pay off HELOC?

[exitstrategy]

Have really enjoyed reading the thoughts and analysis on this forum, and would love to bounce a simple decision off this crowd. 

We have a $12k HELOC loan outstanding, at 4% rate.  We also have about $15k, just sitting in a money market account...making almost nothing.  The only reason I haven't already used the cash to pay off the HELOC (effectively earning 4%, way over money market rates) is that I like the security of having a cash cushion.  But really, the HELOC could be tapped for an emergency and I wouldn't be paying interest unless I had to use it. 

I know the HELOC interest payments are tax deductible, but somehow I doubt that this is a sufficient reason to keep debt.

SO...quick gut check of my logic: should I pay off the HELOC??   

[Arbor33]

See how much longer your draw period is on your HELOC. That'll tell you how long your cushion will be around for. If you have a few years left to go on it, I can't see a good reason not to pay it off.

Figure out your expenses of keeping a balance on your HELOC, less whatever gains you're receiving on the money you'd use to pay it off vs your future situation of a paid off HELOC.

Then see if it's worth it to kill the debt. I'm sure it will be.

[brewer12345]

Is the 15k your only ready cash?  If so, I would not pay off the HELOC with it.  Keep some cash around and pay off the HELOC over time with savings.  Available HELOC limit is not a substitute for cash.  Lenders can unilaterally close your line of credit any time they damn well please.

[exitstrategy]

Both good points, thank you.  There are several more years, but I hadn't realized until I did some research that the 4% rate was relatively low (it's a floor rate, think it is prime + 0.5). 

The $15k is our only liquid personal cash right now, though we're in a good place to build that up quickly.  I think I'll take a middle road, and pay off 80-90% of the debt...this keeps the line open, minimizes interest payments, and keeps a small (but growing!) nest egg of cash. 

Thanks!!