Not too long ago my neighbor needed a new water heater. After it was installed, we went on one of our daily walks and she moaned about the expense and hassle.
“Well,” I said, “at least you covered it out of your emergency fund, right?” I’ve heard her speak about their emergency fund so I simply assumed that the replacement water heater had been paid for using emergency cash.
“Oh, sure. We put it on the HELOC.”
“Huh? I thought you had an emergency fund,” I said.
“We do. That’s what the HELOC is for.”
Oh, man, I thought, seeing the huge risks and holes in this plan. Turns out the emergency fund I’d heard her speak o...