I have two angels/devils on my shoulders:
Angel/devil 1: Don't pay down the HELOC. You took it out a year and a half ago to reduce the part of your net worth that's in stagnant, unproductive home equity. Its variable interest rate is currently 3.86%. So just be cool, make the normal monthly payments, and leave it alone. Home equity still accounts for 25% of your total net worth, and right now, with the stock market's current bull run, that HELOC has made substantial profits for you. You're probably selling this house in the next 5 years anyway, and you can pay off the HELOC in full then.
Angel/devil 2: Pay down the HELOC. You're FIRE-ing next week. You know the HELOC's interest rate is likely to increase over time. You might as well take some of those stock market profits and pay that sucker down or even off. Being debt-free is good. And -- right now, the market is high and the interest rate is low, but if the market corrects and the interest rate soars, you'll be in a bad position to pay it down then. You don't know what the future holds, and a 3.86%, untaxed, guaranteed return is not terrible. Plus, because it's a HELOC, paying down the principal immediately lowers your monthly payments.
Who do I listen to? Do I stay the course? Or do I take some guaranteed profits and reduce debt now?
I realize this is an age-old debate on this forum, but my specific case is a bit different than most because of the variable interest rate and the immediacy of FIRE. Converting to a fixed interest rate would kick it up substantially, probably to close to 5%.
Thanks.