"I realize my LTV ratio is low and my FICO is high, but you'd think they'd discourage using the house as an ATM on a rainy day." Why would they discourage that? There is nothing inherently wrong with using leverage. There is nothing inherently wrong with using your home's equity to further your financial goals. Using leverage you can't pay back is what's wrong. You sound like a good credit risk & banks are in business to "sell" money. If nobody borrowed...there would be no banks for your savings. It's simple. Banks take your savings & lend it to others...hopefully to credit-worthy borrowers like you. A disciplined investor will allow their real estate's equity to work for them rather than sit there as dead money. HELOC's did not cause the financial breakdown. Borrower's poor discipline & decision-making skills did, however, contribute to the debacle. Based on your "high FICO", you do not sound like one who made poor decisions. BTW, I also agree with your banker about the CDs rather than savings accounts. Laddered CDs works well for safety net savings & usually pays a higher yield. Why would one not take advantage of that opportunity? It's not likely a person would need an entire year's worth of living expenses all on the same day...so keep some amount in a cash account, ladder the rest in CDs, & keep rolling them. I do not agree with your banker that a HELCO is a substitute for an emergency cash fund. Doing that could quickly turn you from a credit-worthy borrower into a statistic. /tricia PS You WANT your bank to encourage credit-worthy borrowers to take out that HELCO, don't you? If not, how do you expect them to stay in business? While I'm on this toot...another thing to remember is that if everybody followed the advice on this forum & never carried a balance on a credit card...there would be NO CREDIT CARDS FOR ANYBODY because CCs are not a convenience that bank's offer from the goodness of their hearts. They are supposed to make money for the bank. Now, it's true that a well run bank can either break even or make a miniscule profit from just the fees they charge retailers...no bank would assume that risk. So, if you enjoy having the convenience of a CC...be glad some people carry CC balances. And if you like having the convenience of banking services be glad some people borrower for a new car, use their home's equity to pay for higher education, use a HELCO to purchase income-producing property, borrow to start their own business or expand an existing business, & even borrow to spread the cost of that once-in-a-lifetime world cruise over five years. "Loan" is not a dirty four-letter word. I am sick. I am cranky. I am tired of this generalized bank bashing. Let's just put all of those "banksters" out of business. Heck, we'll all just stash our cash under the mattress & barter for our food. Cash & carry all the way. That will teach those "banksters" a lesson! Since September 28, 2007, the FDIC reports closing 54 banks (www.fdic.gov). The FDIC had better get cranking...heck, they're not even busy yet as compared to the S&L Crisis. The problem with this "crisis" is that it's hitting our money-center banks the hardest. Due to counterparty risk, a pro-active solution was required. Those counterparties included many international banks, our largest institutions, & several states (CA, VA, HI, as examples). A.I.G. was acting as sort of a conduit to funnel money to dozens of financial institutions around the world. If AIG failed most banks in Europe wouldn't have gone down with them. These are mostly banks who bought insurance from AIG against the possibility of a global financial meltdown. AIG is hopelessly tangled in our money-center financial institutions' well-being. Letting them turn out the lights & last man out lock the door wasn't an option folks. ...rant spoken tongue in cheek (sort of). And, since I have just been diagnosed with Sjogren's Disease my tongue is permantly stuck to my cheek!! :( Here is a link that might be useful: Wiki: S&L Crisis

As a personal financial consultant I recommended that folks have 3 - 6 mos. income available in case of emergency, 9 mos. or a year`s worth if their position was shaky or if they were on commission, self-employed, etc. ... and recently Suze Orman suggested in her Money Class book that 8 mos. is necessary. I used to say to some clients, however, that I didn`t always have such, myself, but that I had a rarely-used credit card, and a rarely-used line of credit available, so that I could use the credit card to cover an emergency if I lacked the cash, then draw on the line of credit (fully secured: backed by equities, not a home - I don`t own one) to pay off the credit card debt just after the first billing, to avoid paying high-rate interest. Then I`d figure to pay off the line of credit a soon as possible, to incur only a smallish interest cost. In my 80s, by the way, I`m about 80% invested in stocks and stock-based mutual funds ... and I haven`t bought a mutual fund in about 20 years: I prefer to study up stocks and buy my own ... then pay myself the 2.5% or higher fees that the mutual fund managers charge annually (1.5% or higher in the U.S.). If those managers are so smart ... how come about 80% or more of mutual funds don`t outperform the section of the market in which they invest(question mark - I`m getting a capital ``�`` with a, French, grave accent over it - as you can see in the E that I posted - which was supposed to be in quotation marks, and you see what resulted). I figure that well-chosen equities will quite likely retain most of their value after 10 years or so, and I expect that most of my assets have a good 10-year time horizon, as I live, rather frugally, by choice, within my pensions` income, so my investments are more or less `play money`: I don`t expect to have to draw on it, any time soon ... as I feel that I should plan to fund my retirement to age 100, at least ... 110, better. Running out of days before running out of money is, in my opinion, better than the other way around. Thus, some quality, dividend-paying stocks are, I think, the way to fly, as they drop less in adverse markets, and usually recover, given time. Furthermore, I get a very important tax credit on dividend income on Canadian-based stocks, and later, should my stocks develop a capital gain, I pay tax on only half of it. Plus ... if I give it to a charity, I get a tax-deductible receipt for the full amount ... and pay no tax on the capital gain, which, for a stock that I`ve held for 40 years, can be substantial. Not only that ... my kids, in the neighbourhood of 50, aren`t in major need of money, and on my death can let those assets just continue to run. The base cost amount for them will be the value of the stock at my death ... and my estate will have had to pay tax at regular rate on half of those capital gains ... but some of those stocks, the ones with major capital gains developed, will be given to churches and charities: tax cost avoided. ole (frugal) joyful

Badin, this is a long read...prepare yourself. The best I can do is share my thinking process but please understand that my philosophies and actions are very specific to my financial situation. Lots of people would disagree and what works for me, may work only for me. That being said, I dont have any special secrets. My ideas are of the more "diet and exercise to lose weight" variety. Like most people of a certain age, IÂve lived through a few financial downturns. The most important lesson that IÂve learned about financial self-protection is that income protection matters more than anything. I truly believe that steady employment or the ability to replace income in the event of a job loss is the best thing I can do to emerge from tough times intact and ready to take advantage of better days. That tired old adage about having an emergency fund is really important. Why? Ensuring income and cash flow keeps one from selling off investment assets at the wrong time to pay the bills. You avoid locking in any losses and buy time for recovery. My portfolio took quite a haircut in 2002 but we held and made it back within the next year. Downturns usually bring greater volatility to the markets and you donÂt want to get caught selling assets in a downdraft. A strong emergency fund also protects us from the lure of the credit card to make ends meet while accumulating bad debt. I remember a bleak recessionary period, years ago, after a layoff, when my credit was so stretched that I was living on tuna sandwiches purchased at the nearest gas stationÂs convenience store. My Citgo card was the only one that had any room left. That was my Scarlett OÂHara standing in the field moment. So, how stable is your job and how long will your savings replace your wage income in the event of a job loss? Have you built into your savings an amount to cover COBRA payments? Do you have retiree health care? How employable is your skill set? Is there education you can be getting now that will enhance your employability down the line? DHÂs career is in private business and is very vulnerable to financial downturns so we keep more money liquid than, say, my brother who works for the federal government and has far greater job stability. DH is also at a level that might mean itÂll take a long time to find a comparable position. In line with our level of risk, IÂve recently moved from two years of expenses to three years in laddered CDÂs. If we need to replace income for a longer period, the income generated by our investment portfolio will be tapped. Laddering CDs, bonds, treasuries is a good way to take advantage of interest rate changes. By the way, if you are four years away from retirement, whatÂs your stock exposure? Do you need your investments to produce an income stream or do you have pensions to cover? If you need income, have you lessened your position and moved more into income-producing investments? I donÂt think todayÂs or tomorrowÂs retirees will have saved enough to back out of stocks completely. Keeping 5 years of income in laddered fixed income investments with the remainder in stocks for growth is a technique lots of planners are recommending to their retiring clients. Dump Debt. Pay it down. Get rid of it. Now. IÂm talking credit card debt. If inflation takes off and interest rates follow, those credit card rate hikes can act like a pay cut. No matter how tight things get, donÂt stop contributing to retirement funds. Downturns present excellent buying opportunities. If you remain employed, make sure you contribute enough to get the employerÂs match. This is the "buy low" part. Take advantage of it. Add a new twist to Date Night and sign up for an investment class with your spouse. Leave a few financial magazines in the bathroom. Seek out a good financial planner who can lend an objective voice. DH and I are like monozygotic twins regarding finances but it took a lot of education to get us there. From an investment standpoint, my current goals are still weighted towards growth but with a bit more emphasis on capital preservation than last year. IÂm heavier in cash than usual and have backed out of bond funds in favor of bonds themselves. Again, IÂm just keeping an eye on reducing volatility. Diversification is critical. Invest within your comfort zone but please donÂt keep all your eggs in one basket like a house or a couple of stocks. We go well beyond owning a range of asset classes and manage at the sector level. There are plenty of people who will disagree with me but IÂve reduced my exposure to financials and upped energy and health care. Since DHÂs career and stock options are in technology, we invest less in that sector to reduce our exposure to sector risk. But, diversification means knowing whatÂs in your mutual funds. YouÂre not diversified if both your Large Caps and your Internationals own the same companies. Morningstar provides an X-ray service that can help root out overlapping funds. A lot of investors are in love with gold right now. I have concerns about anyone rushing headlong into gold. As a diversification play, a little gold can be a good thing and help smooth volatility. But I remember when gold was in the tank for a long time so I recently and grudgingly added a small gold position. If it grows out of target, IÂll sell it back into position. ThatÂs called rebalancing. ThereÂs an old investing adage I like quite a bit. Use sailing strategies during good weather and rowing strategies during bad. In the investing world frequent rebalancing is a rowing strategy. Basically, when your asset/sector allocation departs from plan (ex: a target of 70% stocks, 30% bonds is now 80% stocks 20% bonds) you sell 10% of the stock valuation and funnel it into bonds to bring the portfolio back to target. This forces you to sell high and buy low. YouÂd be surprised how many people resist this one. They donÂt want to let go of their winners. So, they market time...might as well just go to Vegas. During the 90Âs bull market, buy and hold (a sailing strategy) worked well for a lot of people. I was rebalancing about once a year. WeÂve been rebalancing every quarter for a while now. In a bear market, rebalancing is your friend. I like quarterly. If your investments are tax-sheltered in a retirement fund, rebalancing wonÂt have a negative tax implication. The bulk of our portfolio is not sheltered so we need to be mindful of tax risk. It is way too early in the game and things need to get much worse before I would implement this next strategy. Lurking in the back of many an investorÂs mind is the ghost of 1929. I shrug it off but itÂs there. So, placing stop-loss orders on the stocks is always a possibility that can be implemented quickly. The signs of a good economy are still too strong to consider such a move but itÂs nice to know that itÂs there. I read some study of people who survive disasters. The ones who lived thought about what could go wrong and rehearsed what they would do in the event of an emergency. Apparently that preparation helped them take action faster than those who hadnÂt thought about it. The latter tended to panic. Hope for the best, rehearse the worstÂsounds right. Last strategyÂif we end up in a long recession and/or a bear market; keep a copy of Rudyard KiplingÂs poem "If" handy. It helps

I am in my late sixties and having seen my parents living on borrowed money I decided early on that I would not do that. Recently my husband who has dementia lost the use of his legs. Not having things in place I had to obtain a guardianship. In doing this my attorney asked if I could live only on what I owned. I set up a separate bank account for this and found that I could barely get by. I am lucky I could cash in my E bonds to cover the rest of my expenses, car payment, house and car taxes, and insurance on them. Every time I changed jobs I put the retirement funds in CD's. Most things do not pay more than a couple of dollars of current interest. Having invested in the E bonds I could cash one a month for years. The reason I suggest the Roth is that when I finally start withdrawing from my 401 we will be in a higher tax bracket unless I decide to file separate. Roth's were not available during most of my working years or I would probably have them. The downside of spreading things is that when I die some things might be missed since most of my things are handled electronically.