Q. I’m confused about the best way to take a temporary cash loan. I can take from my credit card at 20.1 percent interest or from my HELOC at 3 percent interest. The HELOC is much cheaper but everyone says I shouldn’t use the house as an ATM. If I can pay it back in a few months, what’s the harm?
— Short on cash

A. We’re glad you asked before you did the borrowing.

Decisions about debt can be long-lasting, and they can impact every part of your financial plan.

“I agree that you shouldn’t get in the habit of using your home to pay bills or discretionary expenses,” said Jody D’Agostini, a certified financial planner with AXA Advisors/The Falcon Financial Group in Morristown.

She said if you’re truly disciplined enough to pay yourself back in a few months, than D’Agostini said the HELOC makes more sense.

“The reasons are that this is a much lower interest rate, and secondly, the interest on HELOC’s is tax deductible up to $100,000 of debt,” she said. “Therefore, the interest that you do pay will be a deductible expense on your tax bill.”

Just be sure that you don’t fall into the trap of using your home as a piggy bank, she said.

Also try to establish an emergency fund for the future so you won’t be tempted to tap into your home.

Email your questions to ask@njmoneyhelp.com.

Karin Price Mueller writes the Bamboozled column for The Star-Ledger and she’s the founder of NJMoneyHelp.com. Click here to sign up for the NJMoneyHelp.com weekly e-newsletter. Like NJMoneyHelp.com on Facebook and follow it on Twitter

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