Dave Ramsey Advises Against Debt-Financed Home Building for Career Switch

Laura, calling from Alaska into The Ramsey Show, said her husband wanted to leave banking after seven years and return to residential construction work he learned through his father's contractor business. He was earning between $80,000 and $100,000 a year with bonuses but hoped to move into contracting without taking a major pay cut.

Laura said they had spent about $2,000 on classes and exams and saved $40,000 for land while considering credit cards or loans because he wanted to go into debt to build a house.

Ramsey said he would much rather build houses than be a banker, even as he supported the career change itself. He pointed to common custom-home arrangements where the buyer funds the project directly or through a construction loan, with the contractor paid in stages as milestones are reached.

Ramsey warned against buying land and starting construction before buyers were secured during an uncertain housing market. He advised Laura that her husband should start with smaller projects such as decks, renovations and repairs while keeping his banking income.

Ramsey said Laura's husband did not have to quit cold turkey and recommended waiting until clients had signed contracts for two or three custom homes before leaving banking full time. He also said the move into construction could eventually double Laura's husband's income because he grew up in the business.

Co-host Rachel Cruze said she could hear uncertainty in Laura's voice as she described the plan. Laura said her husband was unhappy in banking, and his frustration over the career had started spilling into their 10-month marriage.