Ramsey: Home equity loans dangerous
By Sheyna Steiner • Bankrate.com

Dave Ramsey knows a thing or two about real estate. Having made and lost a fortune in the housing market by the time he was 30, he fought his way back to solvency and now tells people exactly how they can pull themselves out of debt. A personal finance guru to millions via his radio show, best-selling books and seminars, Ramsey counsels people daily on improving their lives by changing their overspending ways. And people listen -- judging by the millions of dollars of debt that callers to his self-named radio show credit him with helping them pay off. According to a press release, callers to his "Debt-free Friday" show eliminated more than $20 million in debt in 2006.

At a glance Name: Dave Ramsey Hometown: Antioch, Tenn. Education: B.S. in Finance and Real Estate from the University of Tennessee Career highlights:     Host of the nationally syndicated radio program "The Dave Ramsey Show," heard by more than 3 million people weekly.   Creator of Financial Peace University, a 13-week program that helps people dump their debt, get control of their money and learn new financial behaviors.   Author of three New York Times best sellers: "The Total Money Makeover," "Financial Peace" and "More than Enough."   Created a group of products to teach children about money. Called Financial Peace for the Next Generation, it's an all-inclusive school curriculum currently used in more than 1,200 schools across the nation. There's also Financial Peace Jr., an instructional kit designed to help parents teach their young children about working, saving and giving their own money.   Author of a series of children's books: "The Super Red Racer," "Careless at the Carnival," "The Big Birthday Surprise," "My Fantastic Fieldtrip," "A Special Thank You" and "Battle of the Chores," which teach children about working, saving, giving, budgeting, integrity and debt.

It's not merely paying down balances that concern him, though. The key message, delivered to 3 million radio listeners and students in his Financial Peace University classes across the country, involves changing the behavior that caused the problem in the first place. It's not surprising then that he considers home equity loans to be among the most dangerous financial products out there for consumers.

You have some pretty strong views on home equity loans.

 I actually have pretty strong views on a lot of things. But, I don't think home equity loans are a good thing at all. I think they're a problem child in the economy.

What's your basic philosophy about them?

 We teach people to get out of debt and we find people using home equity loans for things that are bad uses. One of those bad uses would be home repairs that a person could have saved up and paid for, or vacations that they definitely should have saved up and paid for.

But I think the worst use of all is the debt consolidation loan and it is a con. And the reason it's a con is pretty simple: The figures that we're seeing are that about 80 percent of the people that move their credit card debt onto a home equity loan don't change their habits and continue to go into debt further. They really begin to make themselves a serious mess at that point.