Real Estate the Ramsey Way - Can We Afford a Second Home Without Hurting Our Future?

Episode Date: October 20, 2025

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Dave Ramsey here and welcome to another episode of Real Estate, the Ramsey Way, where you'll learn how to make smart home decisions, avoid costly mistakes, and navigate home ownership with confidence. Today's question of the day comes from Patrick in Connecticut. He says our current mortgage balance is $8,000. And we also have an $8,000 car loan as our only other debt. My wife wants to get a $1.5 million dollar loan. for a second larger home and cash out our single stocks for the down payment. We earn $350,000 a year. I am losing sleep over this idea and it feels like we're going backwards. I want to invest more in retirement and save for our kids' education. She wants to sell our first home later on to pay for college costs. What would you recommend that we focus on?

Okay. So just to clarify, she wants to keep the current house, that's $8.50, and then cash out stocks to put a down payment on a second home that would be worth $1.5 million. And she's like, hey, it's all good because in the future when it's time to pay for college, we can just sell the $850,000 house that'll likely be worth more. Yeah, I don't like this. I think that what you're feeling is correct. You're just having a lot of skin in the debt game.

Yes, a lot of risk. It's a lot happening. I wonder why she wouldn't just. I mean, he's not on the line, but I wonder, in my mind, it's like, okay, if you want the $1.5 million house, sell the previous house, take the proceeds and roll it to the $1.5 million house. Yeah, it sounds like it's like a, I make up a vacation home or something, you know what I mean? And the problem with all of this is, you know, she wants the nice second home, doesn't want it to pay for kids college right now. She doesn't want to put money away to save for that. So it's a lot of present feeling.

That's a lot of things today. This is what I want today. So I'm going to make decisions based on today without really looking long term and saying, okay, what's best for us where we can have a fun life today? It's not like you want to be miserable today. Right, right. But yet you want to be wise and not let this be the motivator. Don't let today be the motivator.

Be thinking long term because you guys have a lot of life to live. And, yeah, it doesn't sound like a lot of wise decisions. You're going to be carrying two mortgage payments. Think about the – so really what we're saying is think about the opportunity cost on it. and what that's going to cost you long term. Clearly, she's not interested in thinking that way today. But you have your work cut out for you, Patrick, but you are correct. Don't do this.

Yep. So I don't know. I would sit down and I want to know her motivation for the second home. And if it is a vacation type situation, it's like a vacation home, you know, could you guys rent somewhere, you know, for two weeks a year and still be able to enjoy your vacations, but you don't have to own the home that you're going to right now, especially because you guys have still car loans and a mortgage on your primary home. So getting that paid down for sure would be the wiser way.

And I would, yeah, cash out some of those stocks to pay off the car loan, especially if they're not in retirement too. Hope that helps. But yeah, sorry, Patrick. We're the bear of bad news for your wife. We are. I don't know why I'm totally reading too much into this question, but I feel like she's just out here trying to live that life.

I'm like, you guys are in Connecticut. It's super expensive. I always think about sometimes when you're in an area that's super expensive and you see how other people are living, you kind of feel like I have to be doing that as well. Yes. Yes. But that's not. That's not the reality. I mean, that's not the reality.

I always think about basketball teams, right? And it's like the Jimmy Butler's, they get paid the big dollars. But like the seventh and the eighth man, they don't make what Jimmy Butler make. So if you go out with Jimmy Butler, you can't get what he gets. You know what I mean? You can't live that life. So anyway, I don't know why I feel like she's just trying to live the life that she's seeing other people live. Yeah.

It's looking that way. Oh, man. That's so fun. It's so true, though. Yeah. Especially, like, on a sports team. Yeah. Like, these guys are like, yeah.

The salary ranges? It's like so significantly different. Yeah. So it takes a lot of maturity. A lot of maturity to push through that. It does. Hey, guys. Thanks for listening to Real Estate the Ramsey Way.

Now, if you're here, you're probably thinking about buying or selling a house. It's exciting, and one of the biggest financial decisions you'll ever make. But you don't want to do it with an inexperienced agent who will rush you into costly mistakes, like the ones some of our callers find themselves in. You need a pro who knows what the flip they're doing and will keep you on track with your financial goals. That's why we only recommend Ramsey trusted, real estate agents. These are vetted, hand-picked pros who actually listen to your needs, guide you through the process, and fight to get you the best deal. To find a Ramsey trusted agent

near you, go to Ramsey Solutions.com slash trusted agent. That's ramsysolutions.com slash trusted agent. Let's go to Kim, who's in Oklahoma City, Oklahoma. Hey, Kim, what's up? Hi, I just want to get some advice on what I should do with the money that I'm going to receive from the sell of my house. So I had lost my husband 20 years ago, and I was a stay-at-home mom at the time, and his life insurance policy had expired about two weeks before he died, and he died unexpectedly. I'm sorry. And so, thank you. But anyway, I just feel like, you know, I spent 20 years, like raising the kids and really spent everything I was able to make.

I went back, became a teacher. I originally had an accounting degree. I knew that I really couldn't spend that time working in that field just because it was just so much of my time was spent at work. And so I went back and became a teacher. and so I've been a teacher since 2008. I love what I do. I'm a special education teacher. You know, I don't make the greatest amount of money.

But the only thing I guess I did right was the fact that I'm not in debt. Good. My car, it's old, but it's paid for. And I have about $450,000 that I should walk away with when I sell the house I'm in. Wow. What's causing you to sell the house? Is it just a life change? You need the money?

What's up with that? Well, I don't have the, I've obviously not been able to have the, like, a retirement plan at all in the last 20 years. So when you were teaching, you didn't put any aside? Yeah, like in the teacher retirement system? Usually you're required to put something. I would always have to take it out and use it. And so right now, I'm just, I have like 20,000 in a, in, like, I work, I don't work in a public school. I work in a charter school.

Okay. So I don't get that teacher retirement when I retire. Okay. So you have 20,000 in a 401K? Right. And then I have about 4,000 in a rough IRA. Okay. And then I have about 20,000 in my savings account.

And then other than that, I don't really have anything else. How old are you? I'm 56. Okay. So you're thinking, I'll sell this house and what? Tell me your thoughts and I can kind of hope you stay on track. Well, I'm thinking buying something cheaper and maybe investing the rest. Or do I rent and invest all of it?

I would not do that. Okay, I like how your brain is thinking. So if I were you, what area are you in? Okay, you're in Oklahoma City area. Yeah, if I could, the $450,000, yeah, if I could get something in cash outright for maybe $300, I might do that and invest the other $150. And then my question would be to you is how much longer do you plan on working? Because that $150,000 will continue to grow, you know, so will the $20,000 and the, the Roth IRA, but you've got to continue working and you've got to start doing baby step four, because you're in baby step four, but you've got to do it, which is contribute 15% of your gross every single month. That's going to be the key here for the next 15 years. Yeah, and I was going to start, like, so my work contributes 7% of my income, no matter what I do, they contribute 7%. That's what That's what John and I were talking about earlier. So how much is that? Oh, okay.

How much is that? It's only like $350 a month. Right, but what's it grown to? Oh, no, that's the one that's the $20,000. That's the one I was talking about. I've only worked at this particular school for five years. Okay. Okay.

So keep doing that and then only ratchet it up to 15%. So they're taking the seven. You do the rest. And honestly, if you can, you let that 7% kind of be gravy. and you still do 15% if you can. Okay. Because you're going to have a better choice. When you do your own Roth IRA and you do your own,

you're going to have a better choice of how it's invested. So that's the reason I say that. Oh, okay. Well, I mean, I'm happy with how it's grown in this particular, however they've invested it at this point. I think it's decent growth. I want to say on average it's been 13-ish-per. Okay, that's great.

Then you add another eight to it and keep the train rolling, you know, that's what I would do. I'm just concerned that, you know, is it going to be enough? And because I'm starting so late. And so that's where I'm a little bit, I get tired of making the decisions alone because there's really nobody to bounce that off of. And, you know, I just, I'm concerned that, you know, what happens if I can't work, you know, I mean, I'll work as long as I can because I have the ability to do that in the field that I'm in. Let me say this.

Can I just normally if you and I were just like sitting down having nachos, me and you and Jade were just sitting down having nachos talking through this, I would wait longer and build a better rapport with you before I said what I'm about to say. But since we're condensed, can I just throw it out there? Sure. Okay. Exhale. So for the last 20 years, you've been doing this on your own, right? Mm-hmm.

And you had three young kids at the time when your husband passed away? Yeah, they were one, three and eight at the time. Okay. So you did what you had to do to survive. Mm-hmm. And I'm going to say this with all the love of my heart, so hear me, okay? Can you say out loud, we're on the same team? We're on the same team.

Okay. Math doesn't care. Okay. And so over the last 15 years, 20, 20 years, you made choices about what kind of shoes they were going to wear, what schools they were going to go to, what camps they were going to go to, what meals y'all had, all that stuff as a single parent. And I'm not going to judge you on that because I wouldn't wish what you experienced on my

worst enemy. Right. But the reality is you're 56 and there's nobody else coming for you. Right. But there's hope here. There's tons of hope here. But you're going to have to adjust your lifestyle as though. you are caring for the 75-year-old version of yourself right now.

So good. So that means you're going to have to opt out on meals, opt out on vacations. And if you want to go see grandkids when your children start having babies, they may have to help you get there. But we got to take care of 75-year-old you. How's it going to set up? So let me tell you right now, if you work, you're 56,

if you work till you're 69, right now we've said, we'll take 150 and invest it, put it with the 20. So now you're at 170. If you can invest 700 a month, I think you said they're already taking out 350. If you can match that, right? So you're doing about 15%. If you can let that grow, that's going to be $842,000. Okay?

So take that as a starting point. I want you to get on that Ramsey Solutions.com investment calculator. And I want you to play with that number, play with that lump sum amount. Because if you can start with a $200,000 lump sum, it'll change everything.