Using Your Home Equity as a Bank

— Slide 8: Your BLOC is an Income Management Tool —
Let's Summarize These Facts
  1. You Must Have Discretionary Income for the BLOC program to work

    if you are living from check-to-check, you will not benefit from this program. It is your excess monthly income that allows your BLOC to function like a bank.

    Note: you can build discretionary income by using your BLOC to consolidate credit card and other related debts: this topic will be discussed later.
Never Let Your Income Sit Idle

Never let your income sit idle in your checking or money market accounts.
  • All income and savings should be deposited into the BLOC account;
  • all living expenses (including your mortgage payment) should be paid from the BLOC account.

Any excess income will be automatically applied to the BLOC balance, thus working instantly to reduce any related debt costs.

The more discretionary income, the faster the payoff

The more discretionary income that you generate (by budgeting and savings), the faster the payoff. We have suggestions on building more discretionary income in another section.

You need to budget your spending to maximize benefits. Having an equity line can be tempting for purchases that are not needed., which can defeat the BLOC program. Budgeting helps you to say NO to unnecessary costs.

Payoff your all current debts using your BLOC
  • all credit card debt
  • all auto loan debt
  • all existing home equity loan debt
  • all personal loan debt

    note: after you pay off existing debt, you need to have a remaining credit line of $20,000 or more for the BLOC program to work. Make sure you open a sufficient line of credit that pays off your debts and leaves open a $20,000 credit line balance for the BLOC use: calculate how much your line should be based on your LTV position

Note: The money used to pay the monthly debt payments will now be added as discretionary income for the BLOC program.

Do Not Payoff:

mortgage loan debt:
we have a slide presentation how you can use your BLOC to payoff mortgage debt

we will show this later

student loan debt:
if you have federal student loan debt that has not been previously consolidated, you should consider consolidating that debt under the federal student loan program. It offers attractive consolidation features: see our student loan consolidation center for information

 

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