My Financial Advisor Told Us To Take Out A HELOC

Summary

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Ramsey Everyday Millionaires – Episode Summary

Title: My Financial Advisor Told Us To Take Out A HELOC
Date: December 8, 2025
Hosts: Dave Ramsey, Rachel Cruze
Key Topic: Whether it's wise to use a HELOC (Home Equity Line of Credit) for a home addition upon retirement

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Episode Overview

In this episode, Dave Ramsey and Rachel Cruze speak with Dan, a soon-to-be retiree from Grand Rapids. The main theme revolves around evaluating financial advice regarding debt in retirement, specifically whether to fund a home addition via savings or to take out a HELOC, as suggested by Dan's financial advisor. The discussion emphasizes personal values, peace of mind, and the importance of listening to one’s own instincts when making financial decisions.

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Major Discussion Points & Insights

Celebrating Retirement | (00:19–01:49)

• Dave asks Dan about celebrating his wife’s retirement after 40 years of work.
  • Rachel encourages a small celebration, regardless of personal habits:

    “Champagne. Pop the bottle right outside the door.” – Rachel Cruze (01:39)

  • Lighthearted banter when Dan mentions neither he nor his wife drink.
  • The hosts stress the importance of acknowledging life milestones.

Dan’s Financial Dilemma: HELOC vs. Savings | (01:56–03:41)

• Dan’s plan: Pay for a $100-120K home addition in cash, using funds from a 401k and savings.
• Advisor’s recommendation: Take out a HELOC to:
  • “Pay a lower interest rate than he can make me” (02:04)
  • “It’ll definitely be a tax write-off” (02:10)
  • “It’ll save me 20 plus thousand dollars next year in taxes because of the tax bracket that he’s aligning us with.” (02:13)
• Dan's reluctance: “It’s very hard for me to think about going into debt immediately as I retire.” (02:31)

Hosts' Analysis & Advice | (03:41–07:50)

• Rachel strongly opposes the HELOC suggestion and highlights the advisor's failure to consider Dan’s values:

  • “Some financial advisors are so stupid. They don’t even think about your values and what you want out of life. And clearly living a debt free life has a price tag for you.” – Rachel Cruze (03:41)

• Both hosts endorse using cash to fund the addition:

  • Rachel: “Just cash flow it.” (04:00)

• Discussion of Dan's financial position:

  • Dan confirms comfort with his retirement nest egg (~$2 million in total) (05:34)
  • Hosts note that taking out $100K for the addition is a small percentage and will not significantly affect their long-term security.
  • Rachel: “If you go and burn that amount in the middle of the room, like, you’re not gonna have any emotion towards it because it’s such a small percentage of your net worth.” (05:35)

• Peace of Mind Over Tax Maneuvering

  • Dave: “His plan gives me a little bit of heartburn. Enough that the pepcid AC is not working. And you called us today. Right?” (06:03)
  • Rachel reemphasizes: “The peace of mind is worth that so much more.” (06:44)

Trusting Your Gut & Personal Values | (07:47–08:15)

• Rachel: “No, I would not go borrow on my house or do an addition when I freaking have the money for it.” (07:48)
• Dave underscores the value of gut feeling in decision-making:

  • “Trust your gut, Dan. There’s a whole bunch of science on this…that we feel it in our body. That’s a real thing. Has the same validity as the logic. Listen to your heart, listen to your body. You were right. Thanks for calling. Tell the financial advisor thanks. No thanks.” (07:50)

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Notable Quotes & Memorable Moments

• Dan, expressing his unease about new debt in retirement:

  “Dang it, you know, just got myself 40 years of work to get out of debt and retire. And then just thinking about going back to that just kind of scares me.” (02:31)

• Rachel, critiquing the advisor’s approach:

  “Some financial advisors are so stupid. They don’t even think about your values…” (03:41)

• Dave, emphasizing how little the HELOC ‘benefit’ truly is:

  “Your plan is simple. Boom, we’re done. We’re done.” (07:08)

• Rachel, reiterating the importance of values over technical strategies:

  “The peace of mind is worth that so much more.” (06:44)

• Dave, on the legitimacy of your instincts:

  “Trust your gut, Dan. There’s a whole bunch of science on this... Has the same validity as the logic.” (07:50)

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Key Timestamps

• 00:19 – Dan introduces his situation and dilemma
• 01:04 – Lighthearted chat about celebrating retirement
• 01:56 – Dan details the advisor’s HELOC suggestion
• 03:41 – Rachel challenges the advisor’s advice and centers on Dan’s values
• 05:34 – Dan confirms nest egg is $2 million
• 06:03 – Dave highlights emotional discomfort with the HELOC plan
• 07:47 – Final advice: Cash flow the addition, trust your values

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Summary Table

| Time | Speaker | Key Insight / Quote | |---------|--------------------|----------------------------------------------------------------------------------------------------------| | 01:56 | Dan | “It’s very hard for me to think about going into debt immediately as I retire.” | | 03:41 | Rachel Cruze | “Some financial advisors are so stupid. They don’t even think about your values...” | | 05:34 | Rachel Cruze | “You guys have $2 million. … it’s such a small percentage of your net worth.” | | 06:03 | Dave Ramsey | “His plan gives me a little bit of heartburn. Enough that the pepcid AC is not working. And you called us today.” | | 07:50 | Dave Ramsey | “Trust your gut, Dan...” |

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Conclusion

The hosts firmly advise against taking on new debt (HELOC) in retirement—especially when sufficient savings are available. They champion the intangible value of financial peace and being debt-free, affirming that personal comfort and core values should always outweigh schemes promising marginal financial or tax advantages. Dan is validated in his instincts and encouraged to move forward with his original cash-flow plan, celebrating both his financial discipline and his wife’s retirement with confidence.

Transcript

[Host/Announcer]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor we start off with.

[Dave Ramsey]

Dan in Grand Rapids. Dan, how can we help you today?

[Dan (Caller)]

My wife and I are preparing to retire. Matter of fact, her last day of work is tomorrow, the beginning of February. So 40 years of effort towards this.

[Dave Ramsey]

Dan, how are you? Dan, I gotta ask you this. This is. I mean, we. We men have to unite because we don't do this well. And we got Rachel here to help us on this. Before we dive in, what is the plan when she finishes the day tomorrow and she wraps it up and comes home? Do you got something planned?

[Dan (Caller)]

You know, we don't. It came on pretty quick. We both had this date in February picked, and then her department dissolved. And they said, you can either take a bio or. All right, you can transfer to another department. So it's all happened for her in the last three weeks. So.

[Dave Ramsey]

Okay. But she's excited about this?

[Dan (Caller)]

Oh, absolutely, yes.

[Dave Ramsey]

Dan, listen, I don't want to spend too much time on this. Rachel's here to back me up. This is where you got to step up. I mean, this is. You got to do something special. She comes home, maybe a little surprise. If she hates surprises. Plan a little something.

[Rachel Cruze]

At least a little retirement celebration.

[Dave Ramsey]

40 years, babe. You're wrapping it up. We got a celebrator is my point. I don't want to. And I'm glad I said this, Dan, because you might have blown it had I not brought this up.

[Dan (Caller)]

You're very. I appreciate that she works from home, but I will bring. So make it monumental.

[Dave Ramsey]

She works from home. Okay. Rachel, what does he do in that situation? I feel like this is your category.

[Rachel Cruze]

Champagne. Pop the bottle right outside the door.

[Dan (Caller)]

Neither one of us drink, but I'll just.

[Dave Ramsey]

Boy, we are striking out. We're striking out.

[Rachel Cruze]

The grape juice. Sparkling grape juice.

[Dave Ramsey]

Okay, Just do something special. All right, so we. We've now helped you there. That's the help you didn't know you needed now.

[Dan (Caller)]

Yeah, that's a whole plus year marriage. We got by. So we work very hard to get where we're at. And we're very comfortable with what we're planning for retirement. We're very comfortable with our financial advisor. But I have one concern, that he's got me a plan that he's got for me. And we are going to put an addition on our house next spring. So we're planning to spend about 100 to 120,000 to do that. Now my plan was just kind of take that off the top of our 401k and our savings and make that do the addition. What he's suggesting, and he gave me, I guess, good reasons is he's suggesting that I take out like a HELOC or a home equity loan to do this project. And he said we'll chunk it away pretty quick. But he said there's reasons for that. First of all, I'll be paying a lower interest rate than he can make me. That's arguable. The second thing he said was it is definitely be a tax write off. And the third thing was the fact that it'll save me 20 plus thousand dollars next year in taxes because of the tax bracket that he's aligning us with. And it just, it's very hard for me to think about going into debt immediately as I retire.

[Rachel Cruze]

Well, yeah, 100%. Because is he, what, where is he planning on having you guys pay off the HELOC when he said you can throw a bunch of like a bunch of money at it? Is he thinking just a little bit every year so that you don't mess up the taxes and all of it?

[Dan (Caller)]

Yeah, he said we'll chunk it away. And I don't know how relevant chunking away is if it's a year or five years, but he said we'll just make a monthly payment on it. And again, that'll give us a tax advantage. It'll save us taxes and all this, which all kind of makes sense, but dang it, you know, just got myself 40 years of work to get out of debt and retire. And then just thinking about going back to that just kind of scares me.

[Rachel Cruze]

Well, some financial advisors are so stupid. They don't even think about your values and what you want out of life. And clearly living a debt free life has a price tag for you. You know, you can't put a price on it, but you know, it's a value of yours that he's not putting into any consideration. And so as he goes around. But so Michael. Yeah, so no, I would not do this. I would 100. Just cash flow it. And if the cash flow comes out of, I don't know if it's the 401k if you guys have money elsewhere, but you have the ability to cash flow, right, Daniel?

[Dan (Caller)]

Yeah, we got a set amount that we're going into retirement with that we're comfortable with and it's going to last us long beyond our retirement.

[Rachel Cruze]

Yep.

[Dan (Caller)]

And just thinking of taking that 100 or 120 right off the top of that. And doing the addition was my plan until he.

[Dave Ramsey]

Well, let's. Let's just put your plan.

[Dan (Caller)]

Offered a suggestion. Yeah, I'm sorry. Yeah.

[Dave Ramsey]

I want to put your plan to the test. Not his suggestion. We hate his suggestion. We hate. So let's put your plan to the test. Let's assume that you didn't get this advice at all. Okay.

[Dan (Caller)]

Yes.

[Dave Ramsey]

And you just went ahead and pulled the trigger on your plan. How do you feel emotionally about your plan? Any stress?

[Dan (Caller)]

No, I don't think so. We have kind of intentionally. We have this 403B that we've been carrying for a long time, and I've been very aggressive with it, and I took it from 20,000 to. It's about 170 right now. So my thought was that is just some play money we've been actually not planning on that we've accumulated that would do this project for the addition.

Well, we raised seven kids in our house, and it was fine with nine people, but now what we find is with adult children instead of nine people every day, we have 29 people, you know, 10 times a year. So we want to double our kitchen and our living room.

[Rachel Cruze]

How much. How much do you guys have in retirement total?

[Dan (Caller)]

Just about 2 million.

[Rachel Cruze]

Okay. Golly. See, and he's going through all these hoops and stuff about this, and then that you guys have $2 million. Do you know what I mean? And you want to take 100,000 of it. And if you go and burn that amount in the middle of the room, like, you're not gonna have any emotion towards it because it's such a small percentage of your net worth. So that's where the peace of mind of your value system overrides his snaking and maneuvering through where it's gonna be not even that much money at the end of the day. Do you know what I'm saying?

[Dave Ramsey]

I agree. I mean, Dan, you answered. I asked it that way just simply for you to hear yourself say, his plan gives me a little bit of heartburn. Enough that the pep said, AC is not working. And you called us today. Right?

[Dan (Caller)]

It did. Yeah.

[Dave Ramsey]

Right.

[Dan (Caller)]

I think I knew where you were going to take me, but I just kind of wanted to hear it.

[Dave Ramsey]

Yeah, and I appreciate that, and we're happy to be here for you. But you, sir, are the ultimate arbiter on this. Your body, your heart, your head. And, man, you're just like, man, if I can put this edition on, and I'm paying cash for my grandkids to be there.

[Rachel Cruze]

Yeah. And I would run the numbers too because I am curious because he lux like the. The rates go up and down. Like it really is very dependent upon what's going on.

[Dave Ramsey]

Don't run the rates at all. I don't want you to be tempted. No, no.

[Rachel Cruze]

It's not a temptation. But it's that versus what? You know what I mean? Like that versus the taxes that you're gonna pay on a hunt. Like. Like what I'm saying is I think it ends up being closer to a wash than what you realize. I think that the guy, I think he's like nitpicking every little thing to say. I'm making this number up. I haven't done the calculations but to save 10 grand, whatever the thing is. And. And that's pennies to you guys. So I'm like the peace of mind is worth that so much more.

[Dave Ramsey]

Yeah. Just listening to you describe everything he told you versus your plan. Yours is simple. Boom, we're done. We're done.

[Rachel Cruze]

And I guess do you have you.

[Dan (Caller)]

Said kind of makes sense.

[Rachel Cruze]

Do you? Yeah. Do you have money elsewhere, Dan? Where to his point. Do you have money sitting in a high yield savings or something where you wouldn't necessarily have to pay taxes if you use that cash?

[Dan (Caller)]

We have about a $40,000 savings account.

401K. I have a lump sum pension and a 403B.

[Rachel Cruze]

Okay. Gotcha, gotcha. No, that's great. Yeah. No, I would not go borrow on my house or do an addition when I freaking have the money for it.

[Dave Ramsey]

Yeah.

[Rachel Cruze]

That's the bottom line.

[Dave Ramsey]

Trust your gut, Dan. There's a whole bunch of science on this that trusting the gut is not this mysterious thing. It's actually the brain that sending physical signals to the body and that we feel it in our body. That's a real thing. Has the same validity as the logic. Listen to your heart, listen to your body. You were right. Thanks for calling. Tell the financial advisor thanks. No thanks.

[Host/Announcer]

Thanks for tuning in to Ramsey. Everyday millionaires need help with your investments? Connect with a smartvestor [e-mail] smartvestor or click the link in the show notes. Ramsey Solutions is a paid non client promoter of participating pros. Learn [e-mail] SmartVestor.