What Happens When You Trade Your Home for a Debt-Free Start?

NerdWallet's Smart Money Podcast

NerdWallet Personal Finance

Business, Education, Investing, How To

4.2 • 665 Ratings

🗓️ 14 August 2025

⏱️ 31 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Is tapping your home equity ever a smart way to reset your finances? One listener’s story reveals what to weigh before selling. Should you sell your house to wipe out credit card debt and start over? What are the hidden trade-offs when using home equity to eliminate debt? Hosts Sean Pyles and Elizabeth Ayoola talk with a listener navigating $55,000 in debt while managing a rental property, weighing whether a sale could lead to long-term stability or a missed opportunity. But first, senior news writer Anna Helhoski shares insights from her conversation with Erin El Issa, a senior data writer at NerdWallet, about a new report on back-to-school spending, including actionable tips for saving money on school supplies amid inflation, tariffs, and social pressures. Then, Sean and Elizabeth answer a listener’s question about whether selling their home is the right move to eliminate $55,000 in debt and build a fresh financial start. They explore how to evaluate the trade-offs between long-term equity and short-term relief, model future cash flow with or without rental income, and factor in tax consequences from withdrawing retirement funds or timing a home sale. Take the Smart Money Podcast Listener Survey 2025 and enter to win a prize! https://nerdwallet.com/podsurvey Want us to review your budget? Fill out this form — completely anonymously if you want — and we might feature your budget in a future segment! https://docs.google.com/forms/d/e/1FAIpQLScK53yAufsc4v5UpghhVfxtk2MoyooHzlSIRBnRxUPl3hKBig/viewform?usp=header What You’ll Learn in This Episode 💰 Home sale decision-making – When selling your house to pay off debt could make sense 📊 Equity vs. cash flow – Weighing long-term property growth against short-term relief 🏠 Rental income trade-offs – How to model your budget with or without tenant payments 📅 Timing the sale – Why the tax year matters if you’re selling a home and cashing out retirement funds ⚖️ Debt payoff strategies – How debt management plans compare to bankruptcy 🧠 Emotional factors – Balancing financial logic with peace of mind and lifestyle goals 🔄 Financial reset planning – Steps to prepare for your next home purchase after paying off debt To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [email protected]. Like what you hear? Please leave us a review and tell a friend. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	I've ruled out uni because I want to live at home.
0:02.0	I've ruled out uni because I want to earn money.
0:05.0	I've ruled out uni because of my grades.
0:10.0	Study with the Open University and there's no need to rule out anything.
0:13.0	With our respected degrees, you can learn from home and work alongside study.
0:17.0	We're open to all. Plus, you'll have the support of expert tutors. So rethink your
0:23.6	future with the degree you didn't think was possible. The Open University. The future is open.
0:30.3	It's almost time to go back to school, at least for the kids of America. Do you know where your
0:34.7	pencil cases and lunchboxes are? Do you need new ones? If so, we've got some advice for how to navigate the school supply resupply budget.
0:47.3	Welcome to Nerd Wallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles. And I'm Elizabeth Ayola. Later this episode, we'll answer listeners' question about whether they should sell a house in order to pay off a large amount of debt. But first up, our weekly money news roundup, where we break down the latest in the world of finance to help you be smarter with your money.
1:11.2	Our news colleague, Anna Hilhouski, is back with some numbers on back-to-school spending, something that I'm very glad that I don't have to budget for. And, Anna, this is not a small expense, is it? No, it is not. And Nervaul conducts an annual survey about those costs. And this year's report found that more than half of parents of children
1:28.4	K through 12 or college say that back to school season is financially stressful for their family.
1:34.1	So to dig into some of the reasons why, we've asked Aaron Elisa, a senior dad writer here at
1:39.3	Nerdwalt, to talk with us today. Aaron, welcome back to smart money. Thanks for having me.
1:45.4	So the report found that parents are expected to spend over $700 per household this year. How does that compare to
1:51.3	previous years and what's driving that number? So it's about $200 more than last year, which is
1:57.6	significant. Yeah. And it seems like tariff-related price increases, or at least
2:02.8	the assumption of tariff-related price increases, may be driving this higher estimate.
2:07.5	So people are trying to get ahead of tariffs, I assume? So this survey was fielded back in May,
2:13.7	and tariffs have been kind of will-they, won't they, since then, but I think that the
2:18.7	estimates are a bit higher just because people have been expecting them. Actually, 39% of back-to-school
2:25.5	shoppers say they'll buy different brands due to those price increases and 35% say they'll shop
	...

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