George Kamel - Ask Me Anything | Real Estate and Saving Money

Episode Date: August 2, 2023

Today, we're diving headfirst into your financial queries, doubts, and dilemmas. That's right, I asked you all what questions you had for me, and let me tell you, I received some solid responses. I love a good deal, when you sign up using this link, I’ll hook you up with a 14-day free trial and $15 off your first year of the premium version of EveryDollar. Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

What's up guys, I'm your host and friendly personification of fiscal wizardry, George Camel. And today we're swinging headfirst into your financial queries, doubts, and dilemmas. That's right. I asked you guys what questions you had for me. And let me tell you, I got some solid responses. And an unsettling number of inquiries about my hair. I'm more than just a head of hair. There's a person attached to this with a heart and feelings. So let's jump into your money questions and other questions and see if we can give you some advice that's worth more than all the golden bananas and Donkey Kong stash. But first, barrel roll on over to that like and subscribe,

and when you smash those buttons, do it for Diddy. Kong. Us little guys gotta stick together. Diddy knows what I'm talking about. I'd like to know more about paying your house off early versus investing that money. So let's talk about this. Paying off the house early versus investing that money,

this is hotly debated. People go, why would you pay off your house when you could invest that money and make more in the stock market? Well, one is a for sure thing, right? Paying my house off is a for sure thing. There is a guaranteed rate of return on paying. paying my house off. Playing with the stock market, it's a different scenario. And the other piece of

this equation is you can't put a price on that emotional, mental freedom you feel when you don't owe anybody anything. It is absolutely worth it and I would do it 20,000 times over again. I don't want to, but I would. Advice for college-age person planning to rent an apartment after graduation without a credit score. She's been told it can't be done. I don't know what Eeyore person told her It can't be done. You can't rent an apartment without a credit score. Gotta get your credit score. It is a farce.

It is a lie. It is a myth. And frankly, I'm just tired of it. In fact, on my podcast, to fine print, which you can go check out, I did a whole episode on credit scores. And I physically called apartments. You can hear the phone calls, random apartments across the country, houses for rent from landlords.

And I said, hey, I don't have a credit score. Will you rent to me? And they said, well, yeah, we'll do a background check. And as long as you have first months and last month's deposit, you're good to go. And I went, oh, okay, that was easy. it absolutely can be done. Stop believing the lie that you can't be a renter without a credit score. When is it too soon to sell a house you bought?

If I sell before five years after owning, what penalties will I take? Well, if you've owned and lived in that house for two out of the last five years, you can sell the house without penalty. Now, there's no penalty if you sell before then, but you will owe money on the capital gains. So if you bought the house for $200, it's now worth $250. You sold it a year later.

You're going to have to pay taxes on those gains. Now, if you stay in the house for two out of the five years, you get to take that money tax-free, up to $250,000, if you're solo or if you file jointly, up to $500,000 tax-free in home appreciation. Pretty cool. Is a house an investment or a savings account? I believe a home acts more like a savings account than an investment. Thank you for sharing your opinion. This is a squishy one. I mean, a house is an asset.

We can all agree on that. It's not always an investment, and it's not quite a savings account. Now, I like to say that paying down your home is kind of a forced savings plan, and it can be an investment when you take into account that homes can appreciate and value, and it can be an awesome part of your wealth-building journey. I'm going to put it in the category of technically neither, but I think it's a very wise decision to make when you're ready, and it's a great asset to have that can't appreciate, which you could argue puts it in the category of investment. But I won't do that. I will not give you that satisfaction. But I won't do that. Should I prioritize paying off student loans? 19,000 left first, or focus on saving for a house, combined income of around $90,000.

Great question. I always prioritize paying off your debt first before becoming a homeowner. And here's why. When people call The Ramsey Show and they're calling about their problems, a lot of the times they got a house too soon, they're still carrying a bunch of debt, and the payments are just too much. They don't have emergency funds saved to cover all of the issues. that can happen when you're a homeowner, so I would absolutely pay off the 19,000 in student loans, then get a fully funded emergency fund of three to six months of expenses, then begin saving up that

down payment. Is that kind of a bummer? Probably, because you're going, man, I really wanted to get a house, but you're just not ready to become a homeowner quite yet. So pause, pay off the debt, get some money saved, save the down payment, then you'll be ready. Are home warranties worth it? I would say unequivocally, no. They make the warranty company money, but it's not going to help you in most cases. They only cover the cheapest repairs or replacements and they still have added service fees. And so warranties are really a waste of money. I was just talking to my friend and he said, hey, I had a home warranty that came to fix the fridge and the ice dispenser and it covers the ice maker but not the dispenser. Well, that's a problem. So all of the big issues and all of those

things are so much fine print that makes it not worth it. So here's a better idea. Keep that money you would have spent on a home warranty in your pocket, put it in a savings account and use that to pay for appliance repairs and replacements on your stuff. And that would, you control the process, you can hire the right person to fix it at the right price, and you can make sure you get appliances that are right for you and your family's needs. Thoughts on living with in-laws to save for a down payment. This is a tough one. This one can be an okay idea, but I'm going to say, as a caveat, you need to have very, very clear boundaries in place. Have it all written out. Here's how

long we're going to stay. Here's how much we're going to pay and rent, if anything. And a lot of the times, it sounds like a great idea, and then you get into it, and it takes way long and there's a lot more drama and it hurts the relationships and the in-laws thought you were staying for six months, but now it's a year and you have nowhere to go because you're not ready for the house yet. So I encourage people to rent if you're able and if you have a great relationship and you're going to be very clear about the boundaries and this is six months while we get on our feet and get the down payment, that can be an okay idea. I just haven't seen it work out a whole lot of the time. Preparing for baby during baby step two, should you pause the debt snowball and start saving everything when you get pregnant

or when you begin trying to conceive? Should you splurge on a little? nothing example up a baby stroller which i now know what that is as an almost dad that's a great question should you save up during baby step two do you pause the snowball and the answer is yes i would pause the debt snowball you are in what's called stork mode once you're pregnant now up until then let's pay off the debt let's start to clean up this mess but once you know you're pregnant you know you're going to have a kid let's pause it at snowball let's start stacking up a whole bunch of cash until mom's home safe If babies home safe, then we can use that towards our debt. There's just so many unforeseen things, and no, I would not splurge on the up-a-baby stroller

if you're in Baby Step 2. Let's find something affordable and used on Facebook, and the baby will be okay, I promise. What are your thoughts on investing for teens? This is an interesting one. I think it's very wise to build up the muscles of saving and investing as early as possible. But do I think all teens should just be investing? Not quite. I think teens should be investing in themselves.

Because truthfully, teens are making not a whole lot of money, and therefore there's not a whole lot of money to invest. And there's also some big expenses coming up if you're a teenager. Things like having to pay for your own cell phone, your own insurance, your own car, your own fuel, spending, enjoying your teenage years, saving up for college, all of that stuff. So I believe if you have college paid for, you have a full-time job, you're through college,

that is the right time to be investing. Once you're making some real money and you're through that, huge life change of further education, upgrading the car, whatever it may be. So I personally would say, no, you got plenty of time to invest from age 22 to 62 to become a multimillionaire and you'll be okay. Now, if you have some earned income and you want to put some on a Roth IRA, that's totally fine. Start to play around with that, but I would invest in yourself first. I'm a self-employed freelancer making $75,000. What's the best way to set aside money for taxes? A savings account? A different checking account. I needed to go elsewhere, so I'm not tempted to spend that money. That is very wise,

first of all, that you're even thinking about that fact that I could be tempted to spend this if it's just sitting in my checking account. So I like the idea of having a separate account for these taxes. You don't necessarily need a business checking account unless you kind of have your own business going. In that case, I would open a business checking, but I would move that money over to savings. And on average, I'd put 25 to 30 percent of whatever money you take in over to a different savings account so you're ready to pay the IRS. And according to the big dogs over at the IRS, you should pay estimated taxes quarterly

if you expect to owe at least $1,000 in taxes on the income you make from freelance work. Why? Because the U.S. is a pay-as-you-go tax system. So if you've got a normal 9-to-5 job with a salary, benefits, whole nine yards, the chances are your employer is withholding taxes from each paycheck, and they're sending that money to Uncle Sam to cover your liability. Not usually the case with freelance income, and that's where quarterly taxes comes into play.

So I would be setting the money aside in savings, and every quarter file your estimated quarterly payments with the IRS so that you don't get a surprise bill at the end of the year. Is it smart to use a sinking fund for insurance while paying off debt? I love that you're even thinking about this. So a lot of people have quarterly insurance payments, semi-annual annual insurance payments, and I absolutely recommend a sinking fund for those needed expenses like insurance. Now, a sinking fund for vacations while paying off debt? No, we're cutting that. You don't need a sinking fund for that because you're not going on vacation.

Insurance is a must-have regardless of where you're at financially. So yes, if it's, you know, $600 a year, let's put the money aside every single month so that when that $600 bill is due, we've got the money to pay for it in the budget. The rest, let's throw out the debt. I have no life insurance. I don't need any, right? I'm a single 60-year-old woman. My kids are grown and independent.

And I'm debt-free with a will and enough money to pay for any after-death costs. You are doing so well, and I'm so proud of you for even thinking about this stuff. So no, you don't need insurance for your life if nobody relies on your income. Like you said, you already have money to cover any after death costs, funeral costs, which is such a wise thing because when you pass and I hope you live a long, healthy life, I don't want your kids worrying about how they're going to cover you financially and cover your financial situation on top of grieving the loss of someone they loved. So no, you only need term life insurance if someone else relies on your income like spouse or kids.

But as you said, your kids are growing and gone. they've got their own life and their own finances, which is awesome. What age should my husband and I make a will? There is no age. It's today. If you get married, you need to have a will. Every adult in the U.S. should have a will. You need a legal will the moment you become an adult, not a second later. And since nothing you own will will will will, the time for a will is right now.

But to give you a healthy sense of urgency about the right time to make a will or update yours, here's a list of common life events that make people think, yeah, I really ought to get that taken care of or updated. Getting married. or your minor children becoming adults, going through a divorce, a death of anyone named in the will like a beneficiary or the executor. Moving to a new state. There's new rules when it comes to that stuff. Facing a new circumstance.

There's addiction in the family. There's a disagreement in the family. You change your mind. All of that stuff might mean you've got to update your will. So get it in place today if you're listening. You will not regret it. What is your biggest goal after Baby Step 7? So if you're new to this stuff, the Ramsey Baby Steps, they walk you through, getting out of debt, having savings,

starting to invest, paying off the house early, and being outrageously generous. So baby step seven is to build wealth and give outrageously. There's no real parameters around what that looks like. So you're asking me personally, what's my biggest goal? Well, part of it is to increase in all areas from giving, saving, and spending. So we still have investing goals. I'm about to bring a child into this world. So I want to make sure their college is totally covered.

I want to be able to upgrade the car for my wife because she deserves it because she's amazing. I want to give outrageously. We want to cover someone's adoption-wise. We want to be able to buy a single mom a car one day. Those kinds of goals get me really excited. And it's the kind of stuff you can focus on. Once you're in Baby Step 7, you're out of debt, you have no payments in the world.

It's an incredible feeling. Highly recommended. What are green flags from a guy from a financial perspective? I would say, number one, they don't have to be debt-free. So don't let that be a huge red flag. If they want to go into more debt or they're trying to stay in debt versus getting out, that has a red flag.

A green flag for me would be he's investing for his future. That's a huge green flag. He's investing in retirement accounts, like a 401k, a Roth IRA into the stock market, mutual funds, index funds. If he's like super into crypto and single stocks, that would be a red flag. So you want to be investing in the right things. Another one would be that he has an emergency fund. He has his act together, and he's not trying to constantly flex and be super showy with his money. I like a guy who's a little more stealth wealth.

You know what I mean? That tells me they're mature. They have some class and the kind of person you want to spend your life with. Now, if you've got a question we didn't get to, leave it down below in the comments. Let me know what you'd like to hear about next. And as always, don't forget to share this with a friend who needs a little attention. Right? They don't ask for much. You've been busy lately with the kids and your karate.

A little I see you would mean the world. So share it with them. Thank you guys for watching. See you next time.