home-equity

A Wedding from HEL

Did you happen to catch the episode of The Dr. Phil Show on weddings? One couple was having a major disagreement over the cost of their impending nuptials and came to Dr. Phil to help them find a solution.

He has $2,500 in savings, she has none. That’s not so bad, I thought. At least they are talking in terms of cash.

And then the bride dropped the bomb.

wedding-roses

Because she’s mid-thirties and has waited so long to get married, she feels absolutely entitled to the lavish wedding of her dreams complete with Ecuadorian Roses to the tune of $7,000—and I mean just for the roses. She said the wedding she has her heart set on will cost $48,000. 

You should have seen the look on her fiancé’s face at the mere mention of that price tag. He was visibly mortified. She went on to say that she wouldn’t dream of putting this expense on credit cards, but a home equity loan (curiously also known as HEL) would be the way to go. They didn’t say, but I got the feeling it was his home equity she is eyeing. 

 

She said rather nonchalantly, “$48,000 isn’t really that much to pay back. I don’t think it would be that hard.” 

I couldn’t help wonder why if coughing up $48,000 in big monthly payments after the fact wouldn’t be a problem, why hasn’t she been saving that kind of money all along? I ran some numbers on a $48,000 HEL at 7 percent on a 15-year schedule and discovered that will be about $430 a month … for 15 years! Their kids will be getting ready for high school and she’ll be turning 50 before they finish paying for their wedding. 

Dr. Phil was great … counseled them exactly right (like he needs my stamp of approval ha!). I recall his reaction was something close to, “Are you out of your mind?!” pointing out the typical wedding ceremony lasts for about 30 minutes. 

He went on to advise that they should do whatever they must to keep the cost of the wedding within the limits of the cash they have. I believe he sided with the groom who had a Backyard Barbecue Wedding in mind. Actually, I thought the idea had real possibilities.

Have you ever had a home equity loan? Unlike our bride-to-be who obviously never has, let me tell you they’re not that easy to pay back. Oh I know, lenders make it sound like your home equity is a stack of $100 bills sitting in a vault somewhere just waiting for you to come down to pick up your cash.

home-equity

Home equity is one of those things you should consider out of reach for now. For most people, home equity is the one appreciating asset they’ll ever know during their lifetime. Nibbling away at it to pay off credit-card debt, a vacation or a wedding, is just foolish. The goal of homeownership should be to one day actually be a homeowner, not a forever “mortgageowner.”

RELATED: Everything You Need to Know About HEL

I hope Dr. Phil does a follow-up show on our couple. I’ve got my fingers crossed that they heard him loud and clear. The best wedding gift they can give one another is a receipt that says, “Paid in full.”

Marriage is tough enough without complicating it further with a heavy load of debt.

 

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14 replies
  1. Missy
    Missy says:

    Hope the groom dumps that one, he can never afford her. $48K just for the wedding? How much is she planning for the honeymoon? She sounds too entitled and materialistic to me, and totally out of touch with reality and the value of money.

    Reply
  2. Richard Rorex
    Richard Rorex says:

    I have used a home equity loan for just one thing, repairs needed on my house. I then paid it off in four years. The air conditioning unit failed and the cost was nearly $10, 000 and I did not have enough in my emergency fund to cover it. The interest rate was 3.9% and our budget could absorb the expense. I see people using equity for foolishness and cringe every time that I see that.

    Reply
  3. kddomingue
    kddomingue says:

    And the groom-to-be didn’t exit ‘stage left’ at a dead run? I’m surprised. My daughter married for the first time at 33. The hubs and I were able to give them $4000 in cash and she and her fiance spent another $3000 in cash on top of our gift to them. That $7000 paid for the wedding and reception….church venue, reception venue, catered food, bar, a DJ, a photographer, her dress and silk flowers. I made her bouquets and boutonnieres and we did the decorating ourselves with from of friends. She and her husband wanted to celebrate the first day of the rest of their life together with family and friends…..without paying for that first day of the rest of their lives together for the next 5 years or more! If we hadn’t been able to give them a cash gift, they would have figured out how to have a $3000 wedding and reception.

    Reply
  4. Birgit Nicolaisen
    Birgit Nicolaisen says:

    We did have a HEL at one point. It helped us get rid of the PMI payments, so it worked in our favor. It’s all paid off and we refinanced our mortgage and cut the interest in half. Our mortgage will be paid off in a couple of years (20 years total). Right around the time we are retiring. Couldn’t have done it without you!

    Reply
  5. Cally
    Cally says:

    While I didn’t see the show you refer to, i thank you for your realistic approach to beginning a life together. too much focus, hoopla, and expense is on the ceremony and not enough on the lifetime commitment of marriage. there also seems to be a competitive attitude around weddings- to “out do” someone else. not keeping up with the Joneses but out-doing them! 35 years ago my husband and i were married in my parents home, we didn’t want a huge show, just an intimate celebration of our love with those we love.

    Reply
      • Judy Swanson
        Judy Swanson says:

        Mary, I soooo love that you watch and respect Dr. Phil’s opinion as much as I do. He is a no nonsense, common sense kinda guy and I agree with his advice on every occasion he offers it. You just put yourself up a bit higher on the pedestal than I already had you! BTW I record his shows everyday and then watch the ones I feel interest me but I missed the one you are referencing. I hope it is still in my cache of recordings that haven’t been watched yet as it sounds like a really great one. You are awesome!

  6. bigmama-chicago
    bigmama-chicago says:

    this girl?? doesn’t want a husband, she wants an ATM!!! How childish she sounds and so out of touch with reality. He needs to pick up the bill for her inability to find someone sooner in life, because now she’s in her second childhood. Hope he finds the door quickly.

    Reply
  7. Isabel Sinton
    Isabel Sinton says:

    I wonder if the guy still married this clueless- – – person? Or did he see the writing on the wall and common sense kicked in.

    Reply
  8. Spice Weasel
    Spice Weasel says:

    HELOCs (Home Equity Line of Credit) which is what they are called where I live are invaluable when you’re selling your old home and buying a new one. Unless you sell your old house first (in which case where are you and all your belongings going to live. You can couch surf but not with all your worldly possessions), you won’t have the money to close on your new house. The best deal financially is to take out a HELOC on both your old and new homes which will give you the money to close on your new home. You need to list your house before you take out the HELOC on it. Otherwise it looks as is you don’t have clear title to you home. I looked at bridge loans and they were way more expensive. I think my HELOCs were prime plus 1%. When your lawyer gets the check from your buyer, she pays off both HELOCs plus her fees, the realtors’ fees, etc, before you get the amount left over. But to use it to pay for a wedding? That’s just ridiculous. The sound you hear are my Methodist grandparents spinning in their graves at the idea of spending money you haven’t made on something so frivolous!

    Reply
  9. ThistleCoveFarm
    ThistleCoveFarm says:

    NO to being in debt. There’s nothing I need or want that desperately. The “bride”…more interested in wedding than husband; if she wants a $48K wedding badly enough…save up and pay for it THEN get married…if she can find a big enough fool.

    Reply
  10. txcharley .
    txcharley . says:

    MANY years ago we used a HEL to purchase a car. Mind you, this was back in the 80s when car loans were in the 17% range and we got a HEL for 13%. We paid it off quickly by paying what we WOULD have paid on the more expensive car loan and never looked back. I am not sure I would do this again, but it did work well for us back then.

    Reply

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