Real Estate the Ramsey Way - How Do I Afford a Home When They’re So Expensive in My Area?

Episode Date: October 13, 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. Let's go to Sophia in Maui of all places. Sophia, how can we help? Hi there. Thanks for having me on the show. You bet. We're glad to have you. Hopefully you can make us be serious here. Well, I'm just wondering if we should continue to rent. or if somehow we can buy a home here in Maui. Tell us more.

Just when you say the word Maui, my wallet hurts. Like my bank account takes a hit when you just say the word Maui. How expensive are a normal home in Maui? Not like, you know, from to the crin. The home you guys are thinking about, tell us what that would set you back. Well, a fixer upper home is about a million dollars. Oh, okay. And tell us more about the fixer upper.

Like how much fixing? Like sometimes they're like tear downers. How much is your rent right now? $1,500 for a four-bedroom where we have hit the jackpot. Why would you ever leave? I don't think I would. You're in Maui for crying out loud. Well, I'm just not feeling super stable with it because, you know, if our landlord were to pass away and her children, like, I just want something that I know it's mine.

I know the payment. And someday, hopefully we wouldn't have to have a payment at risk. Sure. All right, tell us your combined income. Anywhere from 200 to 260. Amazing. Okay. And do you guys have any debt? 4,000 left, which will be paid by, like, next week. Nice. Awesome. And then we're on to the emergency fund? That should take, what, six months? And that would be done probably by the end of June.

End of June. You can stack that in two months? I have a really big month coming up. I'm a photographer. Oh, nice. And you're crushing. The money fluctuates. Okay. Which is another reason why I'm a little bit scared to take on a high mortgage payment because, I guess if I do have a big emergency fund, but even still, my photography is really reliant on tourism. And like we had the line of fires.

We've had COVID. So it's been very apparent that my income fluctuates and it's very dependent. Well, so here's the deal. I understand you being nervous about a change in landlord, what would we do next? But that is far easier to navigate than a mortgage that just absolutely swallows you whole. Agreed? Agreed. Okay.

So, George, what are we talking about? How much money would you like them to put down in a situation like this? Because one of the things I'm concerned about is you said it's a million dollars just to get the fixer up. Then the fixing part is on top of the million dollars, correct? Yeah, I mean, I'm hopeful that things will even out. Prior to COVID, things were like 6,000, 700,000. So it's gone up so much in just these last couple years. What is keeping you guys in Maui proper?

What's keeping us here? Yeah. Have you looked outside of there for a home? You know, what kind of commute? What do you be looking at based on your jobs? Because it's like saying, hey, I live in New York City. I want to own a home. And it's like, well, you live in New York City.

So you know what I mean? It's you guys live in one of the most expensive places in the world. So it's not a shocker, but it's just going, how can we still become homeowners and still live in this area? What's the kind of creative compromise? Well, we're both born and raised here, and we both have family here. So we're established in that sense. And we probably, I wouldn't make the income that I make probably anywhere else.

Right. Well, so how long are we? So how long is it going to take you to save up, George? So you guys make $2 to $260. Once you guys are debt-free with an emergency fund, how much cash could you stack up every single year if you were real serious, real intense? Could you put away $100,000 a year, net income? Probably.

Okay, so that means in three years you'd have $300,000. I assume your income would go up over time if things go well. Yes, I have ideas to expand my business to include more photographers and oversee things. So there is possibility of growth there. Love it. And then could you be a little further out on the outskirts versus right there where the action's hot? Or is all of it there? I think it's a whole island.

You can't really escape. But are there places that are a little bit further out? We're in the countryside. So we are out. We're not like looking for something on the beach in Wailea. Right. So it's still a million dollars anywhere you look in Maui. Pretty much.

Hey, what's happening real quick on the ground with Lahaina? We hear all these conspiracy theories and stories. I just have to ask. Is it being rebuilt? Because I actually stayed there one time with my wife, and it's a lovely area. Well, no one knows for sure. I've heard that the part of Front Street that's closest to the water, because of erosion and permitting and stuff, they can't build at least that half of the road. So I really don't know what they're going to do with Front Street.

but a lot of the residents have gotten building and many people have already moved back in to their own family homes. That's good news. Yeah, so things are really looking well. Okay, well, that's good because that's one of the prettiest places I've ever been in my life. Just unbelievably gorgeous. Well, here's the deal. This is going to take patience. This might be a five-year plan of stacking up $100 grand in a high-old savings account.

And if it's longer than five years, maybe even investing that money. But this can happen. How old are you two? I'm 31. Okay. You're fine. So let's say by 36, we're going to get into a home, and it's longer than you wanted it to be. It's not the ideal scenario, but this is the reality of living in a very high cost of living area and wanting to do it right. So the house is a blessing, not a burden. 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,

trusted agent. That's ramsysolutions.com slash trusted agent. Teresa is up next in Chattanooga, Tennessee. What's going on, Teresa? Hello. Just down the road from you, we're hoping you can settle a marital argument. Oh, we love. Juicy. We love doing this. All right. Who's right? I'm right, of course. Perfect. My husband and I are both 57. We are both currently transitioning our careers, which is a little weird timing, but it's happening. It's about time you had a midlife crisis, Teresa.

Yes, I know. I've been in my job for 20 years, so it's a good time to transition. We have $2.5 million saved, and we're debt-free. Good cars. We're all set up for that stuff. We have $290,000 mortgage, and my husband says, Dave says, Dave says, all day long Dave says, pay off the mortgage. My financial advisor says, you're making about 10% on your investments.

Your mortgage interest is 4.25%. Let's not pay it off and be making the money on the mortgage money that's in the bank. Can we play a fun game, Teresa? Let's do it. Who is incentivized for you to stay investing instead of pull out $290,000 to pay off the mortgage? Who benefits from that the most? And I totally understand that. Who is it? Say it.

She does. Exactly. Your financial advisor is incentivized to keep you invested. So, just I think it's important to have the full context. And also, yes, we always say, hey, the market will generally do 10, 11% over the long haul. But we also know the market could be negative 22% next year. And so there's a forced savings plan with a known variable when you, pay down the mortgage. And we also know, and you know, it's more than just about math.

You'll have emotional peace as you head into what could be retirement in the next five years. That's what he's, that thing, is to not have that hanging on us, especially in this transition time. And we didn't factor in this. You can now invest your mortgage payment when it's paid off, can't you? Yes. Have you calculated those numbers? Have you factored that into the equation? Well, no, because at the moment we're transitioning, so I don't have a real idea of what our income is going to be in the next couple years. Well, let's say there is none. What if you have a real hard time transitioning?

There's a layoff. Man, having no mortgage would really free you guys up to be flexible, wouldn't it? Yes, and having that extra $300,000 in the bank would give me a little more security. So, see, this is what we do all that. You have $2.5 million to, let's not act like this is your entire nest egg. We're asking you to deplete. How much of this is in non-retirement? Oh, he's really smiling now.

Can you not do this? I don't think you're... Oh, your husband's next to you? No, he's on the other end of this open. can hear you. Oh, good. Okay. He's loving this whole conversation. I mean, you also have to remember this. If you paid off the mortgage and you hate it, you could always borrow against it again and put it right back. You could. It'll be a slightly higher rate, but you could do it. The banks will always lend you more. But I bet you won't. Like, I'm willing to make that deal because I know you won't.

Okay. Okay. Well, I was just, to me, the math messed, you know, and, you know, I was, you know, I was. You know, I was showing him like what 10% looks like compared to 4%. But we're not, here's the thing. The truth is we're not making a guaranteed 10% every year. And there's more to the equation than math, which is what George also highlighted. And go look at what you're actually paying an interest this month because the mortgage is front-loaded with the interest. Right. So this month I paid $1,000 in interest and $500 in principle.

Exactly. And so you have to look at the actual numbers of what's happening with the interest. It's not the same as compound growth in the investments as it is paying the interest. So there's the mathematical argument. There's the emotional argument. There's the logical argument. But the truth is you're going to have less risk in your life and more peace if you pay off the mortgage. Could you have potentially made a little bit more if you left it?

Maybe. We don't know. The world could implode next year. We just don't know what's going to happen. And so not owing people money is always going to put you in a better position. I was going to say that. Usually when people come, when they have time, of distress, the number one thing they think about is their home.

They want to keep their home and their family safe. That's it, right? I mean, you've been on this earth 57 years, so you know when the moment comes, if somebody loses their job or you're unsure about a paycheck or a health scare, those are the things you think of. You want to keep your family safe, and you want to make sure your home is safe, right?

Right. So here you have it. And think about this, too. Ultimate security. When you pay off that mortgage, it lowers your monthly expenses forever, doesn't it? Yes, by $1,800. Which means you need less in retirement than you did previously to cover your expenses. Y'all killing me.

I hate to use logic. I'm trying to hit you with every angle, Teresa. Here's the thing. I think your financial advisor is a better salesperson than your husband. That's what it comes down to. They're more persuasive. I was looking at the math, and the math made sense to me, and we've been with her for a long time, and her numbers have been pretty good.

You know, the number's been solid recently. I'm not saying she's a bad person. I'm just saying that people tend to follow, they tend to follow the incentive whether they're sometimes realizing it or not. That's all I'm saying. I agree. The bad news is I lost the argument. The good news is I don't have to listen to Dave says, Dave says, Dave says all day. I love this so much.

Hey, call us back when you're completely dead free. Let us know if you like it or not. Now you've got to listen to George says, George says, George says. I'm just telling you what I have done and what I would do. and so I don't tell people to do things that I wouldn't do, and I paid off my mortgage at a very young age, because even though I could have made, man, you could have made XYZ in the market over those next 30 years if you hung on to a low it.

I didn't care because life happened, and my wife wanted to stay home. And guess what? She could do it because we didn't have a mortgage payment. And so you've got to think about the reality of life on top of, yes, some of the logic, some of the math, some of the variables there. But it's a fun discussion. We're having fun with you. I'm so proud of you guys.

you're multi-millionaires, it's a moot point either way. You're doing great.