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Should You Sell Your House to Get Out of Debt?

You are absolutely pumped to get out of debt. You sit down, gather up all your credit card bills, car loans, and student loans… Every time you think about this debt, it completely paralyzes you, but then you’re struck with an epiphany! You could sell your house to get out of debt (thank you equity!!)!

But…is this a wise move?

Should You Sell Your House to Get Out of Debt?

Thanks to the huge spike in the housing market, many people are gaining equity back in their homes – HUGE equity. In fact, according to, a house that was worth $150,000 in 2012 is now selling for $200,000 or more, just five years later. If you happened to be one of the lucky ones that purchased a home in 2011 or 2012 (or pre-2005), you’re probably sitting on $50,000 or more in home equity.

So, if you simply sold your house tomorrow, you’d have $50,000 in cash that you could put toward all your debts! Sa-weeeet! But…then you’d have nowhere to live and you’d have to start paying rent…but is it still worth it? After all, you’d be debt free!

should you sell your house to get out of debt3 Reasons You Should Not Sell Your House

Believe it or not, I often caution people against selling their homes to get out of debt.


I’ve got three reasons:

1) It’s Too Easy

Do you remember that kid in school who was always getting into trouble? He’d mouth off to the teacher, get disciplined for a second, but then his parents would come to the rescue and get him off the hook.

Do you think this kid ever learned his lesson?


He kept terrorizing other children, continued to be disruptive in class, and turned into a pretty pathetic adult.

Selling your house to get out of a jamb has the same effect. It’s your “Get out of jail free” card.

  • It’s painless
  • You don’t have to change your lifestyle at all
  • And typically, you end up going right back into debt

If you don’t experience the months or years of pain that it takes to get yourself out of debt, then nothing in your mind will say, “Don’t buy that boat, you don’t have the money” or “Do you really need that much car? Yours is working just fine.”

If your house is a reasonable expense in your budget, I’d recommend keeping it and working through your debt the old-fashioned way.

2) You’re Giving Up Your Only Real Asset

Think of all the things you own that are going down in value:

  • Your car
  • The boat
  • Furniture
  • Appliances
  • Tools

The list could go on and on. Pretty much everything you own is worth more today than it will be tomorrow.

And your best idea for getting out of debt is to sell the one asset that’s actually going up in value? Yeah…this sounds like a greeeaaaatt idea…(insert sarcastic eye roll here).

3) You Love It… And You’re Going to Regret It

You’ve lived in this house for 27 years. It’s the only house your kids have ever known. Not only do you have an attachment to it, your kids do as well! They love to visit, and they always end up reminiscing about the place in the house where they lost their first tooth, the spot in the yard where they always played catch with Dad, or maybe you even still have pencil marks on the wall showing their height through the years!

This house has everything you need and has a ton of priceless memories too! If you can get by without selling the house that you absolutely love, then hold onto it! There are other ways to boost your cash flow without selling your house.

3 Reasons You Should Sell Your House

It’s time for the flip side. While I typically don’t recommend that people sell their homes strictly to get out of debt, there are definite reasons to pull the trigger and move on.

1) The Payments Are Too Much For You to Handle

Your home can be an absolute blessing, but if your monthly payments are drowning you, it might just be the ball and chain that does you in financially.

If your house payments are more than 30% of your take-home pay each month, it’s absolutely a ball and chain… And it’s probably best if you get rid of it, downsize, and live life like a normal human being again (you know, one that can actually afford to go out to eat and have fun with your friends once in a while).

Related: How Much Should You Spend on That??

2) You Hate the House

The kitchen’s in the wrong spot, the neighbors always have a construction project going, and everything you need is a half-hour away… You absolutely hate this house.

No matter if you’re in debt or not, if this is your attitude toward your house, then yeah! Sell that hunk-o-junk!

3) You Plan on Moving Soon Anyway

If you’ve already got plans to move to Montana in 4 months because of a job-transfer, then yeah…by all means, sell the house, pay off the debt, and find a cheap rental in the interim.

Before you buy again though, be sure to save up a beefy emergency fund that will cover 3-6 months’ worth of expenses.

And of course…buy a house that you can afford with:

  • at least a 10% down-payment,
  • a 15-year mortgage, and
  • with payments that are no more than 25% of your take-home pay.

Sell Your House to Get Out of Debt?

Nobody wakes up in the morning and says, “You know what? I feel like going $50,000 into debt today.” and then borrows the money from the bank for absolutely no reason. Everyone sort of stumbles their way into debt. The common culprits are:

  • medical debt (nobody ever plans on getting sick)
  • car debt
  • student loan debt
  • and random credit card debt (dinners, movies, concerts… typically death by a thousand swipes)

It’s pretty easy to go into debt, which is why pretty much everyone has some!

So if we’re not 100% set on staying out of debt, then chances are we’ll find our way back in at some point….



In order to succeed financially in life, we need to absolutely HATE debt. Debt keeps us down, it makes us worried, it keeps us in jobs that we hate! It keeps us from loving, from giving, and from becoming our true unrestrained selves!

And the best way to make sure we never take on debt ever again….is to go through the pain of getting out of it.

Instead of little Billy getting off the hook for all of his misbehaviors, make him stay after school to help the janitor collect trash, scrub the floors, and clean the toilets…for a month. I’m just guessing that Billy the Terror might suddenly shape up in class.

When you force yourself to pay off your debts the old-fashioned way – with extra jobs, by cutting your lifestyle, and with time, I’d be willing to bet that you’ll never go into debt again.

So should you sell your house to get out of debt? Probably not. It’s just too easy.

Battle of the Mind Get Out of Debt Money


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. YES! 2 & 3 on why you should… Really be glad to sell our place. Something else you could add on there is this, “you’ll know when its time to sell”. Its more of your gut, mind, heart and family that’ll start giving you indications. For us:
    kids are grown, very little job opportunities (VERY little) for the kids and for us, drive 30 minutes just to get to a larger town (ours has 900 people so…), no longer care to improve or change the house (gotta keep it up so it’ll sell but I’m done working on it), AND since we both feel it, which is important, we know its just a matter of timing. I could go on with more of how we know, but you get the idea.

    • Great comments, Whiskey. The issue is that most people that are asking this question are between 30 and 35 years old and are just looking for a quick way (ie. painless way) out of debt. THAT, I do not recommend. In your situation though (when you’re basically through your working years), it’s absolutely the right thing to do.

      • You know what? I read it again and what you stated. You’re right. I totally missed the point. I was thinking exactly what I stated, more of why, and not on the quick n easy. Sorry ’bout that…
        Yes the quick n easy is not painful enough. “Pain” is a great teacher and if a person is wise, they will take the lesson and not do it again. Some of us are really hard headed and it takes a couple of times but usually it gets drilled in, lol.
        Good article, Thx

        • You got it! Thanks Whiskey.

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