Mortgages, which were considered "good debt," are being swept into the "debt is bad" category. Home equity lines of credit, which were considered "good mortgages," are being swept into the "debt feeds panic" category, and who knows what’s next?

The Bank of Canada, which is in charge of keeping us fiscally safe and progressive, has some control over the interest rates consumers pay, but it doesn’t know how the global financial crisis is going to play out. Its winter 2011-2012 quarterly report, "Special issue: Household Finances and Financial Stability Household Finances and Financial Stability," caused a new wave of media "debt" stories and added another layer of panic, but we still don’t know how this will all end.

What’s next for me?

Where you are financially (and that includes how in debt you are) and which financially-significant moves you want to make in the next year or so, determine how vulnerable you are to short-term interest and property value issues raised in these uncertain times. Your level of financial flexibility will determine whether you can survive anything that comes, or if you’ll find speed bumps ahead.

Are you financially ready for the unexpected - good or bad?

• Do you have a three-to-six-month emergency fund to tide you over if an income problem or sudden expense arises?
• Have you got the money to take advantage of renovation or energy saving programs, or other valuable opportunities?
• Do you have the resources to cash in on travel or car bargains, or will you be cash-poor?

If you answered "yes" to these questions, your financial flexibility will get you through some pretty tough times.

If your "yes" answers relate to being bailed out by a home equity line of credit or HELOC, not by accessing cash and assets, you’re counting on debt flexibility, not financial resources, to preserve what you own and achieve what you want. These and issues like them are precisely why HELOCs are popular. However, if a HELOC is your only financial backup, you may be on shakier ground that you realize.

HELOC Workings

The name "home equity line of credit" explains that property owners borrow against existing home equity, or accumulated real estate value. The lender registers this debt against title to protect its investment, and charges fees and interest to homeowners for the privilege of borrowing their own equity.

Lines of credit can also be extended against income with no real estate involved, but rates and terms may not be as attractive as with HELOCs where the debt is fully secured against real estate. Qualification for a HELOC involves two factors:

Published: March 6, 2012

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Futurist and Strategist PJ Wade is "The Catalyst" - intent on "Challenging The Best to Become Even Better." PJ earned this title by translating the dynamic impact of Boomers and their multi-generation families into relevant insights that start people thinking and taking action—in business and in life. Author of 8 books and more than 1800 published articles, PJ encourages individuals to become their own futurist. PJ writes and speaks about the insight, knowledge and solid decision-making skills that professionals and their clients need to live and work in this vortex of change. For instance, since PJ knows that home is headquarters for the new decades-long "unretirement," she wrote the popular book "Reverse Mortgages: Best Friend, Worst Enemy...Your Choice!", which is filled with suggestions and cautions on protecting, building and managing home equity. Her new business book, "What's Your Point?: Cut The Crap, Hit The Mark & Stick!" will be published in 2012. As The Catalyst, PJ provides strategic communication, client appreciation and advanced education services to the financial, tourism, lifestyle and service sectors - and the clients they serve. A frequently-quoted financial and business commentator, PJ is a thought-provoking strategic speaker who offers practical, real-life suggestions on leaving "the box" behind and embracing Forward Thinking - a talent she regularly demonstrates in this column. For more on keynotes, blogs, books and information on a range of 21st-Century topics, visit TheCatalyst.com.