The Ramsey Show - App - How Can I Make Money as a Financial Coach? (Hour 2)

Episode Date: October 25, 2018

The show about you

🎵 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'm Dave Ramsey, your host. You jump in, we'll talk about your life and your money right in front of you. It's a free call at 888-825-5225. Stephanie is starting off this hour, Rochester, Minnesota. Hi, Stephanie, how are you?

I'm good, Dave. Thanks for taking my call. Sure. How can I help? Well, so my husband and I, we are currently doing baby step number two, but we also have an eight-month-old daughter, so we're not quite to the college saving yet. But we do have grandparents that instead of buying Christmas gifts

or birthday presents would like to put away for her college savings, and I'm just wondering what's the best way for them to go about that. I would go ahead and open the child an ESA, an educational savings account. How much money are they talking about that they want to put in this? They haven't really decided. But growing up, I was giving savings bonds, and they don't really want to do that. I don't know if they're thinking like $100 or, you know, each birthday and each Christmas. I'm not sure.

Okay. All right. Well, you can open some mutual funds as little as $250, others $500, and others $1,000 minimum to get them open. Okay. But you can open an educational savings account and a mutual fund, an ESA. It requires, because the child is a minor that someone be in charge of the account be the custodian that would be you okay and then your

mom and dad can or his mom and dad can add to the child's educational savings account the only limit is you cannot put a total between all of you of more than $2,000 a year into that account. Okay. You can in a 529 put more than that, but you know, we're not talking about that being a problem. We're looking at the minimum and you've just got to get some money scraped together to do a lump sum to start the mutual fund, you know, so maybe two or three people put some money together. Maybe you just put it in a savings account until you get up to $500, and then you open the ESA. Okay, great.

That is a lot of help. Thank you so much. Yeah, just check in with your SmartVestor Pro, and they can help you get that done. Lisa is with us in Austin, Texas. Hi, Lisa. How are you? I'm fine, thanks.

Happy. I'm having a good day. Good. I am. How can I help? I'm just starting your program, and I'm not sure how to do it when there is no money left to save at the end of the month or at the beginning of the month or any of the month. And I was homeless for about a week and then had to live in a hotel for about a week until I found a place to live and then I'm just this is the first month that I was able to pretty much pay all the bills in full and and start to get back on my feet a bit and good good I'm glad you're turning it around. So were you having a career problem or something else? No, I've been a teacher for 11 years and I love what I do, even though I only make $42,000.

Yeah, but $42,000 doesn't cause you to be homeless. How did you end up homeless making $42,000? It was a fight among family, and I left. Oh, you were living with someone else. Yes, and it was a fight among family, and I left and became homeless. Okay. And you had no money saved at all. I have no money saved. I am a spendaholic, I guess you could say.

If I get it, I will spend it. Payday comes and the first thing I'm doing is hitting up Target or Walmart or something. How old are you? I'm 48 years old. 48 years old. And you were still living at home? Before? I had gone, I had had a house that I was paid for and I sold it and went to live with my parents to help my mother,

who was in a diving accident and kind of paralyzed and was going to help her along. What happened to the money from the house you sold? Oh, I used it to pay off my first debt, and then I proceeded to go right back out and get myself back in debt. Okay. All right. Cool. first step and then i proceeded to go right back out and get myself back in debt okay all right cool um so are you do you think you've been through it sounds like you've been through a lot of pain i'm sorry i know when i go through pain uh i have one of two things that happens with me i'm either going to go back and do it again or i've had it and i'm not going back have you had it yet i think so i really think really think this was the rock bottom that I had to hit for me to realize that I can't spend money that I no longer make.

And you have debt now. You've run debt back up. How much debt have you got? I have $71,000 in student loans. And I'm not a doctor. And I have about $20,000 in personal, which includes a lien on my car. How much do you owe on your car? Yes.

The car's paid off. How much do you owe? You have a lien on your car, so the car is not paid off. Oh, okay. Yeah, so it's about $14,000. Okay. So what is the car worth? It's only a year old, so I'm not sure.

Okay. I have never been financially responsible. I've never really understood money. Oh, you understand it. You just spend it. I spend it. I keep the economy at risk. You're a teacher, just spend it. I spend it. I keep the economy. You're a teacher and you understand

sixth grade math. You just choose to ignore it and go do whatever the flip you want to do. Like buy a car you can't afford. Right. A lot of people do that. It's okay. I'm not being mean to you. I've done it too. We know what we're doing. I know when I eat a bag of chocolate chip cookies

it's probably not good for my girlish figure. But I know what we're doing. I mean, I know when I eat a bag of chocolate chip cookies, it's probably not good for my girlish figure, you know. But I know what I'm doing, you know. And it's a choice you make. So you've got to decide that. Now, my good friend Les Brown is the great motivator. He says people finally change their lives when they say, I've had it. I'm sick and tired of being sick and tired. And the only person that can fix this mess is the person in my mirror.

If that's you, I can help you. Yes. This is it. I'm living – when I got out of college, I made six figures. Yeah, so here's what we're going to do. Let's get started right now. We're going to take your paycheck, and you don't do anything with your paycheck until you buy food from the grocery store so you have food to eat.

You're not allowed to go inside a restaurant ever again unless you're working there as your extra job until you get this debt cleaned up. Right. And you can't go back to Target. They don't have anything else you need. Stay out of Target. Because you told me Target's your weak spot. It is.

Okay. Yeah, you can't go to's your weak spot. It is. Okay. Hobby Lobby, Target. Yeah, you can't go to a bar if you're a drunk. Right. Okay? And sit around at happy hour and hope you don't get drunk. So don't go to Target and Hobby Lobby, whatever it is. Whoever it is, it's killing you, right?

Just identify. Because none of these places sell food. Well, they actually do. But that's not where you're going to do your grocery shopping, okay? So you're going to do your grocery shopping, number one. one number two you're going to pay your lights and water we know you've got enough to do those three things number three you're going to pay your rent so you're never homeless again you got enough to do those three things then you're going to pay your car payment and get it paid off as quick as we can and and until you do food shelter clothing transportation and, transportation, and utilities, you don't do anything. You hear me?

Yes, sir. You take care of you first. And you'll not be homeless again. Now, the student loan may or may not get paid this month. But right now, you're going to take extra jobs, and you're going to have no life, and you're going to clean this mess up. Hold on. We're going to sign you up for Financial Peace University. I'm going to walk with you.

And you call me back if you've got questions as you go through this. It's time for you to change. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has debt and a struggle to make ends meet, but they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance and the other doesn't. Big difference.

If one of the parents die, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story, and it puts you on course for better things

ahead. Thank you for joining us, America. Elijah is with us in Singapore. Hey, Elijah, how are you? I'm doing quite well. Thank you very much, Dave. Good afternoon. How are you doing today?

Better than I deserve. How can I help? Yeah, so first of all, I'd like to thank you for everything you're doing. Since I started listening to you, I actually have a few dollars to rub together. Great. My question is basically about a voluntary retirement scheme that is in Singapore. So I can put up to $35,700 a year, and I would get tax relief on that for that calendar year, which translates to about $4,000 in taxes. Now, I want to take half my emergency fund and put it into that account because I might

not reach the $36,000 just cash flowing in from my salary. What are the penalties for withdrawing? I'm thinking, should I do that? What are the penalties for withdrawing? Should I do that? What are the penalties for withdrawing from the retirement? Yeah, it's about 50% on taxes, but I really don't need entire emergency fund. I currently have $30,000, and I'm thinking taking $15,000 and putting it to that. I can rebuild my emergency fund in about three months. If you don't need it,

why would you rebuild it? I mean, I don't have to have all the $30,000. I just built it because I feel very comfortable with having that as a cushion. All right. And what is your income a year? About $160,000. Okay. So what is three to six months of expenses? It is about $23,000.

Okay. That would be three months or six months? That would be six months. Okay. All right. So you can be within the range of three to six months of expenses at $15,000. And if you want to use some of that money, that's fine. And if you want to build it back up to six months later, that's fine. But it doesn't sound like you need more than $25,000 ever in your emergency fund.

Yes, but I'm not a citizen here. I'm also not a U.S. citizen. I work here. I'm an expatriate, and I just feel more comfortable because if I need to leave the country, I have about 60 days to get all my affairs in order and leave. Okay, so you're just going to keep a little extra. I have about 60 days to get all my affairs in order and leave. Okay. So you're just going to keep a little extra.

Well, so what happens if that event occurs while you're down on cash because you funded this thing? It's very unlikely. I just received a new role, and at least for the next two years, I'm probably very safe at my workplace okay well the thing is this here here's what's bothering me if the proper amount to have in your emergency fund is thirty thousand dollars then the answer is no don't drain it down because this is not an emergency you use use emergency funds for emergencies, period.

If the proper amount to have in your emergency fund, which means you should end up there, is $15,000 to $20,000, then don't have more than that later. So you decide what the proper amount in an emergency fund is when all the smoke clears. But don't tell me you're using your emergency fund to fund this and then you're going to put it back, which tells me you don't agree. You know, you've got in your mind the proper amounts, 30 grand, I think is what you're saying. And so the answer is no, don't put the money in retirement. Don't use your emergency money to do that.

But if you're willing to reassess your emergency fund and say, I've got this thing overfunded, I'm going to back it down in the 20 range, then I might go ahead and do this deal because we're not there. But if you think you need to keep $30,000 around for emergencies, then keep $30,000 around for emergencies and don't monkey with it. The emergency fund is foundational before you move on to investing of any kind so you got to decide your definition that's what i was poking around on i'm trying to figure out what you really need slash want and it sounds like emotionally given the unusual situation

that you're in you want to keep 30 grand around and so you should keep 30 grand around if that's it don't mess with that but if not if you're going to permanently lower it then use some of that money to do this then hey i'm just fine with that uh cage is with us in salt lake city hi cage how are you hey dave how's it going better than i deserve what's up hey thanks for taking my call today. I'm a college student. I'm two semesters away from graduating with my bachelor's degree in finance. But the more that I go through school and the more that I listen to you, it makes me want to really make a living being a financial coach,

just as you did many years ago and still do today. So I was just wondering, I wanted to get your advice on whether you think it's still possible for somebody like me to run this type of business and maybe your advice on the best business model to maximize success on the early goings of starting it. Okay. Well, the fee-based financial coaching where someone pays you a fee just to sit down and do one-on-one coaching, which we do some here, and we have a program where we certify people that do that, that come through our training to do that. It's difficult to make a living exclusively doing that because it's very much the inventory is your hours in the day, and you have to sell enough of your hours in the day for enough money to equal a good living and it can be done but uh coming straight out of school difficult to do um not saying it

can't be done but i'm just saying it's not it's not a slam dunk okay it's not an eighty thousand dollar your job your first or two years out it's going to take you a while to build up the thing you could do is you could go into the financial services world like on the brokerage side and work with someone like one of our smart investor pros as an example and those guys are in the business gals are in the business of selling investments and there's nothing that there's nothing that preempts you as a matter of fact it's almost paramount that you do coach people while you're selling them an investment so that they don't get into the wrong investment. You're teaching them.

You're helping them make decisions. But in the process of doing that, then you're making a commission, and there's nothing wrong with that. It's like when you're selling someone a home. You're coaching them. This house is going to be pretty, based on your income, this is really out of your range. You're coaching someone if you're a realtor and telling them that.

In a sense, you're financial coaching them. And so, but you get paid a commission when they buy a house. And so, you know, this idea that some people have that everybody gets paid a commission as a conflict of interest and keeps them from doing the right thing by their clients is absolutely absurd. There's plenty of people on straight commission with high levels of integrity that do the right thing. So you might explore that angle because truthfully, you can make more doing that than you can just doing billing by the hour. And I'm not saying making more is the whole answer. But, you know, as a young guy coming straight out of school as a financial coach, you're probably going to have to get a little bit of miles on you before people are going to trust you.

You know, it could be. I mean, there's some people who will trust you, and if you're really good, you know your stuff, then you'll get business. But just saying it's a tough road to just do what we did back in the day. And it's one of the reasons we quit doing that as exclusively what we did. You know, we started doing events. We started having a class. We started doing other stuff to go with it because it's difficult to scale up

when there's only so many hours in the day you can bill out at an hourly rate. Open phones at 888-825-5225. Amy is on Facebook.com slash Dave Ramsey. Dave, do you put all of your rental properties into an LLC? Yes, I do. As a matter of fact, I no longer own anything personally. I don't have a single thing in my name. My cars are in an LLC.

My house is in a trust. All of my real estate is in llcs um and it's kind of an extreme risk management thing but i actually i actually don't own anything i'm pretty poor personally except that i own all those companies that own all that stuff so that's okay i guess but i mean it's uh yeah we put up to five million dollars worth of property uh if we're doing single families into an llc and then we open another one and if we buy a building it's a standalone building like the building i'm sitting in is worth about uh 16 17 million and it's its own llc standalone and then i've got other buildings that are worth whatever, and they're their own

LLC. But we put up to about $5 million or a single standalone thing. So they're different companies, and that way your risk is spread around. It's good risk management. Why in the world would you trust some random guy in a cube when getting your mortgage? Do you really think he cares about your long-term money goals? Well, he doesn't. Those companies care about getting you into whatever home loan program they're pushing that week. When it comes to ordering a cheeseburger, the meal deal works fine.

But let's get real, people. We're talking about the largest investment you'll probably ever make. So don't be naive and trust an order taker who pressures you into a prepackaged loan. My friends at Churchill Mortgage have been helping my listeners for over 25 years. Call Churchill Mortgage and get custom solutions from an expert within 10 minutes. It's simple. They'll shoot straight with you and quickly show you the real way to save money. Call 888-LOAN-200. That's 888-LOAN-200 or visit churchillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equ Housing Lender 761 Old Hickory Blvd Redwood, Tennessee 37027

Thank you for joining us, America. We're glad you're with us. Open phones at 888-825-5225. In the lobby of Ramsey Solutions, Julie is with us. Hi, Julie. How are you? I'm good. How are you, Dave?

I am better than I deserve. Where do you live? I live in McKinney, which is just north of Dallas. Yeah? Well, good. And all the way up here to Nashville to do your debt-free screen. Sure am. I love it. How much have you paid off? I have my notes here. I paid off about $48,200. Good for you. And how long did that take? 22 months. Yay.

And your range of income during that time? Started off making $70,000 and ended about making $93,000. Wow, good for you. What do you do for a living? I oversee marketing for a software company and I also started my own company during the process of this. Okay. Good for you. What kind of debt was the $48,000? What'd you buy? Oh, everything. Mainly student loans. I also had a student loan, a car loan. I also had 401k loan and then also had to pay some taxes to the IRS. Okay. So you were like normal. Oh, very normal. Just a little bit of debt of all kinds out there and just kind of bopping along. Yeah.

And making decent money, but got a big pile of debt and kind of feel like a rat in a wheel. Well, I'm a travel junkie. And so whenever I realized I couldn't go on all the trips that I wanted to. Because you were broke. Yeah. And it kind of was horrible to think about being on a trip and not being able to afford things to eat. Yeah. I wanted to. Because you were broke. Yeah. And it kind of, you know, was horrible to think about being on a trip and not being able to afford things to eat. Yeah.

I hear you. And so what happened 22 months ago? I was traveling with my boyfriend at the time, soon to be my husband. And he, the year before, had paid for a trip for both of us to go to Costa Rica, which was great. Yay. So I was going to pay it back and say, hey, you know, I'm going to pay for our trip next year. And then realized I couldn't to pay for our trip next year.

And then realized I couldn't actually afford his airfare. Whoa. So I had to go to him and say, hey, can you purchase your own airfare? So it was kind of that, you know, and then also seeing I made good money and I couldn't do everything I wanted to do. Don't make too much money to be this broke. Exactly. So what'd you do?

I got really serious i actually read the total money makeover um about six years ago and started to to become gazelle intent started to understand some of the teachings but then um the 22 months ago is really whenever it kicked in going this is stupid why am i taking so long to get out of debt? Because I had started and then stopped and then got back into it. So that's whenever I had my lovely Excel spreadsheet. I also used the EveryDollar app. So we started doing all that. And plus, my company started to do SmartDollar at the office. Oh, very cool.

What's your company name? The Beck Group. Okay, great. So they taught SmartDollar, which is going through the whole class as an HR benefit at your company. Yes. Very neat. And so that gave you, about the time you were disgusted and couldn't buy an airline ticket, voila, Smart Dollar appears from the HR team. Yeah, and actually, to circumvent, and I think whenever you go through this process, you start to get really creative. So one of my passions is to travel, so I became a national speaker and had other people pay for my travel.

I was just working the entire time. But I still got to do a lot of my travel while also working on my income and traveling around the country. That's not bad. Yeah. That's not bad at all. I'm a professional eater. I wonder if I could get them to pay me for that.

You'd be surprised at what people pay for. I know. They will. When you get creative, that's exactly right. So the company teaches smart dollar you're going through it you get your income up with all these side gigs you're traveling getting paid you're doing software on the side you're doing your work 90 90 000 job and what is the secret to paying off 48 000 worth of debt in 22 months so i'm a marketer um my one tidbit is don't pay attention to commercials or social media. Whoa. Because that's the second you start to see the restaurants on commercials or

the cool stuff that people are purchasing and showing off on social media, you start to have that, well, I should have what the Joneses have. So don't put as much weight into what you see that all the marketers in the world that were really good at what we do if it's trying to get you to purchase something outside of your means shut off the that device shut off the tv shut off the apps shut off the social media um and do something else with your time absolutely yeah the rachel cruz book love your life not theirs that's what it's all about is don't don't compare your life to other people's highlight reel on facebook yeah yeah very cool good for you. And what did you do?

Did you cut your spending? Did you sell stuff? Did you live on beans and rice? What did you do? So I sold some things. I did a garage sale, and really I wanted to get rid of the clutter in my house. And I actually created a marketing campaign around my garage sale. So I titled it Shopah, shopaholic turned minimalist and I did a full

fledged marketing campaign around it and also created posters to go in my yard. And I had a poster of you with your face on it that said, Dave Ramsey's making me sell my stuff. So, um, that's funny. Did anybody comment on that or they even know who it was? Oh yeah. A lot of people knew who they, uh, who you were. I also had one in there ryan gosling saying hey girl you deserve nice things like this stuff and uh one of the rock pointing towards the house saying i can you smell the good deals and um and i actually had people coming into my yard just because of the signs yeah so um how fun how much did you make on your garage sale almost a thousand dollars yeah there you go ding ding right towards that 48 yeah very good so you you did all kinds of things to increase Wow. So. How fun. How much did you make on your garage sale? Almost $1,000. Yeah, there you go.

Ding, ding. Right towards that 48. Yeah. Very good. So you did all kinds of things to increase your income. I did. Is what you're saying. I did. And then also, so 22, well, so whenever I got out of debt, which was about in May, I

actually sold my house and I moved in with my fiance. So the second I sold my house, I kind of jumped into a temporary baby step seven until I get married next month and then I'll be in baby step six and he will be as well. We're both on the same page. I do want to share this story with you. We talked about before we got engaged what the budget was for a ring and I'd listened to your radio show and you had had this conversation before. And my fiance and I, we both make good salaries but I said hey you know what I'm more comfortable if we spend this amount on a ring he said okay and there's a little bit of debate between us but whenever he proposed I said yes and he thinks I did it the other way but I said

yes and then I asked him if the ring fit within our budget yes does the ring fit in the budget? Yeah. And he said, does the ring fit in the budget? Yes. Yeah, yes. Yeah, you're a little bit too much on the program. That's all I'm saying. Just a little bit, yeah. Well, congratulations. Thank you. Very cool, very cool.

Well, and thank you to your company for leading Smart Dollar. That gave you the tools to do all of this at just exactly the time you needed to do it. Yes. So it was perfect and got rid of the 401k loan, which helped them. Yes. That's very cool. Good. Very good.

Good job. Well done. Well done. We got a copy of Chris Hogan's number one bestseller, Retire Inspired, for you. And that's the next chapter in your story. We want you to be millionaires. Yes. And outrageously generous as you go along.

So very well done. All right, Julie from McKinney, sometimes known as North Dallas, Texas. $48,000 paid off in 22 months, making 70 up to 93. Count it down. Let's hear a debt-free scream. Three, two, one.

I'm debt free! Yes! Love it, love it, love it, love it, love it! Very well done. Very well done. Open phones at 888-825-5225. Don is on Twitter following, at Dave Ramsey. Dave, what are the important things to consider when buying a used car?

Number one, do you have the cash? Otherwise, you shouldn't buy it. Number two, does the total of all the things around your house with wheels on it or engines and it add up to more than half your annual income because things with wheels on them or engines in them drop very very quickly in value and if you have too much tied up and things that are going down in value you can't win with money so you shouldn't have rolling stock or engine things, boats and tractors and sea-dos and lawnmowers and cars and whatever else. With more than half your annual income. Because they all go down in value. And you don't want to have stuff invested, too much invested in things that go down in value.

I want you to get some of those things. I like motors and things that make noise. I'm a boy. But I also don't want to have a zero net worth because of it. So that's the thing. Past that, the things you consider are you're looking for reliability. And depending, you know, the cheaper the car is, the more you just want to buy an ugly car that is reliable. The more you're spending on it, the more you'll spend on actual appearance of the car

and a car that maybe will last a little longer. That's what we're looking for. So just, you know, use some. Think long-term with your car purchases, even if you don't keep the car long-term. This is the Dave Ramsey Show. Thank you for joining us, America. We're glad you're here. Open phones at 888-825-5225. Joseph is on Facebook. What should you do if you owe more on your car than it's actually worth?

Well, Joseph, I always tell people to not own vehicles, that's anything with motors or wheels, that total up to more than half your annual income. Because things with wheels and motors go down in value rapidly. Tractors, lawnmowers, boats, snowmobiles, cars, trucks, cars, trucks. They all go down in value rapidly. As a matter of fact, a brand-new car will lose 60% to 70% of its value in the first four years you own it. A $30,000 car will be worth around $10,000 in just four years. You lose $20,000.

That's just dramatic. So given that, you don't want to own things that are going down in value. You don't want to total up things going down in value more than half your annual income. So that's the first measure is do your cars, all your vehicles, things with boats and motors and wheels, add up to more than half your annual income. If so, then, yeah, you need to sell something. The second thing is can you be debt-free everything but your house in a year? I'm sorry, in two years, within two years. If you can bust it it take an extra job

sell so much stuff the kids think they're next beans and rice rice and beans don't see the inside of a restaurant unless you're working there no vacations bust it and be debt-free scorched earth and be debt-free in less than two years then you would keep your car even if you owe more on it than it's actually worth, because you're going to pay it off, and you're going to clear it, and you're going to own it. It's going to be all through, all done, right? That's where we're going to end up. Now, if you owe more on your car than it's actually worth,

and you can't, it's going to be more than half your annual income, and or you can't pay it off inside of two years. Then you do need to sell it. How do you sell a car that you're upside down on that you owe more on your car than it's worth? In that case, if you need to sell it, you've got to cover the difference. You owe $20,000 on the car. The car is worth $16,000. You can sell it for $16,000, but you've got to have the other $4,000 to put with the $16 the 16 to get the title from the bank in order, when you give the title to the bank, in order to give the title to the new owner.

And so where are you going to get that other $4,000 if you're upside down by $4,000? Well, you would have to, in that case, borrow the $4,000, save the $4,000, or talk the current lender on the car in letting you sign a note for the $4,000 difference. That will only happen if you had like a credit union or a local bank. It won't happen with a big bank or a car loan company. General Motors credit is not going to do that. Lexus Motor credit is not going to do that, and so on. So that's what you do. Hope that helps.

Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. John is with us in Detroit. Hey, John, how are you? Good, Dave. How are you? Better than I deserve.

What's up? Well, thank you for taking my call. It's an honor to speak to you. My wife and I are avid planners, and we are planning our next move here in the next two years. I'm 49 and she's 46. We don't have kids, and we're thinking about moving to the Las Vegas area over the next two to possibly three years. We've got a plan beforehand. My question to you is we're looking at, because we do a lot of traveling ourselves, and so we're not sure if looking at a condo or an actual having a home would be a good idea. What's your opinion on condos um because we are planning

on whatever we purchase we're planning on paying it up front so that we you know have no mortgage that's good okay so my opinion on them regarding what value increases or what well uh you know association fees and that sort of thing because let let's say we buy a condo. Let's say we buy a condo for $300,000. Monthly dues are probably $1,000 or something like that. Is it a waste of money to go into a condo versus a home? We're just not sure what the right financial direction would be. No, it's not a waste of money. The benefits are, as you said, you don't have to deal with the exterior maintenance when

you're traveling. You've got neighbors that are close, and if something occurs, obviously you could have the next-door neighbor or the person near you have a key and that kind of a thing. There's a lot of possible good things about owning a condo. As far as a condominium increasing in value, everything that controls the value increasing on real estate, there's three things, location, location, and location, right? Right.

And so is it a condominium in a good area, meaning an area that's stable, growing, that values are increasing, a good neighborhood, a neighborhood that people consider a desirable place to live? Right. And so I want to buy a condominium in a fairly established area or an area that is right on the edge of a rapidly growing edge of an established area, that kind of a thing, from a resale standpoint. And if you do that, you're going to get similar growth in value to what you would in a single family in that same neighborhood. Single families do a little bit better.

There's a little bit more market for them than there is condos. But, you know, if you're in an area that's accepting of condominiums, you'd be fine, and Vegas would be fine with that. Now, having said all of that, then the only downside is what you mentioned earlier, and that is the HOA and the handling of the budget of the HOA. So I would want to investigate, because you are a planner, the budget and how they're doing with the HOA budgeting. Let me give you an example. I had a condo, I owned a rental many years ago in a condo complex that they had budgeted no reserves to replace the roof.

Okay. Now, the Condominium Association is responsible for the exterior maintenance, which would include the roof replacement. So they come up with a several million dollar problem because the roofs are going bad. Right. And they've done no planning to get rid of it. So guess what they did? They special assessed everybody in the place, in addition to their HOA fees to keep, because they had to have roofs, stinking things, Lincoln all over the place. Exactly.

But that devalued the condo and took cash out of everybody's pockets. Okay. And so if you look up and they've got no reserves for parking lot replacement, no reserves for exterior maintenance, no reserves for roof replacement in their budget, and you're looking at a complex that's 10 years old you got a problem you're walking into and so that is the thing you want to look at there the deferred maintenance is hidden down in that hoa reserves budget the second thing you're going to run into is uh and i'm in a bunch of hoas i own a bunch of real estate i I hate HOAs.

Right. Generally speaking, the people that want to be on charge of the HOA are the people that are in charge of nothing else anywhere else, and they're Barney Fife's. They will drive you freaking nuts. Absolutely. And they're people that need a life. Now, there's exceptions to that, but by and large,

you're going to run into a lot of that. Yeah, we currently live in a homeowners association right now, and I'm the president of the association. Uh-oh! Specifically, I say that. Are you one of those? No, I say that specifically because I didn't want to run into a binary fight kind of situation. So I'm a very fair guy. Okay. All right.

Oh, God. I understand what you're saying. Yeah, there's a lot of that. It's not 100% true. Thank goodness. Hopefully you're not one. No, no, no, no. Not at all.

But that's what you want to watch for is the politics of the association. I'm in one HOA that they're all suing each other. And it's just gone. The whole neighborhood's just melting down. You know, it's just ridiculous. So you just, you got to, that's what you could get into. If you're the president of the association, you already knew all the stuff I was just talking about then. As far as even reserves in a homeowner situation.

There's things there that you've got to have reserves and capital reserves to cover. So that's all you've got to look for. That's fabulous. This is The Dave Ramsey Show. Hey guys, this is James Childs, producer of The Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show.