Why Taking a HELOC Is Playing With Fire (According to Dave Ramsey)

Real estate prices have been insane lately, so some people are getting creative—using their home’s equity as a piggy bank through a HELOC (home equity line of credit) to fund investments or pay down debt.

But Dave Ramsey, the famous personal finance guru, straight up calls this a “stupid” move. Here’s why:

1. Your Home Becomes Collateral Can’t pay back? You could lose your house. Yeah, that’s the one thing you probably don’t want to gamble with.

2. You’re Just Moving Debt Around Using a HELOC to pay off debt doesn’t fix the problem—it just shuffles money around. The real issue? Your spending habits. Ramsey says personal finance is 80% behavioral, so build a budget instead.

3. Variable Rates = Budget Killer You borrow at one interest rate, then rates climb. Suddenly you’re paying way more than expected.

4. Easy to Over-Borrow A HELOC gives you access to cash, but it’s way too easy to pull out more than you planned. Before you know it, you owe way more than anticipated.

5. Don’t Use It as an Emergency Fund Ramsey’s biggest pet peeve: people treating a HELOC like a safety net. A real emergency fund is way better than borrowing against your home at variable rates when things go sideways.

6. The Stress Factor Investing borrowed money? What if it tanks? Now you’re stressed, the investment flopped, and you still owe the loan. Not worth it.

Bottom Line: If you’re tempted to tap your home’s equity, think twice. Ramsey’s advice? Build an actual emergency fund and pay off debt the boring way—with a solid budget.