income level. Let's say you make seven grand a month, but you spend seven grand a month. You are not cash flow positive. You have not mastered your budget. Everything that's coming in is also going out the door. The only way to pay down principle is to pay down principle. And you do that with cash flow positivity. It's not just changing the vehicle from a mortgage to a HELOC that just immediately makes you successful. You have to start with the basics, which is budgeting. So if you're living paycheck to paycheck, not. And I've seen all walks of life living paycheck to paycheck. Actually, more often than not, it's the high income earners that are way over leveraged. I was talking to a gentleman out in California. I actually had multiple phone calls with him. Makes $50,000 a month. We've talked about the scenario of somebody making over $100,000 a month and spending close to that, like $90,000, $95,000 a month. What in the world are you spending? They had one home. They didn't have three, four properties, right? That they would also Airbnb out and make money on. They just had one home. They were just spending that much money on a monthly basis. But the most recent one, $50,000 a month and spends 35. And I get it. You got 15 grand margin. And the numbers work. Actually, this person was going to save almost a million dollars in interest on their mortgage by switching it from a mortgage to a HELOC. So still healthy enough to do it. But I just had to ask the question, like, why $35,000? You know, $35,000 is a lot of money going out the door every single month. I know $50,000 sounds like a lot of money. And I know that $15,000 profit margin, not profit margin, but your margin on your cash flow sounds good. But it's, I mean, it's the equivalent of making seven and spending five, right? It's what, what is that on? What are you spending $35,000 a month on? And he didn't know that was the biggest problem. It's like, I mean, you have to look at your bank statements. You have to look at three months, six months, a year because things pop up in six months that don't pop up in three things that pop up in a year that don't pop up in six months. Maybe it's subscriptions that are renewed and things like that. So, you know, I've got a annual premiums for my insurance. Those pop up once a year. They don't pop up every month or every quarter in my bank statements. So it's things like that, that he needs to go back to the drawing board, investigate what are some things that you can shave off? Because if you don't own 10 other real estate properties and you're still spending $35,000 a month, there's a lot of room for opportunity. That's the big one is you're living paycheck to paycheck. It's just not going to work for you. It's not something you should entertain at this time. This isn't a magical elixir or a magical pill that you just flip the product and all of a sudden it works. You have to work too.