A financial advisor recommended a $260,000 HELOC against a paid-off home for tax deductions post-2017 tax changes. The couple has $150,000 debt and contributes $50,000 to retirement annually instead of clearing guaranteed costs first. Ramsey advised against the strategy, emphasizing debt costs more than potential tax savings.

On The Dave Ramsey Show, a caller was advised to take out a $260,000 HELOC for tax write-offs, despite having $1.6 million in 401(k)s and $150,000 in debt. Ramsey criticized the strategy, stating the potential tax savings didn’t justify the risk. He advised focusing on debt elimination rather than tax optimization.

The HELOC recommendation was criticized for prioritizing tax deductions over financial stability. Borrowing to save on interest costs could lead to spending more to save less. The couple’s situation highlights the importance of addressing guaranteed costs like debt before focusing on retirement contributions for uncertain returns.

The advisor’s strategy of using a HELOC for tax deductions may not align with the couple’s financial priorities. Borrowing for tax benefits could lead to unnecessary complexity and costs. Ramsey advised focusing on debt elimination and simpler wealth-building strategies rather than risky tax optimization tactics.

Read more at Yahoo Finance: Dave Ramsey Tells Wisconsin Couple Their Advisor Sold Them Outdated Tax Strategy