Real Estate the Ramsey Way - Why You Shouldn't Buy A House With Someone Before Getting Married

Episode Date: November 25, 2024

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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. Chris is with us. Chris is in Spokane, Washington. Hey, Chris, welcome to the Ramsey Show. Hi, guys. How are you? Better than I deserve. What's up? So I made the mistake of getting into a house with my ex-fiance. And I just, yeah, I just don't know where to go from there. We were in the house for about seven months, and then she decided to pull the plug on us. And I'm just kind of confused and don't know where to go and how to handle it. Wow.

You're a case study and why we tell people not to buy stuff with people they're not married to yet. Oh, I'm so sorry, Chris. Yeah. Oh, man, you've got a heartbreak and you've got a pain in the butt both, huh? Yeah. How long ago was the breakup? About three months ago. Who's living in the house?

I moved out recently, and she's staying in the house right now. Have we discussed when we are going to sell our house? We have discussed it, and we've actually talked to a realtor about putting it on the market, but she would only walk away with about two grand, which I was okay with, but she wasn't up for just getting rid of, or just getting back to two grand. Sorry. Right. Don't care.

That's what I told her. Don't care what you want. You broke up. We are selling this house. Get it on the market. If she won't do that, you're going to have to hire an attorney and force her to. Okay. And I was kind of going that route to see if I could hire somebody to get her on board to do that.

No, I think you call her and go sit down and say, look, I really want to do this the easy way. There's an easy way and a hard way. But we have to get rid of this house. This house is we are not together. in the future and we are not owning a house together in the future. We are getting rid of the house. Now, do you want to put the house on the market and let's do this nice or are we going to have to get ugly?

Okay. I'll sit down in person with her, have a very calm conversation. Don't bring up all the past. Don't bring up all your heartache and you're broken, everything. It's a simple conversation about we are selling the house that we own together because we aren't together anymore and we are doing that. now, are you on board with doing that? Because if you're not, this is going to get nasty, and I don't want to be nasty.

Right. And it's been pretty nasty already. Yeah. Yeah. And so, you know, I would sit down and say that. Like, this is the last chance. Okay. And then if she doesn't, if she says, okay, I'll put it on the market.

And then she doesn't, send her a letter, certified mail, return receipt requested. So you have proof that the letter was delivered and saying you have 10 days to get this house on the market or I'm going to be in touch with an attorney and we are going to escalate this discussion. It's going to get really expensive. Right. Because, dude, this is not going to go well if this drags out five years. You understand that, right?

Yes. And that's why I wanted to call. Yeah. Who's paying the mortgage? We're splitting it. And you don't live there. No. This is a problem. Right. And that's why I needed to talk to somebody because I have so many people in my life giving me different types of advice and I listen to your guys' show quite a bit.

And I figured I'd call you some more advice. How old are you guys? I'm 30 and she's 27. Okay. And you were in the house together for seven years or seven months. How long were you dating before all that? Five years. Wow. So that's why it's kind of confusing and kind of heartbreak and, yeah.

Oh, yeah, it doesn't make any sense at all. I agree. I'm with you. Right. Are you going to walk away with $2,000 as well, or is it not an even split? Yeah, it'd be about $2,000 some change each, which I'm okay with doing that, but she didn't seem to be okay with that. Yeah. She doesn't have to be okay with it.

I mean, this is a stupid tax that we all have to pay. So what is her suggestion? Well, she, we did want to list it, and then she said no, because she would only be walking away with it, so she wants to keep it and then try to put it on the market for after two years, because then we wouldn't have to pay income tax. As you pay equity into a house that you don't even live in the income tax, if you make $4,000. Right. Income tax is $400 bucks. Yeah, that's what's going through her head. See, that's dumb.

Show her how math works. and maybe that will help speed this up. Oh, God. Because we're not going to ride this out for two years as you continue to pay a mortgage and build equity. Maybe. We did not buy a rental property together for us to run together that you live in. No, you broke the marriage up, and so we're selling the house. Ready, set, go.

If we lose $2,000 a piece, we're selling the house. Right. So this is not an investment that we maximize. Yeah, that was another thing I told her. It's going to cost us to sell this house, too. Yeah. You're both going to have to pay a stupid tax here, and it sucks. Yeah, this is a, yeah, wow. I'm sorry, Chris. Sorry you're facing this. But, yeah, you need to, you, being passive in this situation instead of proactive is not going to work.

So I would sit down. I've had a lot of good things happen in conflict scenarios when I can sit down in person with someone. it changes the tone, keep your voice real low and calm and just say, this is not going to work. We've got to get out of this. You broke my heart. I can't stay in this with you. We're not going to own this house together. We're going to put the house on the market this week. And if you don't do that, you're going to force me to become ugly and nasty about this.

And I really don't want to. I just want to get away from this situation. completely and now. And just real calm like that in person. Hopefully you can talk some sense into her that way without trying to do this. But really, you're, I really don't bring up all the old stuff. All we're dealing with is a single issue. Get the house sold.

That's all you deal with. Don't, don't overlay all the problems and the fights and the other stuff in the relationship with it. Just are the things that you don't like about or none of that, okay? Even if she escalates, stay calm. Just go, look, one thing, one thing. We're talking about the house. One thing.

All we got to do is get rid of the house, and then you got rid of me. And until you get rid of the house, you're not going to get rid of me, and it's going to get ugly. I don't want to do that. Please don't make me. All right. Let's go out to Edmonton, Alberta, and talk to Amber, like the light. What's up, Amber? Hey, how's it going on?

We're partying. What's up? Right on. I just wanted to ask if you feel. that we're in a position to increase our mortgage to buy our forever home, or if we should be seeing input and getting the mortgage gone. Okay. Yeah, I want to help with that.

Maybe give you a rundown of where we're at financially. Yeah. We've been doing the debt paydown, but backwards. So I started with the mortgage. So I stopped that. We've got the emergency fund in place. Kids' college funds were fully funded beforehand. Okay.

I stopped in retirement. The only thing we owe now is $9,000 on a travel trailer that will be paid off by the end of next month. So then I have a bonus coming that's guaranteed that will put us into baby step six, basically. Okay. And we own a house that's worth about $6.85. We owe $1.49 on it. The perfect property just came up for us that we feel will be like long term. and we have to increase our mortgage by $105,000 to take that mortgage on.

Okay. So let's think about it like this. I love that you're kind of getting back on track. You're paying off the debt, getting the emergency fund in place. Is it three months or six months? That would be four months or four months. Okay. Are both you and your spouse working?

Yes. Okay. I'm fine with four months. Kids college is on track. So when you sell this house, what will it bring you? All set and done? We got about $500 in equity on it. Okay.

And then the house that you're wanting to get, it's $100,000 more? Yes. Okay. So it'll make our mortgage about $255 instead of $149. Okay. And what's the monthly payment? Have you looked at the percentages? Well, I wanted to do it on a 10-year, and that puts us at 22%.

Listen, yeah. I'm like, why not? Today, kid, today. Yeah. Instantly. I love that you're doing a 10-year mortgage because you want to get this thing out of your hair. I love that it's only going to be 22% of your take-home pay. I mean, you're meeting all the parameters.

And as long as you have peace about it, that's the final parameter. And so there you go. My only challenge to you, Amber, is to unclench your fist around the words forever home. Yeah, fair. Because there's just no such thing, and life just has a bunch of twists and turns. And it's the coolest home for this season. And same as I've got a cool jacket that I got one time from Philson that I love. and I have some cool hunting gear that I got from Sica.

I don't wear those in the summer because it'd be a thousand degrees, right? And so for that season, it's the best, and then we roll into spring, and then we just do what's right in front of us. So I don't really believe in that Forever House kind of thought, but when it comes to numbers, you are right on. Good for you. Okay, awesome. Good for you guys.

Congratulations.