The Ramsey Show Highlights – Episode Summary

Episode Title: We've Been Using Our HELOC As A Giant Credit Card
Date: November 22, 2025
Host: Ramsey Network
Format: Call-in advice with financial experts

Episode Overview

This episode centers on a caller, Carol from Canada, who, after facing pandemic-related financial setbacks, began using her Home Equity Line of Credit (HELOC) much like a giant credit card to cover home renovations and living expenses. Despite a high household income, the family now faces a daunting HELOC balance and must decide whether to roll it into an upcoming mortgage renewal or aggressively pay it down separately. The hosts offer tactical steps, highlight common financial pitfalls for high earners, and reinforce core Ramsey principles.

Key Discussion Points and Insights

Carol's Situation:

• Background:

  • Pandemic led to failed investments and unexpected bad debt.
  • HELOC (Home Equity Line of Credit) used extensively; treated like credit due to cash flow shortfalls.
  • Mortgage up for renewal in June.

• Financial Details:

  • HELOC Balance: $400,000 [01:02]
  • Household Income: $500,000/year before taxes, ~$200,000–$300,000/year after [01:14, 02:00]
  • Mortgage: $750,000 at 3.6% interest. House valued at $2.5 million [02:12]
  • HELOC Interest Rate: 4.5%, variable [02:24, 04:43]
  • Expenses: About $12,000/month, including three kids in private school and $1,800/month in HELOC interest [03:47]
  • Emergency Fund: $5,000 in cash; $50,000 in education savings for kids; a couple hundred thousand in retirement accounts [02:58, 03:16]

Should Carol Roll the HELOC Into Her Mortgage?

• Host’s Analysis:

  • HELOC is over half their annual income, making it substantial debt.
  • "Generally, with HELOCs, if it's over half your annual income, we say, hey, roll it into your baby step six, which is when you pay off the mortgage." — Financial Advisor 2 [02:40]
  • Carol does not have consumer debt outside the HELOC and mortgage, so this is a unique case.

• Mortgage Renewal Context:

  • In Canada, mortgage rates are reset every five years.
  • New mortgage interest rate expected to drop (likely between 2.9% and 3.2%) [05:00]
  • Mortgage would be 29-30% of take-home pay if the HELOC was rolled in—a bit above Ramsey's recommended threshold.

• Variable vs. Fixed Rate Discussion:

  • HELOC’s variable rate is riskier; experts prefer fixed rates if possible.
  • "At 4.5 on 400,000, I wouldn't want to see that on a variable rate." — Financial Advisor 1 [06:26]
  • Keeping HELOC separate may maintain urgency to pay it off aggressively.

Actionable Advice and Strategy:

• Budgeting:
  Carol and her husband, despite high earnings, are spending most of their take-home due to high living costs (private school, lifestyle inflation).

  • "You guys are spending close to 20 grand a month." — Financial Advisor 2 [03:42]
  • "What can we do to decrease our lifestyle and expenses?" — Financial Advisor 2 [09:09]

• Aggressive Payoff Plan:

  • Suggestion: Pay off the $400,000 HELOC in three years — $11,000/month [07:00]
  • "Come hell or high water, we're going to throw 11 grand a month at the HELOC." — Financial Advisor 2 [07:00]
  • Once HELOC is gone, use momentum to attack the mortgage; could be debt-free in about 9 years as kids leave for college [08:15]

• Lifestyle Considerations:

  • Advise evaluating and reducing discretionary expenses (e.g., consider public school as private school fees are a major outflow).

• Ramsey Principles Emphasized:

  • Keep all housing costs (mortgage, HOA, insurance, etc.) at no more than 25% of take-home pay [06:26]
  • Avoid “kicking the can down the road” by rolling variable debts into longer-term fixed debt without a plan.
  • "Live on less than you make. If you get a raise, ignore it and just invest the difference." — Financial Advisor 2 [09:22]

Notable Quotes and Memorable Moments

• On Spending vs. Earning:

  • "You couldn't cash flow the renovations, making half a million dollars." — Financial Advisor 2 [01:20, repeated at 01:54]
  • "It's hard to feel bad when you're making half a million, even after taxes, $300,000. Quite the shovel." — Financial Advisor 2 [08:51]
  • "You just, you know, make decisions with bigger zeros on the end." — Financial Advisor 1 [09:03]

• On Debt Aggression:

  • "I could give a RIP at this point, I just want to see you guys plow through these debts." — Financial Advisor 2 [07:00]
  • "If you can do more than $11,000 a month, be my guest... You and your husband should sit down tonight and go, we got to clean this up." — Financial Advisor 2 [07:33]

• Perspective on Canadian Mortgages:

  • "God bless the strangeness of Canada. Every five years we reset the mortgage rates." — Financial Advisor 2 [04:49]

• On Universal Financial Behavior:

  • "Love hearing from our Canadian listeners just to know that Canada has its own problems. You know, people are making crazy decisions all over the world." — Financial Advisor 2 [08:31]

Timestamps for Important Segments

• [00:06–01:20]: Carol explains her situation: pandemic, failed investments, HELOC debt.
• [01:20–02:12]: Details on income, tax hit, mortgage, and home value.
• [02:33–02:58]: Advisors discuss HELOC in context of Ramsey steps and ask about other debts.
• [03:11–04:05]: Budgeting, emergency funds, and monthly outflows.
• [04:43–05:37]: Advisors and Carol talk about Canadian mortgage rules, rate resets.
• [06:17–07:00]: Advisors outline the risks of variable HELOC rates and restate Ramsey’s 25% mortgage rule.
• [07:00–08:15]: Aggressive payoff plan sketched out ($11,000/month for HELOC).
• [08:31–09:22]: General commentary on financial discipline for high earners and closing advice.

Conclusion

Carol’s story is a case study in how even high-income households can slip into overwhelming debt through a combination of lifestyle inflation, unexpected setbacks, and using home equity as a credit line. The hosts recommend setting an aggressive, short-term payoff plan for the HELOC, keeping it separate from the mortgage to maintain accountability, and tightening the family budget. The episode underscores Ramsey core principles: keep housing costs at 25% (post-tax), attack debt with intensity, and live below your means to build lasting wealth.