"My Financial Advisor Told Me To Take Out A HELOC"

Summary

The Ramsey Show Highlights

Episode Title: My Financial Advisor Told Me To Take Out A HELOC
Date: December 10, 2025
Host/Panel: Ramsey Network (Financial Coach 1 & Financial Coach 2), Caller: Dan

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Episode Overview

In this concise yet thought-provoking episode, Dan, a soon-to-be retiree, seeks advice from Ramsey Network financial coaches about whether he should follow his financial advisor’s suggestion to fund a major home addition using a Home Equity Line of Credit (HELOC). Dan’s personal preference is to pay for the project in cash, relying on his substantial retirement savings. The discussion centers on values versus financial maneuvering, tax consequences, and, above all, peace of mind.

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Key Discussion Points & Insights

1. Dan’s Dilemma: Funding a Home Addition

• Problem Statement [00:02 - 01:14]:
  • Dan is planning a $100,000–$120,000 home addition as he retires.
  • His advisor suggests using a HELOC, citing:
    • Lower interest rates than investment returns.
    • Tax advantages / write-offs.
    • Keeping Dan in a favorable tax bracket.
  • Dan is uncomfortable going into debt after decades of working to be debt-free.

2. Advisors Question the Value of Debt in Retirement

• Debt vs. Values [01:14 - 01:48]:
  • Financial Coach 1 expresses skepticism about advisors who overlook client values:

    “Some financial advisors are so stupid. They don't even think about your values and what you want out of life.” [01:48]

  • Coach underscores the importance of honoring Dan’s desire for a debt-free retirement.

3. Cash Flow Is King

• Support for Dan’s Plan [02:21 - 02:38]:
  • Dan confirms he has sufficient funds—$2 million in retirement accounts and a $40,000 savings account.
  • Coach 1: “If you have the ability to cash flow, right, Daniel?” [02:21]

4. Assessing the Emotional Impact

• Emotional and Psychological Factors [02:50 - 03:22]:
  • Coach 2 shifts focus from dollars to feelings:
    • “How do you feel emotionally about your plan? Any stress?” [02:50]
  • Dan admits he feels at peace with paying cash:

    “No, I don't think so... it's just some play money...that would do this project for us.” [03:00]

  • Family context: Seven kids, now frequent large gatherings—a genuine, meaningful reason for the addition.

5. The Math vs. The Emotional Cost

• Minimizing the Financial Impact [03:38 - 04:11]:
  • With $2 million in retirement, $100k is a small percentage:

    “If you go and burn that amount in the middle of the room, you're not gonna have any emotion towards it. Cause it's such a small percentage of your net worth. So that's where the peace of mind...overrides his snaking and maneuvering.” [03:43]

6. Coaches’ Final Verdict: Trust Your Gut

• Simplicity & Peace of Mind [04:52 - 05:58]:
  • Coach 1: “No, I would not go borrow on my house to do an addition when I freaking have the money for it. Yeah, that's. That's the bottom line.” [05:48]
  • Coach 2: “Trust your gut, Dan. There's a whole bunch of science on this...Listen to your heart, listen to your body. You were right.” [05:58]

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Notable Quotes & Memorable Moments

• On Values:

  “Some financial advisors are so stupid. They don't even think about your values and what you want out of life.”
  — Financial Coach 1 [01:48]

• On Emotional Impact:

  “Yours is simple. Boom, we're done. We're done.”
  — Financial Coach 2 [05:16]

• On Debt-Free Living:

  “I would not go borrow on my house to do an addition when I freaking have the money for it.”
  — Financial Coach 1 [05:48]

• On Trusting Yourself:

  “Trust your gut, Dan...Listen to your heart, listen to your body. You were right.”
  — Financial Coach 2 [05:58]

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Timestamps for Key Segments

• Dan’s Situation & Financial Advisor’s Suggestion: 00:02 – 01:14
• Coaches Address the Value Question & Borrowing Hesitation: 01:14 – 01:48
• Cash Flow vs. Debt, Assessing Emotional Comfort: 02:21 – 03:22
• Retirement Savings Context & Family Motivation: 03:22 – 03:38
• Math vs. Peace of Mind, Advisor’s Tactics: 03:38 – 04:11
• Simplifying the Decision, Trusting Instincts: 04:52 – 05:58

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Tone & Closing Thoughts

The tone is candid, affirming, and straightforward, with the coaches emphasizing that personal peace of mind and values matter more than squeezing out marginal tax advantages. Dan is encouraged to trust his instincts, avoid new debt in retirement, and feel confident in spending what he’s worked a lifetime to earn, especially with ample savings and a meaningful reason for the expenditure.

Bottom line: If you can pay cash for something without stress, do it—especially if being debt-free is one of your key values.

Transcript

[Dan]

Brought to you by the EveryDollar app. Start budgeting for free today. We've worked 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 401 and our savings and make that do the addition. What he's suggesting, and he gave me, I guess, good reasons, is he 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.

[Financial Coach 1]

Well, yeah, 100% because 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]

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 it'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 into debt just kind of scares me.

[Financial Coach 1]

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]

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.

[Financial Coach 1]

Yep.

[Dan]

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

[Financial Coach 2]

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

[Dan]

Offered a suggestion. Yeah, I'm sorry.

[Financial Coach 2]

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

[Dan]

Okay. Yes.

[Financial Coach 2]

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

[Dan]

No, I don't think so. 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 us, 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.

[Financial Coach 1]

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

[Dan]

Just about 2 million.

[Financial Coach 1]

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, you're not gonna have any emotion towards it. Cause 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?

[Dan]

I agree.

[Financial Coach 2]

I mean, Dan, you answered question. 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 Pepcid AC is not working. And you called us today, right?

[Dan]

It did, yeah.

[Financial Coach 2]

Right.

[Dan]

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

[Financial Coach 2]

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 it, for my grandkids to be there.

[Financial Coach 1]

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

[Financial Coach 2]

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

[Financial Coach 1]

No, no, it's not a temptation, but it's. That versus what? You know what I mean? Like that versus the taxes that you're going to 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.

[Financial Coach 2]

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

[Dan]

And do you know, I guess, do you all have money, you said kind of makes sense.

[Financial Coach 1]

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]

We have about a $40,000 savings account.

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

[Financial Coach 1]

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

[Financial Coach 2]

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 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.

[Dan]

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