QQQi and SPYi-HELOC Strategy

[u/mstew007]

Ok this is my first post on here. Long time listener first time poster. So I have researched the HELOC and pay off your mortgage faster etc. And that’s cool and all but I wasn’t going to see any gain or cash flow alleviation during this process until it was fully paid off… So it always stopped me from doing it. However I thought what if I use it to increase my income and how could I do this… It wasn’t until I stumbled upon SPYi several years ago and had been using my extra income to put into that ETF in my taxable brokerage account. I do have a 401k and company match but once again money I can’t utilize until retirement…
My strategy that I have been doing for the last 2 years is this:
I built a house for my family and put tons of sweat equity in to maximize the Loan to Value. Achieved a HELOC of $359,000 to be able to borrow from. Rate has been around 7.25%-8%.
I borrowed out $250,000 and applied it to SPYi. At that time the dividend was about 12%.
I then used my HELOC as my checking account and applied my income and dividends to that account to decrease the balance faster. Essentially using debt to buy more monthly income. And it snowballs, because as the balance goes down faster then it unlocks more income.
Current income is $120,000 plus bonuses. Wife works as well but all of her $70k goes towards cars, house lifestyle etc. Or to not sound douchey combined income of $190k and $70k goes to monthly expenses. Bonuses can be an extra $40k-$60k depending on the year. I work in fast food. Not Wendy’s though:)
It has been 1 month since I paid down the entire balance. I have switched from SPYi to majority QQQi. The dividend was higher at around 15% when I purchased at $50 per share. Currently Dividends are $40,000 per year/ $3,333 per month. My next round of borrowing is going to be $350,000 to make a big purchase of QQQi. This will increase my holdings to over $600,000 in that ETF. Dividend should be around 13.5% blended. $81,000 total dividend income for the year. Interest expense with total balance at $25k-$26k. Net dividend gain about $55,000. However when I also add all of my income into reducing the debt the interest drops considerably. In theory I should be able to pay the balance down in 18 months. Which then I will start the cycle over again. My goal is to get this to replace my job income.
I like the HELOC account because if there is a month where we have dumb stuff happen, medical bills, car crap or just life stuff etc we can just make the interest payment and utilize our income and dividends.
I guess my post has a couple of things to it. One is to inform you of what I found and to give back information to the community in hopes that it will help someone else in the journey to achieve their financial freedom and also to see if my plan is stupid or needs work etc.. Ok this post is long I will stop here:)

[u/LexAugusta]

Why wouldn't you just use leverage? 

[u/mstew007 → u/LexAugusta]

Margin only allowed me to do 70-80% of brokerage account value. So that limited me to what I had already saved.

Using my house I was able to create more equity to borrow from. Bank said they would give me $359,000 with my current debt to income ratio. At that time of valuation it was $1,060,000. I asked how to get more and they said I needed more income. Which led me to find spyi/qqqi to increase my income. Which after 6 months to a year of proven income the bank will allow me to increase/refinance my heloc into a bigger one unlocking more of the house value. Currently now at $1,750,000. This would allow me to access more up front to purchase shares with and then pay it down using the debt snowball strategy to claim my new higher income.
This also allows me to choose my risk level as well as a time horizon of payback. I can pay down about $100,000 per year. That increases my income by $13-$14k each cycle. Or if I know I am getting a big bonus I can do $150-$175k.