 TITLE: Best and Worst Ways to Use a HELOC CONTENT: What Are Bad Ways to Use a HELOC?\n---------------------------------\nAside from putting your home at risk, HELOCs also eat up precious home equity. During the Great Recession, many borrowers whose home values declined found they owed more than their homes were worth. To protect your equity, avoid using HELOCs for:\n*   **College tuition:** HELOCs are often promoted as a way to finance college, but federal student loans are generally a smarter choice. With federal student loans, you may qualify for loan deferment, forbearance, forgiveness or income-based repayment plans if you need it, and interest rates for new undergraduate federal student loans are generally lower than for HELOCs. Students can also apply for scholarships, select a budget-friendly school or start at community college to save money on college costs.\n*   **Vacations or weddings:** Rather than go into debt for a dream vacation, wedding or honeymoon, create a budget to save for your goal, or find budget-friendly ways to travel or host your event.\n*   **Buying a car:** With good credit, you can probably get an auto loan with a lower interest rate than a HELOC. If you can't repay the loan, you could lose your car, but you won't lose your home.\n*   **Starting a business:** Instead of putting your home in peril for an untested business idea, explore financing options such as investments or loans from friends or family, credit cards, crowdfunding or business loans.\n*   **Investing:** HELOCs can free up cash to invest in stocks or rental properties, but returns on such investments aren't guaranteed, making them risky bets. END