Use Our House Down Payment To Start a Business?

[Music] brought to you by the every dooll app start budgeting for free today so my wife and I are on baby STP 3B and our question is should we use some of our money that we have saved up for down payment to start a business what kind of business yeah so the business consists in creating an app uh we have been working with some developers and it will cost us 20,000 in which we have the option to pay monthly for 12 months which is 1,667 a month so we can't cash flow these payments without touching our savings but we know that eventually we would have to pay for marketing lawyers Etc so is it okay to use some of our down payment for the for a business well I I don't think you've given us enough facts for me to say I'd want to know okay I get the um the 20,000 is for the actual development of the app does that include testing as well or is it just they're going to give you an app and then you start messing with it from there no they it's they would do a l of testing and make sure everything is you know on point okay and then what are your expenses let's just let's fast forward $220,000 later out of your house savings fund and let's say we got an app it's been tested debugged it's actually working but now we actually have to get people to use it what's that going to cost you yeah that I couldn't tell you yeah you know obviously not at that point but well but so there's my answering money and ready money saved up well the biggest question is will this even Roi would you be okay if you lit 20 grand on fire and it delayed your house Dreams by a year or two he doesn't know if we play it out if you play out a worst case scenario if this is a total failure you build an app no I'm I'm just playing it out to get you to a decision here and so if this did not Roi you just blew 20 grand now you're behind on a on your house dream is that okay with you I feel like that would be okay uh we have currently we have 60,000 for a down payment okay I'm gonna be a little again these um these um 20,000 we the cash we don't even have to touch those 60,000 at the moment yeah but I I appreciate George's question I'm going to be a little bit more strict on this the fact that you can't tell me what the next stage of the business looks like I'm not knocking on you I'm not trying to be unkind that's horrible I wouldn't I wouldn't burn $220,000 and be okay with it under any circumstance so I appreciate what George is asking I get it but I'm telling you no you don't even know what the next stage of the business looks like you shouldn't spend $20,000 on any business idea until you have gotten a whole lot of answers and you can sit there and say with intelligence in less than 30 seconds or less here's what my risk factor is and it's well worth the risk but you don't have enough information to even answer George's question so for that reason George what am I you're out I'm out you just got shark tanked okay you're not ready you're not ready well think about it this way bet the house you put 20 grand into the house that's a guaranteed return in the form of guaranteed Equity ding ding ding I need you put 20 grand into an app and we've we've seen it happened too many times people get excited about this business idea they pay this company to produce it and all of a sudden it just sits there because they didn't think about what's next how are we going to Market it what's how are we going to monetize it are we going to charge 20 bucks okay well Apple's going to take 30% off the top are we going to do it free with a premium model where you can buy things within the app these are the steps you got to think about yeah when it comes to this business what is the app I'm just curious okay so it's uh the it's a app is for dog and daycare boarding so it it would be it wouldn't be for the US it would be for the country my wife and I were born to raise that and we're we're just doing some Google research like roughly 50% of the population have at least one dog in the household okay so this would be you live in the US you're going to try to create an international app or that's just for one country we yeah so we have dual citizenship so you know it would be easy for us to just go there and start developing there so the app would allow dog owners to use your app and get daycare services when they're looking for some correct man we've done some research and there's no app like that in that country well there might be a reason all right there might be a good reason there might be a bad reason and so we just want you to be super careful with this cash because you've worked so hard so I I'll just reiterate I would tell you to stay in the house house Savings business and put a really good down payment on for all the reasons George gave he's absolutely right and I would tell you that you also need to do way more research and in the time it takes you to do that research and really figure out is this a good business idea in this location you can be saving up the additional 20 grand but even then I wouldn't invest it unless I felt like the probability of success was much higher than just well let's give it a rip that's never a good idea it needs to be we've done market research we know there's a need for this uh we have a wait list of 20,000 people who want access to it that's where I get excited and go all right this has some legs on it yeah yeah so maybe start small maybe build a website where it's very archaic and Primal and you go there and you click a few links but that's going to cost you a 100 bucks versus 20 grand oh I like that George so I I think there's better ways to go about this before you go that kind of money so I don't want to squash your dreams this could be a brilliant idea but I want you to do it in a way that doesn't derail your other financial goals that's right I I appreciate can can I ask a real quick followup question yeah go yeah so uh since my wife and I are self-employed should we both open uh Roth IRA and Max them out doing this um this process well if you're in baby St 3B many choose to invest 15% and so 15% gets you to maxed out Roth IRAs that's great but because you have multiple goals happening right now with the homeown payment savings some people choose to invest less than 15% some choose to go zero or up to a match so for you guys don't go above 15% okay and we're actually we're also put in $200 in S&P 500 so should we stop doing that in a brokerage account outside of retirement yeah I would pause on that and stick to your tax advantage accounts first in retirement later on down the road then can start looking at those brokerage and Bridge accounts gotcha gotcha yeah good question Charles and hey man we're for you we really are we just want you to be really really smart really really slow slow and smart don't get a lot of clicks on Tik Tok and Instagram when it comes to advice for businesses they just don't because you know why nobody gets excited about slow and smart but let me tell you what slow and smart leads to George wealth rich people like slow and smart they're not impulsive cuz they've done it over and over again people that are impatient want a beast oh they like the fast fast and dumb lead fast and dumb woohoo I love it but this Tik Tok guy said and he's got 9 million views yeah well he's broke living in his parents basement create your free every dollar budget today the simplest way to budget for your life

Channel: The Ramsey Show Highlights

Views: 38,264

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

Id: lTcYQZMH0AY

Length: 7min 49sec (469 seconds)

Published: Fri May 17 2024