Why Your Home Equity Might Be a Financial Landmine

HELOC (home equity line of credit) is getting hyped as a quick cash solution, but personal finance guru Dave Ramsey isn’t having it—he literally calls it “stupid.”

Here’s the thing: you’re basically using your house as a poker chip. Can’t repay? Welcome to foreclosure city.

The six main red flags:

Collateral nightmare — Your home is on the line. Market crashes, investment tanks, income drops—you could lose your biggest asset.

Stress multiplier — Complex financial moves = complex problems. What if that asset you invest in nosedives? Now you’re stuck owing money on a failed bet.

Variable rates bite back — Locked in at 5%? Rates jump to 8%? You’re bleeding money on interest you didn’t budget for.

Debt shell game — Moving debt around ≠ solving it. Ramsey’s point: this just feels productive while keeping you trapped in the debt cycle.

Oops, borrowed too much — Easy access to cash = easy overspending. Suddenly you owe way more than planned.

Killing your emergency fund strategy — Using HELOC as a safety net is backwards. One crisis + variable interest rates = financial disaster waiting to happen.

Ramsey’s stance: skip it entirely. Build real savings instead of gambling with your home’s equity. Your future self will thank you.