Tap equity for emergencies

Hundred dollar bills in shape of house

Everyone needs an emergency fund -- three to six months worth of after-tax income -- to cope with layoffs and big, unexpected expenses.

But a home equity line of credit that allows you to borrow against the value of your home by writing a check or swiping a debit card can be a good alternative.

A HELOC allows you to decide how much of the loan you want to pay off each month.

While you must always pay the interest charge -- which is usually tax deductible -- you can choose to pay as much or as little of the principal as you wish.

While most lines of credit cost about $200 to establish and $50 a year to maintain, some lenders charge no application or annual fees.