The Ramsey Show - App - How Much House Can We Really Afford? (Hour 1)

Episode Date: February 3, 2022

Home Selling, Debt, Home Buying, Education, Career, Relationships As heard on this episode: Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/3rZTUAx Tools to get you started:  Debt Calculator: https://bit.ly/2Q64HME Insurance Coverage Checkup: https://bit.ly/3sXwUn5 Complete Guide to Budgeting: https://bit.ly/3utmVXi Check out more Ramsey Network podcasts: https://bit.ly/3fHhbVE

🎵 Live from the headquarters of Ramsey Solutions in Nashville, Tennessee, this is The Ramsey Show, where we take calls about your life, your money, your relationships, your mental health, whatever's going on in your life. Let us know. We're here to walk alongside you. 888-825-5225. I'm John Deloney, joined by my good friend George Campbell, and we're ready to talk about anything, all of it. Give us a shout. 888-825-5225. Let's go to James in Indianapolis. Hey, James, what's going on?

Hey. Thanks for taking my call. I'm first time, and I'm just starting. I'm on step two, just did my first budget, but I'm realizing I have $70,000 in debt, and I have a house that I don't use that has $70,000 in equity. I'm a truck driver. I live in my truck every day. Should I sell the house to pay my debt?

First, I just want to congratulate you, man. How'd you find us? A friend recommended me to Dave Ramsey Plus. Very cool. Well, welcome to our crazy gang. You're going to change your life, and we're honored to walk alongside you as you solve for freedom here. I like that. This is an interesting scenario here. So you live in your truck, and you're saying, I have my primary residence, but I'm never there. Never.

In the last year and a half, I've slept there twice, and I didn't even want to do it then. I don't like the house. Oh, you don't even like the house? No. Okay. Is there a scenario where you would need a place to crash if you couldn't sleep in the truck? George, don't say crash to a truck driver. Sorry. Is there a scenario where you would need a place to crash if you couldn't sleep in the truck?

George, don't say crash to a truck driver. Sorry. You're right. Is there a place you'd need to sleep? Okay. I just found it. There you go. It took him a second.

I'm in a hotel with me being my parents have an extra bed. I'm not worried about it. I love sleeping in the truck, and my company will give me another truck if there's a problem with mine. Cool. Okay. Well, I'm not mad about this scenario. It sounds like you want to go all in. You're willing to do whatever it takes to climb out of the 70,000 in debt. What kind of debt is the 70,000? There's about 20,000 IRS, 34,000 student loans, and I owe my parents about 10,000 and a couple other smaller bills. Okay. I want you to put the IRS debt at the very top of that debt snowball and attack that one

first. Does that sound good? You cannot get rid of those guys. You don't want them after you. And then you're going to list the debts from smallest to largest beyond that and attack the next one. And it sounds like you can do this in one fell swoop if you sell the house. Correct? Okay. James, I'm in. If I'm you, I'm doing this. If I'm you, I'm going all in on being a nomad and I'd sell my house and I'd be debt free. Now you have a thousand dollar emergency fund right now? Yes. Okay, cool. So have you done the math on closing costs and all of that? And you're saying I will get about 70 grand out of the whole deal if I sell? No, this thought just occurred to me today, and I know I owe $35,000 on the house,

but it's worth about $108,000. Okay, cool. Okay. I mean, I'd be working with a realtor right now. If you don't have one, I would go to RamseySolutions.com. You can connect with one of our ELPs, endorsed local providers, in the Indianapolis area who can walk with you through this process and make sure that you get the most bang for your buck, especially in this market. But, man, I love the heart behind this. James, you make one call for free, and you're debt-free, man.

That's amazing. And get that emergency fund fully funded as soon as you're out of that debt, and you're going to be sleeping very soundly in that truck from then on and not crashing in the truck no crash i'm sorry john i'm not thinking oh my gosh you just put some bad mojo out there let's go to aubrey in new york city what's going on aubrey how's it going um excellent everything good good good how are you all right so uh i guess my question is um i'm a new watcher of the show and stuff like that. I've discovered you guys on YouTube pretty recently. Welcome to the gang, man. Our YouTube guys love to hear it. Yeah, it's awesome. So I guess the reason why I'm calling is the last couple, I guess in May, I graduated college.

I've been working since September in a full-time job and making $37,000 a year, which in New York is pretty much the minimum wage here. Obviously, things here are very expensive, and it's tough to be here. But recently, my grandmother passed away, and she essentially left me $200,000. And, I mean, I don't know the first thing about what to do as far as moving forward. I'm 25 years old. I was living at home with, I guess, with her up until now, just trying to help out in any way I can. And now that I'm, you know, getting this money, I don't really know whether I should, you know, what I should do.

I mean, you know, obviously living and buying real estate here is really expensive. Yeah. And I'm making so little that even to keep up with payments for, like, any type of mortgage or maintenance and stuff like that will be relatively difficult. Aubrey, what do you do for a living, man? I'm a, basically, I work in ad sales. I'm an account executive. In sales uh in advertising advertising okay all right um other than texans who are incredibly obnoxious um and i'm one of them so i'm just saying is my friends from new york are really intense on this is i don't care it's a million dollars a square foot.

Don't care. This is where I live. What is it about New York that is worth scraping by like you're doing financially? And here's what I'm asking. You've got a $200,000 gift. And by the way, I'm heartbroken over your grandmother's passing.

I'm so sorry to hear that, but she left you a gift. What is it about New York that keeps you there? Could you go get a job as an ad exec in a city that is infinitely less expensive and really set yourself up financially with community, friends,

that you could start somewhere else? I actually work remotely, so I don't even benefit from it. Oh, you can go anywhere. I can live anywhere in the country are you open to going somewhere else i i am but honestly um i really i've never even gone on a vacation from here i've i've been in new york my whole life and um i don't really know much else i mean i've the only place i've visited other than new york in the last 10 years out of state is florida

so i'm kind of, I am not opposed to leaving just because of, I mean, look, you know, living here, I mean, the money doesn't really count too much here. Like it's, it just feels like even if I use the money to buy a place here, the, the, the maintenance of living here is as I'll still be living relatively paycheck to paycheck. My ability to save will be still negligible. Right. Well, man, I know that's scary. If I'm you, I would take a little bit of that money and go somewhere, go look around a little bit.

But I think this is one of those watershed moments. You're 25. You've been caretaken for somebody that you loved, and they passed away. They left you this incredible gift, and you're being very wise about saying, what's the best way I can steward this gift? Is it to rent a one bedroom apartment for 18 months in New York? Or is it to buy a five bedroom home in Kansas? Or is it to,

right? So you can live wherever you want. And sometimes it sounds ridiculous if you're in the opposite situation, but sometimes endless options is paralyzing too, right? And so here's what i want you to do man i want you to get with a trusted friend i want you to get with a mentor who's a little bit ahead of you on the journey and sit down and say i've got an opportunity to get out of here and go build a life where it's not so expensive where i can build friends and community will you walk alongside me and make sure I don't do anything dumb with this money? And right now I just park that money and you can drop it in an index fund.

You can put it in a high yield savings account for a little bit until you have a next plan. But man, I want you to start thinking about getting out of there and using this money to maximize it as far as it will go. We'll be right back. People all over the country are discovering a faith-based and budget-friendly way of meeting health care healthcare costs through Christian Healthcare Ministries. Christian Healthcare Ministries, or CHM, is a nonprofit organization that helps members carry one another's burdens with healthcare expenses, and they have successfully shared each other's medical bills for nearly 40 years. See if CHM is right for you by visiting chministries.org. CHM is a proud sponsor of Dave Ramsey Live Events.

888-825-5225. I'm John Deloney, joined here by George Campbell, and we are taking your calls on relationships and money and life. Give us a shout. 888-825-5225. Let's go to Nathan in Florida. Hey, Nathan, what's up? Oh,

hey, guys. How's it going? Outstanding, brother. How are you? I'm doing all right. Very cool. What's up? Well, I'm coming up on the weekend, and I'm thinking real hard about I'm on baby step two and doing pretty good on my budget. I had a few curveballs last month. I'm just crunching numbers, and it's just I'm not making the kind of headway that I'd like to make.

I've got a little bit of a predicament here. I fixed a vehicle that was previously broke down and sitting in my yard forever. So now I have two vehicles at work, one that has 260,000 miles on and one that's got 60,000 miles. And the one that has 60,000 miles on it is half my debt. I'm $40,000 in debt, and that car is $20,000. What kind of car is it? So it's a Ford Focus. Sell it yesterday.

What's it worth? Sell it. If you sold it today, what would it be? It's $10 Focus. Sell it yesterday. What's it worth? Sell it. If you sold it today, what would it be? It's $10,000, right? Well, I'm not sure. I was going to take a drive down to a local dealer and see what they would give me for it. I hadn't really poked around too much on what I could sell it for, but like I said, I owe $20,000 on it. And I have two origin vehicles.

The only hang-up is – okay, go ahead. I was just wondering if – you're saying it'll be definitely worth less than $20,000 if you sell it today? I thought you had $20,000 in debt total. He's got $40,000 total. $20,000 is on the car. Okay, all right. So I'm wondering, could you sell this thing for $20,000 or more?

Well, that I'm not sure of. I know the way that the car market is right now, that everything's just inflated on cars, and that's one of the reasons why I'm kind of considering it, especially since I have a working vehicle on the side already. But the only hang-up I have is it's a great time to sell a vehicle. It's not a great time to buy. You don't need another vehicle right now. You've got one, right?

You've got that beater, right? Yeah, but that's what I'm saying is it is a beater of beaters. It's got 260,000 miles on it. What kind of car is it? It's a Ford F-250 with four-wheel drive. All right. The goal here is not, the goal, I want you limping along here, right? Okay.

And if you tell me that this thing is safe and can get you from A to B, you're not going to get any dates out of this thing, and you're going to have to duck your head when you enter into a grocery store parking lot. That's part of the deal, man. Could you drive it 10,000 more miles without it exploding? Well, I'm pretty confident on without it exploding. I mean, it's got dry rot sitting on the tires. Well, get some tires.

Don't drive on rotten tires, right? But I don't want you to overthink this. I want you to be uncomfortable. You are running for your life here, brother. Right. You're not driving a death trap, but you're running for your life. Right.

Well, I mean, I guess what I'm getting at is it's not the greatest on gas, unlike this little four-cylinder car. And what I'm thinking is another possibility is sell both the vehicles and whatever money I can get out of the truck, go get me a little gas-efficient car. Or do you think I should just, maybe I'm overthinking it and just run with it?

Dude, just rock that truck until the wheels fall off. And do it safely, of course. But you're not scared to fix a car, so that's good news, but that clears half your debt. I'm not worried about fuel efficiency. I'm worried about debt payoff efficiency. What's your payment every month on the little car? $321.

So you would free that up, and you'd have that every month back in your life to attack the other debt. What's the other debt, the other $20K? The other $20K is a mixture of personal loans and credit cards. So we're going to list those smallest to largest at that point, and we're going to attack them with a vengeance. And every payment you free up is going to move this process along faster and faster. What's your income? My income is sitting at just under $50,000 a year.

Take home. I'm sorry. That's the take home. Take home $50,000. Great. This is great news. You're bringing over $4,000 a month, and we're going to tighten up that budget as far as we can take it to free up as much of the money to attack the rest of those debts. And every time you get in that truck, I want you to say, I hate you.

I'll never borrow money again. I hate you. Give it a name. Yes, give it a name. And put all that angst and energy. I'm going to get rid of you. I'm going to save up some emergency fund. I'm going to get me another car.

John hates your truck more than you do, man. I'm hating it for you. And by the way, when you do your research, don't just go to a local dealership. I want you to check Vroom, Carvana, all of those sites. Check what it would get on private and Facebook marketplace. Do your due diligence to get the most you can for this car. And you are

in a beautiful spot because you've got two cars. And so list it on a private sale and see what you can get for it. Give it a week. Give it a couple of days to see what can happen. I've heard crazy stories about Carvana just paying way over

what they could even get. Really? So that's what I'm just saying. Just check them all out. It'll take you five minutes to go on those sites and plug in some numbers and they'll go,

hey, we'll give you 22 grand today and we'll come pick it up. But a gas, conscientious car with 60,000 miles, that will do well. Sure. It'll do well. Good for you,

brother. All right. Let's go to Tyler in, uh, where's Tyler at Birmingham, Alabama. What's up, Tyler? Hey guys, how are you doing today? Good. How are you brother? I'm doing well. So I am a 23 year old second year medical student. Uh, my wife works full time. She's been working full time since we got married at 19, and I worked as an EMT full-time plus throughout undergrad. Our goal has always been to get through medical school debt-free, and during undergrad, we were able to save about $60,000, which we have since spent on my first four semesters of medical school. Additionally, my parents set me up a student account for undergrad that thankfully I didn't have to use because I got a full-ride scholarship to undergrad.

Wow. And it has grown to about $45,000, which would cover my next three semesters. We haven't had to dip into it yet. We're down. We've spent most of that savings. We're down to about $6 it yet. Um, we're down, we spent most of that savings. We're down to about $6,000, which is essentially a three month emergency fund for us. Um, and basically, so we're lined up to pay for my next three semesters and we're trying to figure out how we're going to pay for the last semester of medical school. Cool. And you have three

semesters to figure it out, right? Right. And we're trying to save as much as we can. With our monthly cash flow, we're able to save, in not a ton, maybe $100 or $200 a month. To give you an idea about some of the other things financially for us, our primary residence we own, the mortgage has a balance of around $100,000, and it's worth around $190,000. We paid some on that throughout and have renovated it to be able to get that equity up. And we also have around $30,000 in our Roth IRAs between the two of us. And that's kind of a total view for us. And we're trying to figure out if there's anything we can do

that we're not doing already to try to pay for that last semester of medical school. Your new goal is to cash flow and invest in yourself, which means, this is hard to hear, we're not going to do any investing right now. We're going to pause that. If you're getting a refund, we're going to change your withholdings because that's going to give you a raise in your budget every month. We are going to be dead set on cash flowing this med school. And then that's it. That's all we're focusing on right now. And when you graduate, you guys are so young and you're already doing great. But right now you got to focus on cash flowing this thing and you only have a hundred bucks of margin to do it, which is going to be really tough.

And I'm going to tell you something crazy. And George, you can tell me this is a terrible idea um i would at at you say you're 23 right 23 23 the chances of you getting through med school and then getting placed somewhere else are quite high right um it's going to depend i'm going to attempt to mark to match at my home university but there is a chance right so there's a chance I would strongly consider sitting down with my wife and saying, is this a moment where we sell this house? It actually earned us $90,000 in equity. We're going to get through school debt-free. We're going to get matched

and we're going to get a cool apartment in whatever city we get matched in to finish up our residency. And then you're going to be done with med school. You're going to owe nobody anything. And then you can get the house of your dreams because all of your money will be yours. That's not a terrible idea, John. You're right.

Really? I like it. Usually my ideas are terrible. Thanks, George. We'll be right back. This is the Ramsey Show, 888-825-5225. And it is resolution season. And if you're like most people, you make resolutions on New Year's Day, and you give up on them by Valentine's Day.

Have you already quit yours, George? That's a personal attack, John. Not going to answer that. Yes. You're not near as bulked up as you said you were going to be, but that's cool. Why do you fail, George? Because you're trying to figure it out on your own. So if you've decided to take control of

your money this year, don't do it by yourself. Get the support and accountability you need by joining a Financial Peace University class. You'll go through our proven money plan with other people who will help you stay motivated because they're trying to get out of debt and build wealth just like you. Right now there are hundreds of FPU classes getting started, both in person and online on the internets. So forget the lame resolutions, George. Make 2022 the year you take control of your money and don't do it alone. Find an FPU class and get started for free at ramsaysolutions.com slash FPU. That's ramsaysolutions.com slash FPU. Let's go to Jackie in Honolulu. Hey, Jackie, what's going on? Hi. How are y'all doing? Remarkable. How are you? Great. So my scenario is my husband and I are on baby steps, born six, no kids.

Congratulations. He gets out of the Navy. Thank you. He gets out of the Navy the end of this month. I work as a real estate agent, so the pay is not often, or it's only when I close. And so far, that's been about every other month since last September. And so we're planning that we're going to be living out of our emergency fund, but we're kind of wondering should we get part-time jobs to supplement this time.

My husband's in a program right now to learn Java software development, and it won't be done until the end of May. So that's about when he could actually conceivably start getting a full-time job again. So I'm going to let George hop in on this. I want a quick question. Across the United States, the real estate agents that I know have had better the last 24 months, better than they've ever had in their life, sometimes two and three times as much. Has it been different in Hawaii? Has it really been shut down? It's not been different in Hawaii, but I just started the previous August,

and it's a hard market here to get into. There you go. Okay. All right. So you're just getting your feet underneath you. Yes. Very cool. Okay. Yeah, I mean, if you're willing to do a part-time job or two or three right now, that's what I'm doing until I can pick up some of this real estate stuff and your husband gets through the program. Is this program full-time? He's not able to pick up a side job as well? It's not full-time. He's planning on doing Lyft, seeing how that works out,

doing, I think it's Lyft or Uber. He can only do one of them until he gets the Hawaii driver's license. So he's going to be trying to do one of those in the morning and then possibly in the evening some night. Very cool. Sure. And he can also look into a lot of the delivery apps like Instacart and Shipt, and sometimes people can make even more money on those. And there's no one in your vehicle ever, which is kind of nice. So he can also look into a lot of those different apps. And you can make $20, $30 an hour. I use Instacart and Shipt all the time. Big fans of it. And you can make some great money just in tips.

And you both can do that. I think, yes. I actually mentioned to him getting a part-time job, and he's iffy on me getting a part-time job because that takes away from my ability to generate clients so that we can actually make some more money it's a push-pull just nervous yeah i think it's gonna be nervous but i'm not a huge fan of y'all in like making a plan to live out of your emergency fund because then it's not an emergency fund anymore if you expect it it's not unexpected right and so i would much rather see y'all scratch and claw and And you're right. Maybe you're out delivering things and you're handing cards to every person you see and you

can use it. I don't know if that's even allowed to do that, but what's ways you can double dip and figure it out. But I do get there's a tension when you're trying to build a new business. You want to go all in and not split your attention, but you also got to eat. But it's one of the most flexible things as well. You can just turn the app off. If you've got a sudden real estate appointment, you know, you kind of know your schedule. It's a little more flexible with real estate. So I would try to plan around it to go, you know, I'm not in an office 40 hours a week. So I can plan to go, hey, I'm going to devote four hours to delivering some food right now from the grocery stores and make an extra hundred bucks. And if you get a call on the way, you can talk to the, yeah,

you can get it. Yeah. All right, let's go to Danielle in Redding, Pennsylvania. Hey, Danielle, what's up? Hi there. How are you? Well, I'm a little stressed at the moment, so I'm calling to get some advice. All right. My adult daughter and her two children are living in my house and she has always had a tendency to do things impulsively and there's been

a shortage of maturity. I will also add to some issues that we've had and recently she has now started a new relationship and I've seen some things that I don't like in her. And I feel like I want her to move out of my house. But I don't want it to be, you've got to get out. I need maybe some guidance on how to work this out because I want her to get out of my house. I just want to tell you, thank you for your spirit and thank you for loving your baby girl. And also, this is hard,

but thank you for having boundaries. And all of those feel like they're in tension with one another and they are, but they're not all mutually exclusive. So you're heading into some choppy waters, but they're the right waters and so good for you. So why did she come move into your house? She, this is one of the impulse things, she went and kind of eloped, let's say,

with someone she had been seeing for a short time. I'm going to say about two years or two and a half years into it, he up and left and left her with her daughter and their one-year-old at the time. And she wasn't generating enough income. And I would never let my loved ones just live in the street. So certainly come home. And I didn't feel like, you know, you have three months, you have six months and she hadn't been making money, but I will take the responsibility and say I think that I have let it drag on too long. There you go. Because I've seen her not become more responsible and be taking steps to move out. She's quite comfortable. And now I feel like you're not just comfortable, but you're taking things for granted. You're enabling the behavior now.

There you go. So here's what I want you to do. I want you to write her a letter. And I want you to go by yourself. And it may take a couple hours. It may take a couple of days. It may take five drafts, one draft. I don't, I don't, I don't care, but just get it right. And I want you to have a couple

of parts in this letter. The first one is I want you to tell her how important she is to you, how much you love her, the things that you see in her life that you are proud of her about. I want you to let her know that. And it's important that you write this down and I'll tell you why. But then I want you to talk about, here's how I've loved you, stepped in the gap. And here's the next way I'm going to love you, which is I'm going to walk alongside you as you leave the nest. And I want you to take her out somewhere. We joke here at the office, I'm always telling people to go to breakfast. Our friend Anthony liked to have these conversations at dinner. I think better in the morning. so I like breakfast. But I want you to take her somewhere, and it may not even be in a restaurant. It may be in a private place.

But I want you to read her this letter and then hand it to her. And here's why. When people are in this situation, as soon as they start to get a hint that I'm going to be homeless or less specific, I'm getting abandoned again. I'm getting left again. Their brain shifts. Their critical thinking literally goes offline and their fight or flight takes over. And so they start hearing things that are not always real. When you write it down and hand it to them, she can reread it and reread it and reread it and then eventually get to the, okay, my mom, even if I don't agree with it,

in my mom's heart, she loves me and she's trying to walk alongside me. I want you to stay on the line. I'm going to give you a copy of Total Money Makeover by Dave and I want you to give that to her as a gift. I want you to help her make a budget. I want you to give her a ramp. Say, in three months, I'm going to go with you to look at apartments. I'm going to go with you to look at rental home, whatever that looks like. I'm going to help you with your job. I'm going to walk alongside you, but at this deadline is when we're moving out. Man, she's lucky to have you. Thanks for loving her. Thanks for caring about her, and thanks for doing this the right way. We'll be right back. 888-825-5225. This is the Ramsey Show.

Let's go out to Linda in New York City. Hey, Linda, what's going on? Hi, thank you so much for taking my call today. Of course. How's it going? I have a question. So my husband and I have been doing our best to be financially free, be at peace with our finances. We're at a step where we're looking to purchase a property.

In New York City, in the neighborhood we live in, most of the properties are around a million, if not more. So just getting into debt for $800,000 on a mortgage really scares us. So do you have any advice on how to proceed? Well, it should scare you because that is a lot of money. It's $800,000. It's the biggest financial decision you will ever make in your life. So you have a healthy level of fear, but let's talk through the numbers and see where you guys are at.

So you're out of debt and you have a fully funded emergency fund? Yes, we have around $53,000 in an emergency fund. Okay. Is that more than you need in the emergency fund, or is that appropriate for three to six months of expenses? I think that would be a year where we try to be as conservative as possible. Okay. Well, how much do you have for a down payment? So far, we have around $130,000. By the end of the year, we can add in another $100,000.

So around $230,000, $240,000. Okay. What's your household income? Around $300,000. Okay. That's some good news there. What do you all do for a living? My husband is in finance, and I've recently started also in finance. Very cool. So is your take-home pay around, let's say, $200,000?

Um, yeah, that would be fair. Okay. So that means you're taking home around $16,000, $17,000 a month. And so with our parameters, what we want you to do is to put down 10% to 20%. At least 20% would help you avoid PMI, which is that private mortgage insurance, which on that massive loan would be hundreds and hundreds of dollars a month that you throw away to the lender to protect them and not you. So let's say you could put 20% down. And then let's say you did a 15 year fixed rate mortgage, which is the only mortgage we would ever recommend.

And then let's say you wanted to do with our parameters and have that be less than 25% of your take-home pay, right? So based on my math, you're looking at, let's say, 4,200 bucks for your mortgage payment. And so what I like to do is not look at, can we afford an $800,000 mortgage? I want you to say, if we can afford $4,200 a month on a 15-year fixed rate mortgage with this much down, how much house does that let us afford? And right now, you might be able to buy a $600,000 house, let's say, which means we've got to be more patient. We've got to save up another $100,000. It may be another year. So what I like to do is use the Ramsey Solutions Mortgage Calculator.

You can find that on our website, RamseySolutions.com. Click on Free Tools and start to play around with that. And don't let it make you live in fear, but let it give you freedom to start dreaming about what that next step is. And if that next step is, hey, I think we're going to be ready a year from now, that's great. Or if the step is, all right, we can afford a tiny condo. Is that something that we're going to be happy with? Are we going to sit here with regret and still have $700,000 in debt? Then I'm going to pause and go, all right, yes, renting is the worst. And yes, it feels like we're throwing money away.

But what if you saw it as buying yourself patience and you saw it as we're going to get one step closer to our vision by renting for another year? That's a very different picture to paint. Do you feel that? It is kind of scary because most of the houses in the neighborhood are not even beautiful. I mean, most of them are very, they would need renovation as well, even at a million. Oh, yeah. Are you locked into this neighborhood? If I, in terms of our work, we are because we want to be close to the city.

If we go more deep, you know, farther away from the city, we might get something for around $800,000, or maybe $700,000, but we're still at, like, for $200,000, you know, or missing out on the neighborhood that we want to be in. Sure. And you're definitely wanting to stay in New York City proper? Given our work situation, our career aspirations yes so there's a hard it depends on how you look at it

but I hear this a lot I know George I know you do too there is a hard reality when you look at your income whether it's $300,000 or it's $30,000 and I really had my heart set on this neighborhood it would be this level of convenience

for us. It would provide this many opportunities. I found the same problem here in Nashville when I moved here. It was three, sometimes four times more expensive than where I moved from. And I wanted to be in this community and ultimately it couldn't happen. I either was going to have to concede on 15 more minutes or 20 more minutes or 30 more minutes in a commute or I was going to have to do what you're doing, which is really fret over spending more money than I'm comfortable spending,

way over leveraging myself for a house I don't even like. It's not even, it has no, I don't like it. I don't like like. It's not even, it has no, I don't like it. I don't like living in it. And so anytime, whether you're a single or in a marriage relationship, George, when you box yourself in to a decision, that's when you end up making a decision that's not a wise one. When you say it's either this or it's either that, you end up going, okay, we have to,

and you don't, right? Well, then the next call becomes, hey, we have $800,000 in mortgage debt and we are scared out of our minds. Or we both work in finance, one of the most volatile industries. And I just read some news today that some of the big financial players are scheduling some layoffs this year, right? It's a messy time. One thing I always tell folks is trust your gut. And if you're about to take on a mortgage that feels gnarly, trust your gut. Listen to that. And I'll also say this. I grew up with not a lot.

My wife grew up with not a lot. We didn't have a lot. And Dave has been a helpful coach. It's pretty cool that I get to have him as a personal coach on some of this stuff. But there is a scale to this, right? And so if you are making $300,000 and you've never made that kind of money before, a $500,000 loan feels incredible. And you got to rest assured that if your job is secure and your income is safe and you're not making dumb purchases, that you are going to be okay, right? And it's just, you've got to balance the, it's a ratios question.

So let's look at the reality for a second, Linda. I did some math for you on our mortgage calculator. If you put down $230,000 on a million dollar home, you are looking at a $6,400 a month payment. Not including escrow and insurance. Not including all the closing costs and all the things that come along with home ownership. The joys, especially in a crappy million-dollar place where you have to fix everything constantly because it's New York City.

You've got community taxes and city taxes. You're looking at 40% of your take-home pay being eaten up by this mortgage while you're trying to do the other baby steps, while you're trying to live your life, be a homeowner, fix all the things. And so here's what this new picture looks like. You would have to put down 550 grand to have that mortgage payment be reasonable and give you financial peace. And you go, 550 grand? Let me remind you, you make $300,000 and you just told me you can save at least 100 grand a year. So what

this now looks like is, man, three years from now, we're going to have a home that we love. We're not going to be rushed into it. It's going to give us financial peace. We can afford the payment easily. I'm breathing easier just thinking about it. So that's the picture. And you live in New York City, which means you got to buy yourself a lot more patience than if you live in a small town in Iowa. Right. And George, you're a good picture of this for folks because you worked at a fancy place. You got a big fancy job. Yet you and your wife said, we're going to start with a condo and we're going to pay this thing off. And when we get there and we can breathe, then we're going to say, okay, what is the fantasy?

What's the myth? What's the thing, right? What's the dream? Walk people through your psychology there because that's hard. It's hard. Well, the problem is if you go to the bank and say, hey, we'd love to buy a house, how much money will you give me? They will give you an astronomical number and you you go, oh, my gosh, we're rich.

The bank is willing to loan us $800,000. They're our friends. They're our friends. Look how nice they are. No. I want you to look at your budget, your bank account. That should be your advisor. How did you rein it in?

Just look in the mirror. We pre-decided. It's amazing when you pre-decide. We pre-decided, hey, we're going to put down as much as possible and we're going to pay it as quickly as possible. And we want to do it in less than four years because anything more than that feels like too long of a journey for us to pay this thing off with a little bit of intensity.

So that's what we did. And so we let that dictate the house that we bought. It's kind of like deciding before you go out to your friend's house, like I will only have one drink or I will not look at the dessert table. You've got to pre-plan. If I wait until I look at the dessert table, I'll she-rope. You know what I mean? Nailed it.

Hey, appreciate you, George Camel. Thanks for the guys in the booth, Kelly, Ben, James, even Zach. Hey, hope you're having a great day. Be kind to one another. We'll see you soon on The Ramsey Show. Have a friend or family member that needs a daily dose of Ramsey advice in their life? Let them know about the Ramsey Call of the Day podcast. It's a quick hit of advice about life and money in under 10 minutes. Check out the Ramsey Call of the Day podcast wherever you listen to podcasts.