Why Using Your Home Equity to Invest Is a Trap (According to Dave Ramsey)

Dave Ramsey just called HELOCs (Home Equity Lines of Credit) “stupid” and honestly, the dude has a point.

Here’s the deal: Rising home prices tempted some investors to tap their equity for real estate or other investments. Sounds smart on paper, right? Wrong.

The risks are brutal:

Your home is the collateral. Can’t pay back? You lose everything to foreclosure. Markets are unpredictable—if your investment tanks, you’re underwater.

Variable rates are a nightmare. You borrow at 5%, rates spike to 8%, and suddenly your interest payments balloon.

You’re just moving debt around. Paying off credit cards with a HELOC doesn’t fix the real problem—your spending habits. Ramsey says personal finance is 80% behavioral.

Easy access = overspending. You pull out more than intended, owe way more than expected, credit takes a hit.

HELOC as emergency fund? Disaster waiting to happen. Now a crisis becomes a loan with variable interest stress on top.

Ramsey’s take: Build a real emergency fund instead. Stay debt-free. Don’t gamble with your largest asset.

The bottom line—your home isn’t a piggy bank.