Why Dave Ramsey Says Using Your Home as ATM Is a Financial Trap

Rising home prices have tempted many to tap into home equity through HELOCs (home equity lines of credit) for investing or debt payoff. But personal finance guru Dave Ramsey calls this trend outright “stupid” — and here’s why.

The core problem: You’re betting your house. If investments tank or income dries up, foreclosure isn’t just a theory — it’s your reality. Your largest asset becomes a liability overnight.

Variable rates bite back: HELOC rates fluctuate. You might lock in 6% today but face 8%+ tomorrow. That affordable monthly payment? Not anymore. You’re essentially gambling on interest rates holding steady — spoiler alert: they won’t.

You’re not actually solving debt: Using a HELOC to pay off debt is just shuffling money around, Ramsey says. You still owe; you just moved the problem. Personal finance is 80% behavioral — the real fix is budgeting, not borrowing from your home.

Stress multiplies: Want to trade one worry for three? A HELOC does that perfectly. If your investment underperforms, you’re trapped with debt + rising payments + home equity risk. That’s not diversification; that’s financial roulette.

People use it as an emergency fund: This is backwards. A true emergency fund is cash sitting safely aside. A HELOC in an emergency becomes a financial disaster because now you owe variable-rate debt when you can least afford it.

The bottom line: Building real wealth means avoiding leverage on your primary asset. Ramsey’s advice? Skip the HELOC entirely. Focus on creating an actual emergency fund and paying down debt the old-fashioned way — with discipline, not borrowed equity.