Did You Buy Too Much House? - Dave Ramsey Rant

Charlotte is in Colorado and says I've got a question in regard to 25% rule for home mortgage we live in Steamboat Springs where property prices are high only condos will be in our price range should the HOA fees be included in the 25% HOA dues are very high here due to the high cost of snow removal sometimes as high as $350 a month okay here's the situation the whole thing of saying don't put more than 25 percent of your take-home pay into a house payment on a 15-year fixed-rate mortgage is so that you don't get house poor I grew up in the real estate business I got my real estate license in 1978 I'm old I have seen a lot of people do a lot of stupid stuff with real estate and I've seen a lot of people make a lot of money in real estate you know who makes money in real estate people that don't get themselves in a position that they're forced to sell it real estate that sells fast is known as cheap it's a good buy from me because I'm gonna buy it from somebody's in trouble so you can kind of back in go well you know I live in New York or Steamboat Springs there's snow or you know it's is there a is there do I get a pass on math no you don't get a pass on math math works everywhere exactly the same and so if you don't make enough to live in an area where the real estate is expensive that means you don't make enough to live in an area where the real estate is expensive I live in Williamson County in Tennessee it's the wealthiest County in the state it's the eleventh wealthiest County in the nation it's absurd the average house price in our county is double any other county in the state cray cray I mean it's nuts out here it's just a little suburban bubble outside of Nashville there's those types of sea areas all over America and I can't afford to live in Williamson County maybe not maybe not yet to make more to live there I can afford to live in Manhattan probably not pretty much got to make six figures to live on the island darlin so the most expensive real estate on the planet Orange County Manhattan Miami Beach Tokyo London these are all right Singapore they're all right there together and you just have to make a lot of money live there and so I get this question all the time well do I live in California well maybe you don't anymore or maybe you're gonna move to a different part of California but you're probably not gonna live in frickin Laguna Beach you know if you're making forty five thousand dollars a year the numbers don't work sorry you don't get a pass on math so you can include the HOV fees you can talk about snow you can not talk about that but at the end of the day the question is not whether my 25 percent works or whether you what you include in the 25 percent the question is after you pay get through paying for your house are you broke and when you take out a house payment HOA fees piti principal interest taxes and in Texas Maori or high yeah well I understand you live in one of those areas where stupid people have run up the tax base and then wonder why everybody left and so that that's what's going on you know and so you got to ask yourself do I fit in here but when you add it all together and then you are finished paying for your housing are you broke that's called house poor and when you get much over 30% on that you start to get the trouble 30% of your take-home pay now a mortgage company on a thirty-year adjustable rate will qualify you for about twice as much as you can actually afford but you can't do anything else so after you pay your payment when your kids are gonna be skinny please don't talk to me about vacations please don't talk to me about saving for your kids college please don't wonder why you're not able to fund your retirement when you've got your house strangling strangling you I love real estate owning your own home and getting it paid for is one of the two primary pieces of financial data that will lead you to being a millionaire owning real estate is absolutely vital for your financial future but owning it the wrong way will destroy your life biting off more than you can chew and you choke on it will destroy your life so Real Estate's a two-edged sword Oh everyone should buy real estate real estate is the answer when poor people don't have access to real estate when broke people can't buy real estate we need policy change there's systemic problems with our way of life capitalism isn't working no you're full of crap and you just can't do math because when a whole bunch of broke people buy houses you know what happens they securitize that stupidity and selling and hedge funds oh wait then they take it to the main market oh wait you can almost destroy the entire way of life known as the United States you know what happened in 2008 when a whole bunch of broke people bought houses that couldn't afford houses and put them on mortgages and overpaid for them and they securitize that crap meaning they bundle the mortgages together and sell them as Fannie Mae blocks in bonds and then they all failed well shock broke people buy houses it makes them broker that's why they call them mortgage brokers don't do it I love real estate I want you to get a house it's a key part of you becoming wealthy but when you rationalize your butt off and think map done try to find a way that I can I can somehow figure out a way that I'm going to overpay for this and it's gonna be okay because my situation we have snow that's just bogus doesn't work it's like the guy who says I gotta have a full wheel drive truck for snow it snows once a year you gonna have a four-wheel-drive truck so you go $40,000 in debt to drive once a year then this is just rationalization so no you count everything not you don't count the utilities but what does it cost for you to own this property and is that gonna own you that's the question you have to answer the rule of thumb we use is you shouldn't have more than about 25% of your income your take-home pay going towards that then that leaves room and the other 75% to buy stuff like food college funds retiring with dignity saving up and paying cash for the next car so it's not in debt saving up and paying cash for the next couch so it's not in debt saving up and paying cash for your little vacation so it's not in debt and when you have so much debt on your house that you have no margin no disposable income in your budget all the other stuff starts turning into debt and this snowballs and falls down on your head no pun intended so check it out folks we've got to use common sense if you think you got house fever and you're getting ready do something stupid with a house they'll take a cold shower they'll help you get over the house fever

Channel: The Ramsey Show - Highlights

Views: 648,055

Rating: 4.8211675 out of 5

Keywords: the dave ramsey show, budget money debt cash, real estate, insurance, how to make money, dave ramsey, save, credit card, compound interest, buying house, buy, snowball, did you buy too much house? - dave ramsey rant, dave ramsey show, money, dave ramsey home buying, ramsey, debt, dave ramsey rant, mortgage, dave ramsey buying a house, dave ramsey how to buy a house, dave rant, #daverant

Id: OEXWwrY1EZ4

Length: 8min 13sec (493 seconds)

Published: Fri Mar 15 2019