Net worth: on the rise

I'm in the process of refinancing my home, and taking advantage of additional equity with a home equity line of credit.

The refinance itself just makes sense - lower interest rate, and slightly smaller monthly payments. The home equity line - you could argue that I'm making either a good or bad decision. On one hand, I'm consolidating existing debt (car loan, student loans) into a single loan against something of physical value. I'm also giving myself a little bit bigger cushion between the monthly income and expenses, which will allow me to build up more significant savings.

On the other hand, I realize I'm just trading one debt for another. The smaller monthly payment is due to the longer term on the line of credit (30 years vs. 4-6, depending on the loan), and on a couple loans, I'm taking an increase on the interest rate (though not as significant as you might think, since I consolidated student loans too early to take advantage of really low rates). But the breathing room, and eliminating some of the worry and stress, is worth it. Even if it costs more in the long run, I'll feel better being able to build up at least a small emergency fund.

Another concern - the home equity line of credits puts me in the position of actually having the means to go into further debt, something that hasn't been true since I paid off my last credit card and canceled all of them. Now we'll see if the discipline I've built up over the last couple years is going to work.

One really fun thing - I found out with the appraisal that my house is now worth 42% more than what I paid for it eight months ago.