HGTV's Solution to Debt

HGTV has a show called “Income Property” where the host teaches a family how to turn a portion of their home into rental property by renting out a room or a basement or something along those lines. I caught the show last week, and while I don’t know all the details of the family on the show, here’s what I do know…

Two adults own a home. They are planning to get married in the near future. All their primary income currently goes toward debt repayment. The husband (to be) is already working an extra job, just to pay the monthly expenses and other bills that they have.

So then the host shows them a plan to redo / finish their basement so that it would be a rentable apartment. He shows them 2 plans, which are virtually the same except one cost $6,000 and the other costs $12,000. The one that costs more is due to the cost of labor, so the couple can save $6,000 by doing most of the labor themselves.

Now I realize that the host is a designer and not a debt coach, but I was still baffled that anyone would suggest to this couple to go $12,000 (or even $6,000) further into debt to get $700 in rental income.

Then the longer I thought about it, the less baffled I was. Most Americans do the same thing… they will refinance the mortgage on their house to lower their payment. They transfer balances or borrow “free” money to lower payments. …and the reason this doesn’t work – the reason it doesn’t get you out of debt, is because it doesn’t address the problem. The reason you are in debt to the point that it hurts is because you haven’t been accountable to where your money is going. You don’t have a plan. You don’t understand how money works. If a deal sounds too good to be true, it probably is! There is no magic to getting out of debt. Creating more debt to create more income is not the answer.

It did not surprise me that the husband (to be) was very reluctant to choose the cheaper plan that required all the work. Unfortunately, that couple will be spending the “extra” $700 that they have created in no time, and they will be further away from financial freedom than ever before…