Dave Ramsey Tells Wisconsin Couple Their Advisor Sold Them Outdated Tax Strategy

"On a November 21 episode of The Dave Ramsey Show, a caller named Sam from Wisconsin explained that his financial advisor recommended taking out a $260,000 HELOC against his paid-off home for tax write-off purposes. Sam and his wife, both 45, have $1.6 million in their 401(k)s, contribute $50,000 annually to retirement, and bring in $225,000 per year. They're also paying off $150,000 in debt, including a $50,000 student loan."

"Ramsey rejected the advisor's strategy outright. "Your financial advisor is selling you a load of crap," Ramsey said. The tax deduction for mortgage interest was severely limited by the 2017 Tax Cuts and Jobs Act, and even when it applies, the math rarely justifies the risk. Sam would pay thousands in interest annually to potentially save a fraction of that on taxes."

"This advisor's HELOC recommendation represents a dangerous inversion of financial priorities. Tax strategies should optimize existing financial decisions, not create them. Borrowing $260,000 to generate interest deductions means paying real money to save theoretical dollars, and the math rarely works even for those who can still itemize deductions. The couple's situation reveals another issue: they're contributing $50,000 annually to retirement while carrying $150,000 in consumer debt."

A paid-off-home HELOC recommended for tax write-offs can be a poor financial move because interest costs often exceed tax savings. The 2017 Tax Cuts and Jobs Act limited mortgage interest deductions, reducing the situations where interest is deductible. Paying interest to pursue marginal tax benefits can mean thousands in annual interest to save a fraction in taxes. Prioritizing debt elimination—such as $150,000 in outstanding loans—typically offers guaranteed returns compared with uncertain retirement investment gains. Tax strategy should optimize existing financial choices rather than create new debt. Consider replacing advisors who rely on outdated pre-2017 tax approaches.

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