I was hoping to hear some ideas on what everyone is doing, other than working a W2 and eating ramen.

Great idea. :)

Yes its a very bad idea.

Any ideas on what I should do with 500k in equity?

I'm particularly liking the idea of a dulplex, and "House Hacking". 

Hey Spencer - It sounds like a great idea to generate some extra income with your empty room!

The limited housing supply has resulted in increased competition among buyers and higher prices. 

Penalties of these Federal charges may include:30 years in prisonUp to $1 million in finesThey have a "statute of limitations" - (with a third "T"  ;-) of 10 years from the date of the transaction - 10 years from now, you could get a very nasty call and hopefully, you put your reserve money in a good account that grew to cover legal expenses**********************************************And the universe could blow up as Doc says in Back to the Future " But, granted, that's the worse case scenario." 

If you are self-employed with no full-time employees you may wish to consider opening a Solo 401k instead of a self-directed IRA as it has several advantages over an IRA LLC such as much higher contribution limits, direct checkbook control (i.e. no need to have the account at a speciality trust company), ability to take a 401k loan, exclusion from unrelated debt finance income tax with respect to investment in real estate acquired with non-recourse financing, etc.Can I contribute to both a Solo 401k and SDIRA?

The sky is the limit!