Real Estate the Ramsey Way - Is My Mortgage Too Big for My Income?

Episode Date: March 30, 2026

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I bought a house in August. I'm a divorced single mom. I have two kids. I basically used my divorce settlement to buy this house. I put a big down payment. And even now, I am struggling with having a pretty high mortgage payment with my income. I don't think it's sustainable. And I'm sort of going back and forth on what is it the best decision? If it wasn't, you know, it's done now. But what could I do to kind of help myself move forward? I bought a house. house and I thought I would have some money left over, but I had to pay off my car in escrow, and that added an extra like $18,000 in order for me to get my debt-to-income ratio low enough to be approved. So that increased the amount of mortgage you needed, which increased the payment? Mm-hmm. Yeah. Yeah. Tell us the ratios. What is your mortgage payment and what is your after-tax monthly income? My mortgage is 3880. I don't know, 3890. I don't know. 3890. say that, that includes all of the homeowners insurance and, um, insurance and, uh, property tax. So they, they put it in there. So, um, yeah, so $3,300, um, and my net pay is $6,2,220.

Oh, gosh. Oh, yeah. Yeah. I make, I mean, I, I make $103,000, but I live in Seattle and it's a very expensive. So we're talking two-thirds of your take-home is going toward the mortgage. And that's not leaving a whole lot left to live and put food on the table, let alone accomplish any financial goals. Are you getting child support at all, Anna? Yeah, I get $850 in month for two kids. Okay. And that's on top of your $6,200? Yeah, that's on top. All right, that helps a little bit. So, yeah, we can count that. Yeah, we kind of count all income coming in, even if it is child support or alimony. Okay. So.

It gets you to like 55%. Now, does that include the take-home pay? Are you, do you have any deductions coming out? Like health care premiums, 401K? I pay my health care. My kids' health care are on their dads, and I pay, I have to help pay for that. My deductions are just the typical taxes. Just tax stuff.

Okay. And I do contribute to 401K. How much? What percent? I believe I think I meet my company match. I think it's 4%. Okay. So you're likely investing.

If you make 100K, we're talking 4 grand. And so you wouldn't include that for the 25% parameter, which also helps your numbers. So now we're down to like 50-ish percent, which is not great. But at least we're kind of, we can see the forest from the trees here. Is there room for your income to grow? Um, there's a little bit, um, I mean, I don't, I wouldn't say any time soon. Okay. No.

Mm-hmm. But when did you buy this house? Like the line of work, I mean, I bought it in August. Okay. It's only been half a year. Yeah, it's similar to, to our last callers, six months, because there's not going to be a ton of equity. I mean, it's, uh, I already, I already, well, I mean, I don't know how accurate, you know, looking at Redfin, et cetera, is, but I mean, there is already equity in the house.

What would you get if you sold it after, you know, net of fees and all that? I mean, I don't, I don't, I don't calculate the fees, but I bought it for 730, and it's, I mean, it says it's worth between 820 and 9 something. Yeah, I'd be shocked in six months if it went up 150 grand. Zillow's always, Zillow and Redfin, they're not always accurate. I know. Yeah. So what you could do, Anna, just to gather information as you're thinking about this, because it is a big enough question financially for you is to get a realtor and have them just pull some comps in the area and just see. I mean, you know, maybe it's gone up a little bit.

I mean, I don't know. But after you factor in maybe a little bit of equity, but then all the fees and the relator fees and all that when you sell the commissions, like once you factor it all in, you may end up losing. money if you end up selling, right? So there might be a reason to hold it and to stay in it for maybe two years or so, and it's going to be uncomfortable because it is eating up so much, but at least to get some equity back in so that you can make a better long-term decision. Because it probably was, I mean, I would feel like if I went through something like that and having kids, you want a place to land. You want something that you're like, okay, this is our home. We're building this new life, right? And so, like, I could see it almost being

an emotional decision and not always factoring in like, okay, what is this actually going to feel like in real life? So I don't fault you for that. It makes sense. But we also want to get you into a place where you can start building walls and you have some breathing room because, you know, going through a divorce, like, that's, that's in of itself extremely stressful. And then you put on top of a financial strain, which so many single moms, they, I mean, you were in the boat with so many people, which is so hard. It's so hard. It's so heartbreaking, having to raise these two kids, too, along with everything. So. Have you done a month budget to see how much is actually

left over or if you're going into the red each month? I mean, I'm working on it. I mean, a big part of why I got divorced was because of my financial incompetence. Because of yours? Because of mine.

Okay. So what went on there? Just not keeping up with details, spending whatever you want? What does that look like? Yeah. Yeah, like hidden debt. You know, I'm working on it. I'm actually in, like, a DA program, which is helping. Good. So I was completely out of debt, and now I have debt again.

Home costs, or, you know, obviously, because I'm kind of living outside my means. But I do know some places I can tighten. I do have kind of a side job. I teach classes, and I can teach more. Have you cut off all access to debt? Have you frozen your credit and all that? Yeah, I don't use my credit. I don't use my credit cards.

I mean, the other question I had is I do own my car, and my car is worth, I'd say, $18,000, but I could easily sell it and then get a car that is, you know, good for my kids and for me and for commuting. But I wouldn't. I wouldn't do it. You're not going to free up a debt payment, and then you're going to downgrade in car, and you might have, you know, eight grand, but that doesn't solve that mortgage problem. Yeah, your car's not the issue. at this point. So I would hang on like Rachel said for, you know, two years and then see where you're at.

Nothing is like you're not going to miss a mortgage payment. You're just sort of skating by right now in survival mode. And it is going to be uncomfortable. And that's where the budget is really going to help you. Because now whatever's left over after that mortgage payment comes out, you have to be very intentional with. And that's where a budgeting app, like every dollar will help. So I'll make that our gift to you to help you figure all of this out. And when you fill out that every dollar budget, you'll list your income for the month, include the child support, and then below will be all of your expenses. Yep. Yeah, so stay on the line and Christian will pick up. And George, I vote that Anna cuts up all of her credit cards tonight. Absolutely. You said you don't use them, but you still

have them. I think you just cut it off at the source. Since you know it's an issue, right, just in general, it's been, just cut off at the source. And listen, if you hate it, if you hate it, I promise, they'll let you back in. I don't, you can get another one. Yeah, I only have, I only have one. And I pay a lot off. One is all it takes. I'll tell you that. You could still do some damage. I'm not kidding, though.

I would cut it up and actually use a debit card. Force yourself to use your money because there is something, even if you pay it off every month, there's something about in the moment taking care of groceries, whatever it is. When you pay it, it's done. There's not a bill coming. And it actually factors in psychologically and you end up actually spending less when that's the case. And so I would try it. Anna, you're kind of on this whole new journey, this whole new chapter, this whole new life, right?

And so do something so different. You're the kind of person who doesn't swipe the credit card, who uses her own money. Because she doesn't have one, right? Because she cut it up. I love it. I love that challenge to you. Yeah, I should, sorry, I can I go back? Let me go back. I have one credit card to pay off every month. My other credit card, I don't use it. I had it, I opened it because I used it for moving fees, etc. some new things in the house and get some appliances and it had a zero percent well i would cut it up and pay it off and close the account and i want you to try no debt anna like hardcore and it's

extreme this is extreme in our world today but be so hardcore with it and be so extreme and be so extreme and do it for six months and see how you feel because i'm telling you there's a freedom there you don't even realize the burden you're carrying so if you keep doing what you've been doing you're going to keep getting what you've been getting so do something so extremely different with your money and see the results 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 Ramsey Solutions.com slash trusted agent. I'm 44. My husband's 46. We currently only have 80K left on our mortgage. We have no other debt. We are interested. We are interested in purchasing a newer home, bigger, more desirable area, which would leave us with a newer

mortgage of about $250K after about a $250,000 down payment. And I'm just wondering if this is financially smart. I think number-wise, it's doable. However, emotionally, it feels a little bit more challenging to move forward with this. For sure. How much you guys make a year? Close to 200. Okay. How quickly could you pay the $250 off? Do you think if you like really, if you guys said, okay, paying off the house is a priority to get this mortgage down. How quickly do you think you guys could do it? Honestly, I don't think it would happen very fast, maybe seven to 10 years. Okay. What do you have? Go ahead. It just feels like we wouldn't be able to, I'm going to say, build wealth as far as contribute more to the 529s, more to the 4.4.

401k is doing this. What percentage are you doing for, you're doing retirement now? Are you doing 15%? My husband and I are each both doing 10%. Okay. And how long, what do you have in there? What do you have in retirement so far? About $5.50.

Okay. So that'll double, yeah, I mean, that will, that'll double every seven years. So you guys, I think, will be fine at retirement. And people that are doing, you know, the baby steps, on average, they pay off their home in about nine years. So let's say that's you guys. You know, then you'll be, you know, your husband will be 55. You'll be 53 with a paid off house. So I think the numbers, I don't think it's absolutely terrible, but, but, you know, big purchases like this, I always want to check my spirit in it and ask like the motivation of it, right? Is it to be closer where you guys want to be? Is it for the schools for

the kids? Is it? It is in the newer neighborhood, a bigger home, you know, kids in the neighborhood that are friends with kids, my kids. Yeah, totally, yeah. So, I mean, yeah, it doesn't, that doesn't absolutely scare me. I just want to make sure you guys as a household can fund 15% of your income into retirement. And I don't want the kids' colleges to go on complete pause because you guys wanted a newer, bigger house, right? So from a legacy perspective, I do think there is some level of saying, hey, we are going to have to contribute and make sure the kids are good with college and do this. Can we do both?

Because choosing one or the other feels maybe a little off. And I'd also ask myself the question because when I look at this, my brain goes immediately to, oh, my gosh, you only owe $80,000 on your mortgage. Now, I'm just throwing this out there. question I'd ask myself is if our house were paid off, would I still be interested in getting a $200, at that point, maybe a $200,000 mortgage on a house? Or would I be like, no way, my house is paid off. I'm good to go. That'd be the question that I'd spend a lot of time with. And you might be like, yes, Jade, I am ready to go. Yeah, it does seem like we're almost towards the finish line yet we've been looking at houses for the past decade. Okay. How much is the house? How much is it? How much is. your current house worth?

About $2.80. Okay. And what are you guys looking to upgrade to? The sale price is $4.95. We'll put down about 55%. Oh, yeah. Yeah. I think you guys are fine, Katie. I mean, as long as you get as... Yeah, as the payment, you know, no more than 25% of your take-home pay,

so that you guys can invest in retirement, kids' college, all of that. So it may be a season of decreasing lifestyle a little bit. Yeah, and pulling back from, yeah, I want the household to be investing 15% and you guys are at 20 right now. So just be thinking about that. So pulling back will help with this and to hopefully maybe get it paid off sooner. But yeah, with your ages, income, what you're putting down, I mean, they're putting down 55%. Like I think you're doing everything right and above right in that perspective. The biggest thing is making sure, and I'm assuming that you guys already do have some sort of emergency fund in place.

but making sure you have the right amount of emergency fund because now with a bigger house payment, that amount needs to go up to match that new lifestyle, obviously. So just some little things to keep in mind. I love that you mentioned the 529s and making sure that college is still a priority because very, very important. But other than that, I'm like, let's go. That's great.