Episode Overview

Podcast: Ramsey Everyday Millionaires
Episode: Our House Burned Down—Should We Use Retirement to Rebuild?
Date: December 12, 2025
Hosts: Dave Ramsey, George Kamel
Main Theme:
This episode centers around a listener, Randy from Los Angeles, whose home was destroyed in the January LA fires. The discussion explores the financial decisions and options when faced with a massive loss—specifically, whether to tap into retirement savings to rebuild, or leverage other resources. Beyond Randy’s personal scenario, the hosts share broader principles about insurance, investing, and resilience.

Key Discussion Points & Insights

1. Caller’s Situation: House Lost in the LA Fires

• Randy lost his home (and 6,500 others in the community) in the January LA fires in Altadena.

• He's now considering how to rebuild. Insurance will cover $1.1 million of the $1.6 million rebuild cost, with an additional potential $200k from a SoCal Edison lawsuit (uncertain).

• This leaves a $400,000 gap for rebuilding.

  "Luckily we had enough insurance... we're about to rebuild for 1.6 million. Insurance will probably cover about 1.1."
  — Randy (00:47)

2. Evaluating Options For Covering the Gap

• Randy has a $631k mortgage, could sell the property for about $800k, but would lose significant equity.

• Options: Sell and walk away with ~$150k, rebuild and go into more debt, or use retirement funds.

  "That's a rock and a hard place if I've ever seen one."
  — Dave Ramsey (01:57)

• Randy prefers to stay and be part of the “Altadena Strong” community rebuilding effort.

3. Financial Picture

• Randy is 63, with $2.7 million in retirement (401k, deferred comp, IRA).
• $300,000 in liquid personal property payout (after the fire).
• Combined household income of $615,000 ($550k Randy, $65k spouse).
• Emergency fund of about $25,000 (in addition to the $300k).

4. Strategic Advice: Protect Retirement, Maximize Cash Flow

• Don’t rush to drain retirement. Pulling $400k now means losing future tax-free growth and paying taxes on the withdrawal.

• Use liquid cash first (the $300k payout).

• Leverage high income and rent assistance to save aggressively as insurance pays living expenses during the rebuilding period.

  "I would use any liquid cash I have because number one, you're not going to unplug the growth. Number two, you're not going to pay taxes on that."
  — Dave Ramsey (04:00)

• Stack cash: Live lean and save $20-25k/month for 12–18 months (the rebuild timeline). This should nearly cover the $400k gap without harming retirement.

  "Put 20k a month in a high yield savings account for 18 months. You close to the amount you need..."
  — Dave Ramsey (05:55)

• Only use as little retirement as necessary, if still needed after maximizing cash and savings effort.

5. Broader Lessons: Insurance & Community

• Importance of having robust insurance coverage, understanding policies, and reshop annually.

• Know what’s covered in your state—homeowner’s insurance is complex, and natural disasters (like wildfires or floods) stress-test policies.

  "Just go, well whatever happens, insurance will cover it. No, no, no. You got to read the fine print..."
  — Dave Ramsey (07:44)

• Emotional recovery: Rebuilding is not just financial—community matters (“Altadena Strong”).

• The risk of assuming insurance “has you covered”—be proactive, not passive.

Notable Quotes & Memorable Moments

• On the emotional impact:

  “It was horrible… But now we’re in a kind of an excitement mode because we’re rebuilding.”
  — Randy (00:31)

• On the value of keeping retirement funds invested:

  “That money’s going to double every seven years… at 70, what you're really giving up is not the 400 plus taxes. What you're really giving up is 800,000 because you’re unplugging all that growth.”
  — Dave Ramsey (03:55)

  "Leave your retirement alone. And then thank us later when you retire with $5 million."
  — Dave Ramsey (06:23)

• On insurance literacy:

  "Just doing a little bit of research can save you a lot of heartache, because if it's not covered, you need to know you might be on the hook if this event happens."
  — Dave Ramsey (07:59)

• On community and resilience:

  "I love the idea that you want to be a part of Altadena Strong… the community rising up together and rebuilding. That's pretty special stuff."
  — George Kamel (06:45)

Timestamps for Important Segments

• 00:17 — Randy shares his story; house lost in fire
• 00:47 — Outlining the insurance & rebuild cost gap
• 01:57 — Evaluating “rock and a hard place” options
• 02:18 — Randy’s age, retirement, and assets breakdown
• 03:55 — Dave on the true cost of pulling from retirement
• 04:30 — Randy’s household income and insurance rent coverage
• 05:31 — Debts gone except mortgage; leveraging high income for rebuild fund
• 06:23 — Dave frames the win: avoid tapping retirement, compound future wealth
• 07:44 — Importance of knowing your insurance coverage
• 08:24 — Emotional weight of disaster, insurance for peace of mind

Takeaway Principles

• Prioritize liquid funds and current cash flow before raiding retirement savings.
• Maximize time when living expenses are covered (insurance rent), aggressively save for approaching big costs.
• Understand your insurance coverage thoroughly; don’t assume everything is covered.
• Community matters: Financial recovery is easier when the emotional and social backbone is strong.
• Adversity can be managed through discipline, planning, and resilience.

Episode Tone

Empathetic, practical, and empowering. Dave and George maintained a supportive, slightly humorous, and deeply rational tone, balancing financial logic with an understanding of the emotional trauma involved in major loss.