The No-HEL Rule
Avoid home equity loans
The No-HEL Rule is a framework for avoiding home equity loans (HELs). HELs can be risky because they can lead to debt and financial difficulties. The rule is simple: avoid HELs and opt for other financing options instead.
- Home equity loans can be risky due to the potential for debt and financial difficulties.
- Other financing options are generally safer than HELs.
- Avoiding HELs can help individuals avoid financial risk and achieve financial freedom more quickly.
- Understand the risks associated with HELsResearch and understand the risks associated with HELs, including the potential for debt and financial difficulties.Pro tipConsider working with a financial advisor to determine the best financing option for your situation.WarningBe aware that HELs can be risky and may not be the best option for everyone.
- Opt for other financing optionsChoose other financing options, such as a personal loan or a credit card, instead of a HEL.Pro tipConsider shopping around for different financing options to find the best rate and terms.WarningBe aware that other financing options may have higher interest rates or fees than HELs.
Ed and Sally's story
Ed and Sally took out a HEL, which ultimately led to financial difficulties and foreclosure.
OutcomeThey lost their home and experienced financial hardship.
Not understanding the risks associated with HELs
Failing to understand the risks associated with HELs can lead to financial difficulties and regret.
Not opting for other financing options
Failing to opt for other financing options can result in taking on unnecessary financial risk.
The No-HEL Rule was developed by Dave Ramsey as part of his Total Money Makeover program. The rule is based on the idea that HELs can be risky and that other financing options are generally safer.
Source · BOOK
The Total Money Makeover Updated and Expanded