The Ramsey Show - App - Do I Need to Rent Before I Buy a House? (Hour 2)

Episode Date: August 8, 2018

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Music Music Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225.

Andrew is with us in Springfield. Hi, Andrew. How are you? Good, Dave. I hope you're well. Better than I deserve. What's up? Yeah, I've got a question for you. I'm in baby step number two. I make approximately $52,000 a year. I have right

around $19,000 in debt, standard stuff, car loan, a little bit of credit card, a little bit of personal loan. I'm making headway on it, I'm pretty motivated. I have started a side business building some furniture. I'm doing pretty well. My question is, how much should I or should I do any reinvestment into this side business while I'm trying to pay off debt or should all of this side money go into my snowball? Well, how much headway have you made? I've paid off about $6,000 in the last three months. Good. Very good. And what kind of money are you making on this side gig?

Well, so it's doing well where I'm basically doing custom stuff only. So you tell me what you want. We talk about it. We come up with an idea. So how much money are you making? Making approximately $1,000 a month, and I think I could do more than that. I'm only doing it basically one day on the weekends and a couple hours here and there in the evenings. I'm pretty busy with other things as well.

Gotcha. So what would make it make more money well if i could quit doing some keep doing the custom stuff but have some items ready to sell so i have a you know a few things you look at this table or this bench or this whatever yeah i like that i'll you know here's 300300 that you want for it. There you go. Okay, take it home. Instead of taking time to sit down with you and talk about what you want, to reinvest and make some things that I want to make that I think are cool

that I think will sell and have them available. So what will it cost to make those? Most of the standard coffee table, I typically have about $200 to $300 in materials. I do blacksmithing and then big glass. And what do you sell it for? About $1,000. Okay. And what else would you do?

What do you mean, what else would I do? Yeah, I mean, so basically you could do, if you made $1,000 in a month on custom and you put it all back in, you could do five coffee tables, right? Probably. Yeah, three to five, depending on size and just timing. But, yeah, I could do three to five. Okay. And, I mean, you said you could do the materials for $200, right?

Yeah, two to three, just depending on the type of lumber. But, yeah. Okay. Yeah, two to three, just depending on the type of lumber. But, yeah. But the time that you're spending on that, you would not be spending on the custom, too? Right. Okay. Right. Well, we've got $1,000 a month income right now, and I hate to have that. Well, minus expenses, so $700-ish.

Okay. All right. You know, the thing you want to weigh out is how quick are you going to get your money back plus a profit, and are you going to make more money as a result of doing this? But if you use up all your time doing this, you don't have time to do the other. Right. I'm not sure this works out. Okay.

Yeah, I know it's a little bit of a gamble. I didn't know if you kind of had a rule of thumb or not. No, I mean, it's not a gamble. If they all sold, it barely works out because you're not going to make the $1,000 and you're going to put $1,000 in. That's a $2,000 swing, and you're going to do three tables that you make $700 on. That's $2,100. So, I mean, it's not really a gamble

the gamble is you could actually lose and if you if you win you're not going to make a whole lot more so that that's what's bothering me just in the math equation if you think it through now if you have some hours that you can continue to do the custom, and you can add this to it, and you want to, let's do a table and see if it sells. Let's do another table and see if it sells. Do one at a time, and take all of that money on those tables that are not custom and plow them back into the business, but keep your custom money coming back out for your debt snowball. That would work.

Okay. You see how I'm doing the analysis here? Yeah, yeah, yeah. I get it. At the end of the day, the only reason we're doing any of this is to make money. Right. So what makes the most money the fastest? That's the equation.

And it's ROI, return on investment of your time and your money going in. So we have an established pattern of $1,000. That's pretty cool. Good for you. You enjoy it. That's good. You're obviously good at it because people are hiring you to do it. So I'm going to spec out one table here.

Let's put one table out there for $200. Definitely do that. If that one sells, then spec out two. But these are with extra hours that you add to your calendar and don't take away from the $1,000 you got coming in on the custom. And on the custom, you may want to raise your price a little. It sounds cheap. Matt is with us in Charlotte, North Carolina. Hi, Matt.

How are you? I'm good, Dave. I know you're doing good as well. I am. How can I help, sir? Well, I've just got what I think is a basic question, but I just want to confirm with you that my wife and I are making the right decision. We have a few deaths other than our house, about 19,000 in vehicle.

I'm sorry, 13,000 in vehicle loans. And we also have what we like to call an investment in a beach house that we own only about 63 000 there um but we have two daughters that are 10 and 7 and we have 52 000 saved for them for college and my question is should we take some of that college fund money and pay off the auto loans. I feel like we probably should, but we'd like to confirm that with you before we pull the trigger. What's your household income?

About $160,000. And how much debt have you already paid? Well, the truck that I'm in, the auto loan that I have now for my truck, like I said, it's about $18,000. We started at $21,000. But I'm talking about you've not been working a get-out-of-debt plan where you've aggressively paid this debt down. You're just starting, right? Yes, sir, pretty much. At one time, all we owed on was the house.

I would not take the money out of the college fund not right now you would not okay because you make a hundred and sixty thousand dollars a year it's huge you need to really tighten your budget up and just pay the stinking thirteen thousand dollars off fast and then you need to reach over and pay that sixty three thousand off really fast what do you owe on your personal home? About $143,000. I've only got about 10 years left on that house, so I'll be $49,000. The house should be free and clear.

Yeah. Our kind of long-term plan was when we get ready to retire, to sell the house, which is valued at $300,000 or so now, and move to that beach house. That sounds fun. Okay. Yeah, let's get the beach house paid for, get that paid off later on using the baby steps. But no, right now you've not made any progress. You make a lot of money. I want you to make some progress. And really making $13,000 worth of progress, making $160,000, you're not going to be able to do that in your sleep. And I wouldn't do it. This is the Dave Ramsey Show. Can you believe this real estate market?

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761 Old Hickory Boulevard, Brentwood, Tennessee 37027. Up next is Brian. Brian is in New York City. Hey, Brian, welcome to the Dave Ramsey Show. Hey, Dave, how's it going? Better than I deserve. What's up? I think it's awesome that I'm talking to you right now. I appreciate you for taking my call. Well, thank you for being here. So, Dave, I've been listening to you for around over a month now.

I've seen a lot of your YouTube videos and everything. And, you know, I decided to get back on track. I'm 23 years old. I just graduated my undergrad in May. and I started working at a good company with a salary of $45,000. I did pick up a part-time job, and my take-home pay is around $3,500. So my question is that I'm currently working on paying off some personal loans that I had for a vehicle. And I'm currently paying off all credit cards and credit collectors off. And I plan to have them all paid off by December. Okay.

So then besides that, I have student loan debt. How much? Which is $36, Good. Okay. So then besides that, I have student loan debt. How much? Which is $36,000. Okay. How long do you think that's going to take you? I did some math, and it looked like I could pay it off if I worked full-time with both jobs and everything, and around a year to less than a year and three months maybe, max. Wow.

That's pretty intense. Okay. So, yeah, I tend to, because I know I could survive with my part-time job for my weekly expense. I don't pay much. I just pay for my insurance. I live at home. Okay.

But that's what I was going to ask you. If at this point, I am 23, I'm turning 24 at the end of this year, I wanted to know if you think it should be a point where I should be considering moving out and getting an apartment and maybe lowering my payments and delaying the longer time paying off my student loans. It could extend it by another year or year and a half if I have to, you know, use all that money for rent and food and all that. I doubt it would be a year and a half, but it might be as much as a year. I think that would depend on how well you're doing at home with your mom and dad and how, you know, how your relationship is there.

The good news is you've got a way out. The point when somebody's at home and they're 23, all I want is a deadline when they're leaving. And it's not 28. If it's 24, that's fine. If it's 25, that's fine. But we need to know when you're leaving for your sake. You need to target your aiming at. You have a very specific plan here.

And so if you want to stay there, they want you to stay there, there's not any weird stuff going on in your relationship with them, everything's cool, then I'd probably stay there and finish knocking it out. If it only added three or four months to your debt snowball, then I'd probably go ahead and move you now, but it's going to add a year. I think I agree with your math. Okay. All right. Yeah, because I was considering that I wanted to buy myself like a – I wouldn't say buy myself a house, but I would like to buy myself like an apartment or something. I thought that an apartment would be –

No, I wouldn't buy anything until the student loan's done. You'd move out, you'd rent. Yeah, that's exactly why I was asking if I should consider renting, because I did want to do manual underwriting, and I know they like for someone to be renting for a certain amount of time. Well, after you're debt-free, you still have to save up your emergency fund and your down payment. You'll be paying plenty of rent while you're doing that to establish yourself.

And you will have been on the job two years, and you'll have a good, strong down payment. You'll have your emergency fund. You'll be 100% debt-free. And, you know, you're 25 years old moving into your first house. That is not a bad thing. You're not an old man at 25. I've met a bad thing. You're not an old man at 25. I've met a couple people that were kind of an old man at 25, but most people aren't.

And so you've got plenty of time, is my point. Do this right. Either stay there and knock it out in that year if everything is cool at home, or take an extra year and be renting, and then it's going to take you about another year to save an emergency fund and a down payment after you're debt-free. So it's either a two-year or a three-year plan to buy. And of that, you're either going to be renting two or three years, one of the two.

And that's how it's going to work out. So good question. Thanks for calling in. We appreciate having you in the listening audience, sir. David is with us in Fort Collins, Colorado. Hi, David. How are you? Doing great.

How are you, sir? Better than I deserve. What's up? In March, my position at work got dissolved through a corporate restructure, and so I took a position that was one that I had before I took that job and to tide it over until I could find something else. And now I've gone through two interviews on the phone and I have another one that I'm flying down to Texas for with the same company that I've done the interviews for, a different company that I had the layoff from. And I was

trying to find out what it is that I should be looking for when I'm there. When should I be looking to move my family in the sense of we'd have to sell the house and look to buy another house. Do we rent for a year before we buy a house down there? Do we just trust the ELP for the selling and buying of houses down there that we've contacted? What are the other things that I should be looking for trying to figure out what this move is going to entail? Okay. Well, obviously the first thing is you're going to like the job,

you're going to like the company, you're going to like the value system, and the culture and the pay and the upward momentum potential and all that kind of stuff, and then you take the job. As far as the house stuff goes, I would not buy in the new city until your home in the old city is sold now it might happen rather quickly um and it might but it might be that you are your family is there for a little while in fort collins and then they move to texas and you rent for a little while while you get your house sold the faster your house sells um obviously the more

seamless this is and the more likely you are to go ahead and buy in Texas immediately. But you might end up renting something in Texas for six months to make a transition happen and not end up with two sets of payments. I would not purchase until the other one sold. That simple. And I just would not. You're going to get yourself into all kinds of problems there. And so I would avoid that if at all possible.

Hey, thanks for the call. Open phones at 888-825-5225. I said that wrong. I said if at all possible. I don't know why I put that tagline on the end. I would just not do it. It is possible. Don't do it. Maybe I said that.'t sometimes i don't know why you do we all do that we add stuff to the end of a sentence just

to kind of finish talking or something and i just did that on the air caught myself roxanne is with us in medford oregon hi roxanne how are you hi i'm good dave how are you? Hi, I'm good, Dave. How are you? Better than I deserve. What's up? I'm nearly 30, and I have no debt other than my mortgage, which I owe about $204 on right now, but I'm 40 months ahead on payments because I've been paying extra each month. Stop, stop, stop, stop, stop right there. You don't want to be ahead on payments. Well, I'm ahead based on I pay extra on my principal each month. but you if you don't pay a payment next month you're late right okay that's not what

i meant to say yeah okay i just want to make sure we're on the same page all right go ahead yeah um i'm looking at doing some more retirement investment i have about 38 in a roth ira and i was looking at either doing a 403B or a 457 through my work, and I didn't know which one I should do and if I should do it pre-tax or post-tax. I would do Roth version if you can get Roth, and there probably is on the 403, probably not on the 457. And I want to do something where you can pick the investments in good growth stock mutual funds that have long track records. 403Bs, some of them have that. Some of them have crappy insurance products available to invest in is all they have, bad annuities and bad whole life policies and that kind of stuff.

Because the insurance world has gotten real wrapped up in the 403B world. So have you got good mutual fund options with either one of these we do have options through fidelity and tia craft they're both solid companies uh both of them have some good funds both of them have some lousy funds like any company does so look at long-term track records and i'm going to go with the roth version of 403B as my first choice if you've got reasonably good funds to pick from those two families. PIA, Cref, and Fidelity are both fine companies. Nothing wrong with the company. But make sure the particular fund has a good track record.

Good track record for performance. Okay, I need you to listen to this, because one normal routine that everyone does can cause total chaos in your life. Folks, I'm talking about the simple act of using Wi-Fi. When you're on Wi-Fi anywhere in public or at home, you're at risk of hackers easily seeing every site you visit and search you're doing online. It doesn't matter if you're doing it on your cell phone or your laptop. I'm not telling you this to scare you.

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That's hotspotshield.com slash Dave. You can be secure in seconds. Download Hotspot Shield today. In the lobby of Ramsey Solutions, Jennifer is with us. Hey, Jennifer, how are you? Hi, Dave. I'm well, thank you. How are you?

Better than I deserve. Where are you from? I'm from East Lansing, Michigan. Cool. Welcome to Tennessee. Thank you for having me. And all the way to the south to do your debt-free screen. Yes, yes. I'm so excited. How much have you paid off?

$140,000 in about six years. Wow. Good for you. And your range of income during that time? I started off at $67,000 and I'm now making just under $100,000. Good for you. What do you do for a living? I'm a at $67,000 and I'm now making just under $100,000. Good for you. What do you do for a living? I'm a professor. Good. Of what?

In the School of Criminal Justice. Oh, look at that. Good for you. So, PhD, I'm guessing that's all student loan debt? No. No? What was it?

It was my car payment as well as my house. You paid off your house? Yes, paid it off. I am looking at a weird woman. Yes. I love it. Way to go, kiddo.

Yes, thank you. How old are you? I'm 35. And you have a paid-for house. Yes, it feels so good. That is wicked weird. Yes, it is. That's ridiculous.

That's crazy. Who has a paid-for house at 35? You do. I do. I do. And it's incredibly empowering. I bet. Yes.

That's amazing. What's this house worth? It's now worth about $160,000. Love it. Yes. Very cool. So you do have your PhD, I assume. Yes.

Okay. In criminal justice. Yes. Okay. Good. Good. So how much of the $140,000 was your house? $130,000.

Okay. And so you've been working baby step four, Step 456 then for several of these six years. I have. So tell me the whole story. What's the journey look like? Yeah. Other people want to know how you do this at 35. Okay. So about six years ago, I was talking to my friend who told me about you. I had never heard about you. He told me that you have a radio station. You've written several books on how to get out of debt. And it's also from a biblical perspective. So I purchased the book and I read the book within a couple of hours and I was just hooked. I was hooked about, you know, the perspective on getting out of debt and staying out of debt. And to be honest, a year

prior to that, when I was a doctoral student and I had just graduated, I had actually prayed to the Lord to ask to help me manage my finances. I was used to making very little money as a doctoral student, and I knew I was going to start making relatively good money, and I just didn't know how to manage this money, and I wanted to be a good steward of the money that God was allowing me to have. And so just under a year later, I came across my friend. He told me about your plan, and I felt like it was an answer to God's prayer. So when I read it, I was hooked.

I was hooked. And I remember being particularly, you know, looking at my past mortgage payments that I had made. I was paying the minimum for just under a year. And when I actually looked closely at my payments, I was so disgusted by how very little had gone to the principal. It was all, for the most part, going to interest. And that got me angry.

Ah, good. Yeah. I love it. Good for you! Very cool. Very cool. So all you did was total money makeover book and game on. Yeah, that's all I did. Followed the baby steps that you had outlined in the total money makeover. So you knocked out the car debt, built the emergency fund, started putting 15% away for retirement, and then attacked the house with a balance. Yes, I attacked it with a vengeance. Yes, absolutely.

Well, that's cool. And so, yeah, the good news about being single is you don't have to talk anybody into it. Except you. Absolutely. You don't have anybody to bug you about it, but you don't have to talk anybody into it. Yes. Very cool. Very cool.

Good for you. Thank you. Thank you. So, when people find out that you're 35 years old and you have a paid-for house, shut up. I mean, when they find that out and they say, how did you do that? What do you tell them the secret to getting out of debt is? The secret, number one, is having a written plan. I had always budgeted before, but I certainly, after I got on your plan, I had a much tighter plan.

And also, at the same time, you know, every extra dollar was going to the debt. And so whenever, when I got a raise, when I got a tax refund, or when I was doing subcontracting work, every extra money, I was no longer using it for myself. It was going towards the debt so that at some point I was, whatever I bring in each month, more than half of it, I was hitting it towards the mortgage because I was determined to get out of debt. And then the other thing was really just trying to stay focused on the main plan. I always wanted to be on the show to give my debt-free scream. And so during times when I would feel tempted to get off course, I would listen to the debt-free scream saying, I want to be on the show one day. And so I do have to live

like no other. So eventually, at some I do have to live like no other. So eventually, at some point, I can live like no other. Yeah. So in six years, there has to have been a moment where you, I can't do this, I've got to quit. What happened? Was there? Six years ago when I first started?

No, in the six years. That six years is a long run. Yes. And sometime during that, you had to be kind of down about, you know, you hit that bottom, and then you come out of that, and you're roaring to fight again, right? Yeah. But tell me about that down moment. Was there one?

Whenever I would start to feel down, I would listen to the show, and then I would feel convicted when I'd hear other people talking about the sacrifices that they were making. So you really didn't have a dip? Not necessarily a dip, but what did help is I never taught Financial Peace University, but at my church I did teach a class on finances, and we used your book, The Total Money Makeover, that I taught for several months. And so it helped me to stay on task, but it was also really fulfilling to help other individuals at my church try to get out of debt or encourage them to get on the plan.

And so that was a way to hold me accountable as well. That's very cool. Yes. So we live like no one else. Why? So eventually we can live like no one else. So what are you going to do to celebrate? What are you going to spend some money on, Jennifer? Yes. Tell me your celebration spend. Yeah. So at the end of December, I've actually chosen I'm going to be going to Israel for 10 days. Yes. And I never would have thought that I could even take a trip to Israel because it's way too expensive.

And then I'm going to be doing a missions trip next year. And these are all things that I never would have thought even possible to do. But now it's incredibly liberating to no longer be a slave or a servant, you know, because I'm completely out of debt. You're going to love Israel. It's one of our favorite trips we've ever taken and been there a couple of times. And you never read the Bible the same again. It's like pop up Bible in front of you. It changes 3D. It changes everything. Yes. So you're going to eat that with a spoon. That's going to be wonderful.

I'm so proud of you. Thank you. So you brought some people with you to celebrate. Who came with you? My good friends, Idria and Mark. They came with me just to root me on. They've been encouraging me. Good.

So you had some good backup then. Yes. Anybody make fun of you while you're doing this? No. The only thing that happened, you know, for quite some time, a couple of years ago, I really didn't have a smartphone until just a couple of years ago. I remember a few of my friends asking, how come you don't have a smartphone? You know, you don't have access to the internet. And also a couple, at the beginning of

the year, I actually got into an accident, a car accident, where my car was totaled. I was fine, fortunately, but my car was totaled. And at the time, I actually had a few family members and friends telling me that I should go and lease a car or finance a car, $20,000, $30,000 worth. And I remember feeling very tempted to do that. But here I am a few months, I can see the finish line, and I felt like it was a test from the Lord to see what are you going to do? What are you going to do? What are you going to do? You've been walking the walk, but are you going to veer off course? And so I managed to just stick it out and use. Fortunately, I got more money than I anticipated for the car and bought another used car with cash, no financing.

Good. That's what you're supposed to do. Exactly. I will never go into debt. But people use totaling a car as an excuse to move up in car. Yes. That's what they usually supposed to do. Exactly. I will never go into debt. But people use totaling a car as an excuse to move up in car. Yes. That's what they usually do. Yes.

Way to go. Thank you. Very good. Thank you. So proud of you. Yes, I appreciate it. You're special. This is neat.

Very, very neat. I love it. We've got a copy of Chris Hogan's book for you, Retire Inspired. That's the next chapter in your story. We want you to be a millionaire and outrageously generous along the way. Yes, I'm looking forward to doing that. I can tell you're going to use money as a tool and you're going a millionaire and outrageously generous along the way. Yes, I'm looking forward to doing that. I can tell you're going to use money

as a tool and you're going to enjoy it too. Yes, thank you. And I want to say, Dave Ramsey, thank you again for just everything you do, your ministry, the books. It truly was an answer

to my prayers. You really outlined how to get out of debt. And for me, not only to get out of debt, I intend to stay out of debt and to build and maintain well. So thank you so much. And I intend to also push of debt and to build and maintain wealth. So thank you so much.

And I intend to also push it forward. Thank you. Very well done. Very well done, Jennifer. Thank you very much. All right, Jennifer from Lansing, Michigan, $140,000 paid off in six years, making 67 to 100 during that time. What a story. Count it down.

Let's hear a debt-free scream. Three, two, one. Thank you, Jesus. I'm debt-free. I love it. Well done. Very well done Man That's inspiring We've had a lot of houses paid off on our debt-free screams today This stuff's hitting another level There's something going on out there Y'all feel it? Yeah

Common sense is breaking out Be careful Common sense is spreading Be careful it might jump on you This is the Dave Ramsey Show Common sense is spreading. Be careful, it might jump on you. This is the Dave Ramsey Show. You know what I've learned after talking to so many people who have been victims of ID theft? They feel violated and they have a sense of fear and intrusion.

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I'm well, Dave. How are you? Better than I deserve. What's up? First of all, I just want to thank you so much. Your financial guidance has been invaluable to me and I really appreciate it. So thank you. Cool. So I have a question. I've recently been employed by a state institution, and I have an option to choose between either the traditional teaser's pension plan and what they now with matching but the teasers plan gives a lot more of a percentage

of a higher percentage so the teasers plan gives like it's 16.84 percent right now determined by the general assembly and they're matching six percent on the ORP plan at 6.84%. Okay. But on the teaser plan, I don't know these plans, but I'm going on what you're telling me. It sounds like the teaser plan is more of a traditional pension plan, and you don't get that until you're 65 or 59 or whatever after you're gone and all that.

With the other one, with more like a 401K plan, with that one, it sounds like you probably would be vested, and if you ever left the state, you could roll it to an IRA and take it with you. Is that correct? Yes, that is correct. Okay. Yes. Now, I have to choose between one or the other.

It's a mandatory thing. I have to choose it one or the other. It's a mandatory thing. I have to choose it. I'm going with the 401K type. Yeah. Based on what you're telling me, okay? The reason is when you die, it stays with your family. Yes, exactly. Pension does not stay with your family on a traditional pension.

It dies with you. It might have survivor for your spouse but that's the most and it's just gone that money's just gone 50 000 yeah now the money that you put in if you put anything into the pension then you would that get that back out but um because that's that's vested automatically in most cases anyway. Sometimes it'll die with you. But either way, and two, with the pension plan, it's going to come and go, be strong or weak, depending on how well your state government is run. Right. Because if the state government gets in financial pinch, the General Assembly is going to back down what they're doing, is what you're telling me. Right. And if they keep doing real is what you're telling me. Right.

And if they keep doing real well, they'll keep it up there. If the state workers' union, if there is one, keeps pushing them, they'll keep it up there. That kind of a thing. But there's all these things that are outside of your control here. Like, you know, you do a good job managing money, but they don't, and you're going to get penalized kind of thing, you know? So those are the reasons I tend to go that way. Now, I'll tell you what I would do if I were in your shoes. Jump online and find the SmartVestor Pro in your area.

Yeah. And go sit down with them and let them unpack that with you in detail. They can help you comb through every little piece of this, and you'll understand it, and then you can make the decision. But it sounds like, based on what you know so far about it, that I'm going with the 401K type rather than the pension type, and those would be my reasons, okay? Would you recommend, then, that the 6% that I have to put in

goes towards the 15% that I put down, or no? Yes. Okay. Yes. So with the optional retirement, the that would be towards my 15 exactly yeah that'd be because you're putting money into something and you you have options you you get to pick what that goes into right yes i have full management of those yeah and so that's just like your 401k somewhere else yeah and we you know if you put six percent in your 401k

in a more traditional employment setting we would definitely call that towards your baby step four fifteen percent so yeah you're right on track so hey thanks for the call and well well done sir very well done you're staying on top of things good good move jay's with us in el paso texas hi jay how are you hi jay uh excuse me hi dave i'm a little nervous. No troubles. It's an honor to speak to you. You too. Thank you very much for taking my call.

Sure. Thank you. So here's my question. My wife and I own a house. We've been in it for about 15 years. We bought it for about $147,000. We sold about $140,000 for it. It's right now worth about $283,000. I have $32,000 worth of debt. And we just started your program. We've been doing it for like the last six or seven months. We've been trying to pay off our debt.

And I want to ask you about selling the house. I'd like to put more money into it to try to get the most out of it, but I kind of wanted to hear your thoughts about selling the house. Why is it you want to sell it? Well, I'll be honest with you. The taxes in our neighborhood keep going up exponentially. We came into the house, and it was about $3,500 a year. We're now north of $7,000 a year. So our mortgage payment is tied, you know, it's in the escrow with that. And so we're, you know, our mortgage payment went from $1,000 to over $1,600 a month. And so your taxes went up, your taxes went up like $8,600 a month. And so... Your taxes went up like $8,000 a year?

In the 15 years we've been here, yeah, like $7,000. So, you know, when we first moved into the house, about two years after we were here, we got a letter from the city saying that our house had been, our neighborhood had been very undervalued, and they hit us with a huge tax bill. And so that tax bill keeps climbing, climbing, climbing. Where else are you going to live in the area that doesn't have that?

Well, right now we got this house on a very, very good deal. I mean, if you're moving because of high taxes, are you moving outside of high taxes are you moving outside of this area right it's a it's a different uh neighborhood that would have lower taxes that would that's a different city it's a different city no it's the same city well why would it have lower taxes because it's undervalued and they're going to nail you in the face later well i think what happened was when the housing bubble was happening, the city just kind of took the advantage of jumping on that and raising a lot of neighborhoods' taxes.

Well, now listen, here's the deal. This is the same city. If you're going to live in another city and they misbehave with their tax policies, if you're going to stay in the same city and they misbehave with their tax policies, they're going to get you at the next place too. You can't run from this. I mean, that's a possibility. No, it's a probability because it's their behavior.

It's a predictable behavior the city engages in is what you're telling me. Yeah, sure, but I mean, we can't move out of the city. I mean, we have roots here. Okay, so is your home currently overvalued on the tax rolls? No, it's not. It's not. Okay, so you're going to move to an area where it's undervalued on the tax rolls? Or at least more fairly valued.

Well, if it's not accurately valued, overvalued, then you have a dispute process that you can go through in any city to lower that. I would not move on property tax alone into the same area of property taxation. That is not reason enough for me to move. That's what I'm saying. So let's look at the rest of it. You said you owe $140, right? I owe $140, right. And you said you owe $140,000, right? I owe $140,000, right.

And you said it's worth $285,000, right? Yes. So you've got $100,000 equity. And so you're going to move into a price of home that's priced about what? Well, I was thinking to move into a house that's about the $140,000, $150,000. What I'd like to do is just sell this house. Pay cash. And pay cash for another house. That's what I would like to do.

Are you married? Yes, I am married. What does she say about this idea? Well, since we started your program, we both kind of have opened our eyes to our debt, and we see what an albatross it is around our neck and so she's motivated to get out of debt okay but is this you need to go look at some 140 000 houses you have children at home yes i have a one son i'm a seven-year-old okay well y'all need to go look at the house and go can we live in this neighborhood raise this kid in this neighborhood i'm not saying you can't there's nothing nothing wrong with a $140,000 house in El Paso.

It's a pretty good house, actually. But you need to go look at that because you're basically cutting in half what we're talking in price range. And if you want to do that and be debt-free, that's not a bad thing. But just make sure you're understanding all the moves you're making very clearly. Because that's the last thing I do is tell people to sell a house. It's not that I never do, but it's just I do everything else first, usually. This is the Dave Ramsey Show. Hey guys, this is James Childs, producer of the Dave Ramsey Show.

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