The Ramsey Show - App - Should I Use My 401(k) To Buy a House? (Hour 3)

Episode Date: August 24, 2021

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Welcome to the Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the 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, Dr. John Deloney. Ramsey Personality is my co-host today. Open phones at 888-825-5225 as we talk about your relationships. We talk about your mental health. We talk about your money.

We talk about your life. And we're going to do it all right in front of you. 888-825-5225. Chris is in Boise, Idaho. Hi, Chris. Welcome to the Ramsey Show. Thank you. How are you guys doing?

Better than I deserve. What's up? So we just recently moved up to Boise, Idaho, and we're looking to buy a house. The market up here is crazy as far as people just trying to get into a place. So recently we found a place, we put an offer on it, and we've been offered the possibility of passing on an appraisal. And so I just wanted to get your opinion on what that would look like, if that's a good idea, if it's not a good idea, as far as just knowing, hey, this is where it should be based on what an appraiser is saying. So just wanted to get your two cents on it.

Okay. opinion of value by a professional, hypothetically, that knows how to establish a logical opinion of value. The way a residential appraisal is done is they find the three closest comparable sales, closest in geography, closest in closing date, meaning they didn't close three years ago, they closed three months ago, three days ago, closest in attributes, meaning you don't compare a 10,000-square-foot house with a 5,000-square-foot house. You compare similar things. So the closest comparables are comparables, all right? And then you adjust for the differences. And so how many square feet is the house that you're buying? It is 2,200 square feet.

Okay. And so if the other house was 2,300 square feet, they would adjust by multiplying the per square foot dollars by 100 and adjust that price to use it to establish your price. You follow me how you do the adjustment? Yeah. Okay. If your house has a pool and that one doesn't, they will do a plus or minus adjustment from

the other property that they're comparing it to. And then they take those three properties adjusted to make them look like yours, and an average of those three adjusted properties, comparable sales, is how the appraisal is established. So it's a fairly easy process. It's basically sixth grade math with some basic application to it that uses some common sense. Now, so typically if you've been out looking, did you buy the house through a real estate agent? Yes. Okay, so the real estate agent can pull you the three best comparables out of the multiple listing service that the appraiser is likely going to use.

And what he's saying is because of the location here in the area, you kind of have a mix of properties. You have, you know, your track home situations, and you have larger lots. This particular piece of property that we're buying, it's like two acres. Then that's an adjustment to the comparable. Right. If you're comparing it to a track house, if you compare it to a track house that was cheaper, we would give you add-on to that track house price that sold two weeks ago because you've got two acres and he has a half acre, right?

That makes sense. But if you – They're saying there's no comps in the area. There's what? They're saying there's no comps in the area within – because it's outside of Boise. So within – from what I've understood, those comps are supposed to come within a certain mileage, I guess, of – Yeah, how far out are you outside of Boise? I would say we're probably 15 miles.

Oh. I mean, you can still get a good feel for what this is. Okay. If the real estate agent cannot pull something that gives you an indication of what the value is, you need a new real estate agent. That's right. That's somebody trying to sell you something. There's nothing that's comparable.

Oh, horse crap. They can give you the idea and show you the houses. I mean, it might be too far away to be an ideal comp, but at least give you an indication of values. I mean, I can pull square footage averages across the whole freaking city of Boise and use that as a comp and multiply that by a comp and multiply that by 2200 right and i'm not going to be that's going to tell me if i'm way off i mean do you feel like the information you have about the area that you're off or you just feel completely ignorant and vulnerable no i just want to make sure we're not you know we're not over we're not overbuying. And an appraiser can't tell you that.

Okay. Okay. Well, that's good to know. Because all they're going to try to do is what I just established. And so what I don't want you to do is pay $800,000 for a property that comps out of $500,000. Right. And that's my concern. But, again, what we've seen in the area that's

not the case okay it's got acreage that's anywhere near this it still seems on the high side but it's also it's a the house was built in in 19 so it's a fairly new house as well so we're trying to take that into consideration and i think that's what he's getting at is there's not going to be any exact comparables because – Yeah, but he needs to give you the three best ones he can get his hands on. Okay. And then explain to you what the differences are. Right.

And let me put it this way. I bought my house in Nashville, I guess, a year ago now. Nashville's been one of the hottest markets in the planet. And my realtor, she's amazing amazing her name's amanda she's an elp here several times she said we're walking away from this because this is not a good deal for you and she only got paid when i bought a house that was a realtor who was giving me information not that was in her best interest but that was in her client's best interest. Does that make sense? Yeah. And here's the thing. My point is the appraisal is not magical. Right.

It's not like going to make a bad deal good. I thought the appraisal was for the bank. Them saying how much we're going to loan you or not. It is, but I mean, it's establishing value. Make sure the bank is not loaning too much. Right. On the property. But it's still not magical.

Right. It's still not a magical document. It's a dude. Yeah. Who took three other properties and adjusted. Right. It's a dude. And sometimes it's not a smart dude. I've dealt with some of them that are dumber than a rock. And so they drive you crazy in the real estate business sometimes. But they're not all, I mean, it's not a horrible business. It's a great business. Most of the people are very very reasonable uh but if but if you get two appraisals and they're within five percent of each other that's like known as a miracle oh wow i didn't realize it was that

volatile yeah i mean or that much variability between yeah absolutely so i mean and that's okay i mean i i two appraisals on a piece of property and they're close. I can tell. I get a feel for it and I'm good. But I think you can take a per square foot on the 2200. In fact, you got two acres. In fact, you're out a little bit. Make an adjustment and say, okay, this other house is older. It's on a smaller piece of property. It's internal.

And so I'm going to allocate a higher square foot because of those things. And, you know, you're going to tell if you're hundreds of thousands of dollars off. The appraisal is not a guarantee that you're not getting screwed. It's just not. It's not a guarantee of value. It's not a guarantee of what the market's going to do in the future. You should not be comfortable just because of the appraisal. It's an approximation.

It's an opinion. This is The Ramsey Show. So you don't think you need ID theft protection? Check out these numbers. Every seven seconds, an identity is stolen. And the average time to completely resolve an id theft event is 44 months 44 months people but you won't just spend time on it you'll also spend money 26 percent of victims end up borrowing money and using payday loans while another 15 percent sell personal belongings to deal with this nightmare pretty quick way to screw up your debt snowball and your baby steps, but not if you're a member of Zander's ID Theft Protection Plan. Zander's plan covers

all types of ID theft, takes over the work if you become a victim, and protects against stolen funds and expenses you incur. They also cover your children for free on their family plan. It's just the smarter, more affordable way to protect yourself. Go to Zander.com or call 800-356-4282. Save yourself the trouble before it's too late. Well, like we were just talking about, there's a lot of hype going on in the real estate market, particularly with buyers who think they have to buy right now. And it's going to happen. It's got to happen right now. I've got to do it right now. A lot of this is because mortgage interest rates have reached some of the all-time lows,

and buyers are frantic to lock in these great rates. I mean, when you're talking about something in the 2% range, that's pretty crazy, you know. 3% was pretty much gold standard. I mean, my gosh. And I remember selling real estate in the 17% market back in the day. So, I mean, listen, you're probably not going to get rates cheaper than that. But that does not give you the green light to do stupid. Stupid as in buying before you're debt-free, buying with a no down payment,

buying with no money. You know, this is going to get you ahead. So get your head out of the craziness for a second. Look at your situation. Are you debt-free? Do you have the down payment? Can you afford a home mortgage, mortgage insurance, taxes, maintenance? Do you want to do all this?

I know it's easy to get caught up in this, so here's what we're going to do. We've got a free mortgage calculator that will help you with the process. You can plug in your numbers and see exactly what your homeownership options are based on your budget. Go to RamseySolutions.com, click Free Tools, and check out the free mortgage calculator. RamseySolutions.com and click Free Tools. There's a whole bunch of free tools on there. The mortgage calculator is one of the more popular ones. Dr. John Deloney, Ram, personality, is my co-host

today. Caleb is with us in Winston-Salem. Hi, Caleb. How are you? Hey, Dave. I'm good. How are you? Better than I deserve. What's up? So a little over an hour ago, I actually drove my 2004 vehicle into a tree, and it doesn't need to take much damage for it to be totaled. Wow. Are you okay? I'm fine, yeah. I was wearing my seatbelt. We're all good. I'm at home. Anyway, I got an ELP insurance agent earlier this year. And now I'm just curious. I call my dad to try to figure out where we go from here. And he's just saying, let's just, once we get our estimate,

let's pay for everything in cash and not involve insurance. And I'm like, well, why did I get insurance then? Um, so I guess I'm just, like, what would be the benefit of paying for it in cash, and what is the benefit of, like, involving insurance? How old are you? I am 29, and I'm just figuring all this out. That's okay. I wasn't making fun of you. I'm just making sure you weren't, like, 18 or something, because it does affect rates, right?

Car insurance rates. So, I mean, you rates right um car insurance rates so um i mean you should have normal car insurance rates i do not know why you would not turn in a wreck at 29 years old have you had a bunch of other wrecks have you had some kind of violations or something or i mean you've got like 73 tickets or no i have a pretty clean driving record the only time in my life i didn't turn one in is i had an exact obnoxious, this is 20 years ago, an obnoxious, my deductible was $2,500 or something like that, or $2,000, and the damage to the car was $500. So it was actually cheaper for me to go pay $500 than it would be to pay out the deductible.

Does that make sense? Yeah, that's a good point. What's your deductible? That is a good question. I don't know. Yeah, I don't know. So I'd find that out. I did look up the Kelly Blue Book value, and it's like $1,300 in my vehicle. Okay, so if you have a $1,000 deductible,

then you may be in the category of what john's talking about and the insurance company is going to write you a nine hundred dollar check for your loss of your you know if you have a thousand dollar deductible and the car's worth 1300 you're going to get 300 bucks and your premiums are going to go up for turning in a wreck right on the next thing so your dad in that case would be right. Okay. Yeah, you would just say, because if you've got a $1,000 deductible, the first $1,000 of the $1,300 is out of your pocket, right? Yeah.

And so you're hoping they give you the full KBB value of that. But if you have a $250 deductible, you turn it in. Right. Okay. Because they're going to give you an $1, dollar check then right yeah i guess i have some homework to do then yeah you call if you called your agent oh no because your dad's not yet yeah yeah yeah you need to you need to gather some information and your agent's

not um uh you know if you were if you're working with an elp to get insurance that means they shopped to several different insurance companies. So they don't work for the insurance companies. They work for you. They're an insurance broker. And so they can give you good advice on this. But if you had State Farm, you call the State Farm agent, they have to tell State Farm everything. So the good news here is this guy's on your team.

And so my guess is you've got a $250 or a $500 deductible, and my guess is you probably need to turn this wreck in because you probably don't have a lot of money to go buy another car with. Nope, I'm in baby step two. I got $1,000. Okay. So I'm hoping you did not take a $1,000 deductible on this car. You shouldn't have. I wouldn't assume so. Yeah, you shouldn't have. You probably have a $250,000 deductible on this car. You shouldn't have.

I wouldn't assume so. Yeah, you shouldn't have. You probably have a $250, which would be fairly standard. So you're going to get $1,100, $1,200 out of the insurance company, and you're going to put a little bit of your $1,000 with this because this is an emergency, and you're going to go buy a $1,500 car. Okay. With some insurance money.

I think that's what's going to happen. Okay. And then you're going to have to stop your baby step two and get your thousand dollar built back up to a thousand again and you know then we're going to go forward from there the great news is nobody's hurt yeah i'm glad you're okay man yes thank you it scares the crap out of you don't it yes i'm still kind of shaking a little bit like adrenaline adrenaline dump yeah it may take a few hours but yeah yeah your hand's shaking a little bit. Yeah, like an adrenaline dump. Yeah, it may take a few hours, but yeah. Yeah, your hand's shaking a little just from the thing.

Yeah, I was going to the farm Friday morning. I come around this corner down here. Dead gum Raptor goes completely sideways. Oh, it just spun out on you? I just about whipped it all the way around, and it just got – it had been raining. Man, my heart starts beating right now just remembering it. Yeah's a it's a anytime you have that wow this is this is not fun about to tear up a good car here yeah i'm sorry man i'm sorry you've been through that but i think you probably have a low deductible if you had a high deductible i think your dad

would have been right and he probably carries a high deductible which is probably he's able to and it's a more expensive car and it and more of a situation like John had. Well, and also remember when, you know, if you get in a single car accident like this, you may have a ticket and you have to pay to have the thing towed. So there's going to be some money coming out of your emergency fund, too, to make sure you do it all the right way. Oh, yeah. Get all your information, right? Yeah, because the car is definitely totaled. Yeah.

I mean, if you bumped it, it's $1,300. You totaled it. That's right. It didn't take much. All right. Gabriel is with us in San Antonio. Hi, Gabriel. How are you?

I'm doing outstanding, sir. How are you? Better than I deserve. What's up? I need words of wisdom from you, sir. I currently have uh three properties one's a commercial property that one's paid off and then I have a residential house it's also paid off and then the current house I live in I stole the mortgage on it I owe less than half on

it for being there for less than three years I only owe 143 I built it for $320,000, and I owe about $143,000. What do you make a year? Between me and the wife, ballpark, I'll say about closer to between $250,000 and $300,000. So how quick are you going to pay off $140,000? I'm sorry? How quick, making that kind of money, you're going to pay off this 140 000 mortgage um just depends how the business responds so far the business has been doing pretty good i think so you're making a quarter million dollars a year yes sir between the profit

you know she brings 100 i also have three professions i'm a i'm a first responder and i'm also an electrical and mechanical contractor. Yeah. That's awesome, man. You're making a lot of money. I mean, you make $250,000 a year. You should pay this off in a year and a half, two years, shouldn't you? That's my intent, but, you know, we have some expenses like, you know,

private school for the kids. Dude, you make a quarter of a million dollars. Yes, sir, but, you know, what I was thinking of doing, not only was it a wise decision or not, you know, the house I have on the southeast of San Antonio, it's a small two-bedroom house that I had when I first, you know, it was just me and my son. I was a single dad for nine and a half years. So I fixed that house up.

I made it nice. It looks real good. And my fellow officer, who's also a realtor. Look, if you want to sell it, fine. You can sell it. But you don't have to sell it. You do have to get on a budget because you don't know where all your money's going. We'll be right back. In the lobby of Ramsey Solutions, on the debt-free stage, Juan and Anna Maria are with us.

Hey, guys, how are you? Hi. Hi, how are you? Welcome, welcome. Where do you guys live? Cartersville, Georgia. All right, a little north of Atlanta. All right.

Welcome to Nashville. And all the way up here to do a debt-free scream. How much have you paid off? We paid $91,898 in two years and two months. Wow. Good for you. I love it. And your range of income during that two years?

We start at $75,000, and right now we are in $152,000. At $152,000. Great. What do you guys do for a living? I'm a videographer. And I am a technical director for a dietary supplement company. Wonderful.

Good for you guys. Well, congratulations. What kind of debt was the $92,000? Me? Yeah. It was a ton of stuff. It was three credit cards. It was a personal loan and medical bills and student loans.

Okay. Wow. Okay. How long have you guys been married? Five years. All right. So what happened halfway into the marriage, two years ago, two months ago, you looked down and you went, ah!

Yeah. Me? Yeah. Okay, so I had an emergency surgery where we were told that we were going to have to do fertility treatments in order to start our family. We kind of freaked out, and of course I had done my master's and I had finished that up. And we had student loans and we had that grace period. So I was like, yeah, we can pay it off later. But when we started figuring out fertility treatments and IVF and all these things,

I kind of freaked out and I said, we have to do it, we have to do it, we have to do it. And we kind of, at the time, we didn't have the income that we have now. And we were kind of struggling with him being in a couple of jobs and not one specific job. So we were just basically living off of my salary, and I decided, let's just do it. It doesn't matter. We'll get into this $35,000 loan. Whatever interest rate, it doesn't matter. We'll let's just do it. It doesn't matter. We'll get into this $35,000 loan, whatever interest rate, it doesn't matter. We'll just have to do it. Um, I was listening to you at the time and, uh, I'm not going to cry. I told myself I wasn't going to cry. And, uh, um, I was listening to you at the time and I remember, um, you know, you saying, well,

save up for certain things that you want to do. But I was like, eh, you know what, kind of shut you out for a little bit and I didn't want to listen to it anymore. But we actually went through the IVF treatment and it didn't work. And I remember just being so devastated that it hadn't worked. And now we were sitting there having to pay every month a $900 monthly payment that was just a monthly reminder that it hadn't worked. Wow. Amazing. That's so hard. Yeah.

You're doing good. Wow. Yeah. So I told him I want to get rid of this loan because it's just a monthly reminder of how bad things were for us. And if you can't tell by his accent. Yeah, we are from Colombia. I moved here five years ago. I thought East Tennessee for sure.

I was way off. Yeah, I really like a Colombian. It's different. And yeah, it has been difficult, of course, but hard work and know that everything will be

better and working hard as a team because we are a team. So Ana Maria, 35,000 of the000 was the IVF. Mm-hmm. Okay. And so just the weight of that emotionally made you guys go, we've got to pounce on this. I have to get this out of my face.

Exactly. It's driving me nuts. Exactly. We were not gazelle intense after that monthly payment started kicking in. And I told him, I don't want to think about this. Every month is just... And I think after that, I started again listening to your show and just reading again and making our budget and doing all these things. And then in one of your shows, I don't remember if it was you or somebody else, but you said, you know, if you're doing IVF, go for it.

Stop whatever else you're doing, but make sure you save up and you pay cash so that you don't have that monthly reminder in case it didn't work that it didn't. And I was like, yep. And whenever I go and step on that stage and tell people about how we're debt free, I'm going to tell them definitely pay it as like right up front. Don't do loans. It's just it's a horrible reminder. There's so much drama involved in the whole process anyway. Yeah. And on top of that, and you're waiting and you're waiting and you're waiting.

Did it take, you know, and then the disappointment and the stuff. And then you add to that the slap in the face of the debt payment. It's just too much. Yeah, it was definitely a lot. And then, you know, the student loans for the master's degree. I mean, it's gotten me where I am today career-wise, but I could have definitely taken a different route for that. But you're how old? I'm 32. I just turned 32 last week.

Well, happy birthday. Thank you. So you've got plenty of time. Yeah. Plenty of time for this all to work out. And it will, for sure. And so then you jump on this with both feet at this point, and you go, okay, we're going to actually do this Ramsey stuff. We're actually going to go gazelle intense, and we're not going to do anything, and we're getting this whole thing paid off.

And two years and two months later, you're done. Proof that when you do lean in on it, it goes. Yeah. Yeah. I'm proud of you guys. Thank you. So so proud of you guys how's it feel to be free amazing yeah yeah well done have you had your first month where you've got no bills and that 150 000 has just deposited itself yeah so what we did is we got married and since basically we met in colombia i brought him here we got married while he was doing his whole immigration status change i was basically taking care of the house and we didn't have a big wedding and we didn't have a honeymoon so as soon as we paid it off

we scheduled our little honeymoon to cancun and so it was nice to kind of know that it was already paid for. We had nothing to worry about. And we didn't have to worry about coming home to all these bills and anything. I love it. That's so good. That's so good. You deserve a celebration. That's peace.

That's peace. Yeah. That's neat. Yeah, that's incredible. Good for you guys. Thank you. Thank you. What do you tell people the key to getting out of debt is?

Teamwork. Yeah. Work hard and know that you have that reward on the end of your journey. For sure. It pays off. It pays off. It may look like you're not ever getting there and reminder I wanted to send him

back to Colombia so many times yeah you stopped in March too it was it was but definitely now

we get to enjoy each other and just we sit at home and we watch our soap operas our telenovelas in Spanish

and we just enjoy it we enjoy it and we enjoy our fur operas or telenovelas in Spanish, and we just enjoy it. We enjoy it, and we enjoy our fur baby and our nephews and everything. It's so nice to just, we are able to help, and that's huge. That's huge for us. It's huge for me and for him too, but that's rewarding for me, is just knowing that you can help others after you're done with your journey. Well, you're not done. You're 32.

But you got this part of it done. You got this part of it done. And there's a lot of upside, a lot of wonderful things are going to happen in the next decade of your lives. It's going to be absolutely amazing, I predict. So proud of y'all. Well done. Very, very well done. Very powerful.

Wow. 90, well, we've got a copy of The Legacy Journey for you, because, of course, that is the next chapter in your old story for sure, is the legacy that you're building. And a copy of the Total Money Makeover for you to give away and get somebody started. So Juan and Anna Marie from Cartersville, Georgia, the Atlanta area, $92,000

paid off. Two years, two months, making $75,000 all the way to now $152,000. What a powerful story. Incredible. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free scream. Three, two, one. We're debt-free!

We're debt-free! They are fun. Oh my gosh, that's wonderful. That East Tennessee accent coming through. What a couple of... What an incredible couple. I love it. I love it.

This is the Ramsey Show. our scripture of the day isaiah 41 10 so do not fear for i'm with you do not be dismayed for i am your god i will strengthen you and help you. I will uphold you with my righteous right hand. Brian Tracy said, Character is the ability to follow through on a resolution long after the emotion with which it was made has passed. We are in need of character in our culture today. Stephanie is with us in Arlington, Virginia. Hi, Stephanie.

Welcome to the Ramsey Show. Hello. Hi. Hey. So I am a first-time caller but big fan of the show. I am calling to get some advice. I'm a first-time homebuyer, and I went in the deep end for my first buy. I've been renting ever since I graduated college, and I am a 28th official as of June, and I ended up going into a

large investment, and I'm just kind of looking to get advice in terms of liquidating my assets and my savings, hoping to do this without any of my parents' help, but they are offering. And unfortunately, crypto is not an option, which I had actually spent some time learning and investing in and thought that would maybe be an option to sell my crypto, but it sounds like Freddie Mac and such have not made legislation that allows me to use that. But I ended up selling all my employee stock purchase, my employee stock, which got me about half of the down payment for my home, which is only 10% of the actual loan. And the other half, I'm looking at my 401k. And the first thing I found when I

looked up in terms of getting a 401k loan, your show popped up in terms of not getting, ever getting a 401k loan. I am able to take about 60k in cash or the limit of 50k in a loan but i was curious to just get your opinion in terms of um the remaining uh 50k that i would like to liquidate um what would you suggest knowing that i have um the 401k and i'm happy to answer i got a little bit lost in the process so you're buying a home you want to buy a home you have you contracted for the home contracted i did all the home inspection and now it's just in terms of uh and you have you have 10 down from the sale of employee stock um yeah so in terms of the um the mortgage so it was i'll just tell you the numbers it was um 760 is what we closed on um and you've already closed on it oh not closed sorry that's not the

record okay contracted for so wait a minute just stop just a second i don't want to hear all that the bottom line is you have 10 of your down payment you have not closed yet in the bank from the sale of employee stock. Correct? Yes or no? Yes or no? No. I am still working on getting that 10%. I want to get 100K.

Okay. So how much do you have from the sale of the employee stock? Employee stock, I have 55K. 55K, all right. And so you could do a Fannie Mae loan with 5% down with that on a 15-year fixed. What is your income? My income is about 130. Okay, all right.

So you can probably pull this off. You have no other savings at all other than 401k, and you said you own some crypto. Yeah, and I put down the 14.5 initial, which is the cash that I had, and that was it. So you're talking earnest money check. What was that? Well, you put down $14,500 as earnest money on the contract? Yes, yes, yes. All right, and so $55,000, and you have no other money.

You have zero emergency fund. I do have another TD Ameritrade stock that I could sell or get. What does that worth? $23,000 cash. What's that worth? I could pull out 23. It's 55 total, but I could only access 23 without the double. It's a Roth IRA, so I would get double taxed.

We don't cash out Roth IRAs. We don't cash out 401ks. We don't borrow on 401ks. So why is it you're not cashing out your crypto? It sounds like in terms of sourcing and trusting where that cash comes from, banks are not recognizing it

in terms of a down payment. No, but if you sell your crypto and you don't have the cash, sell the crypto. What's it worth? I'm about $30K in crypto. Sell the crypto. What's it worth? I have about $30,000 in crypto. Sell it today. I believe there was an issue with that. It needs to be on the books for about two months.

You have enough down payment to close on the deal now you just don't have enough that you want you can you can do a 95 conventional fannie mae loan you have five percent down so you can do that but you're wanting to put 10 down and we're trying to help you get there plus you don't you have no money that you can get to except retirement accounts and you're going to get penalty you're going to get your butt penal. Plus, you have no money that you can get to except retirement accounts, and you're going to get your butt penalized off. You're too broke to buy this house. Way too broke to buy this house. But you've already contracted for it.

You shouldn't have bought it because you've got all your money stuck. Because you don't have any money. You have no money. You're broke. I mean, all your money is tied up in retirement accounts and other things so anyway the the deal is that um uh uh yeah i want you to have an emergency fund in place a rainy day fund and i don't want you i i don't care but i'm saying what i would advise you to do because if i were in your shoes and woke up you need to close on this deal you put

down earnest money you've made a promise you've made a pledge called a contract to buy this house and so yeah you need to cash out your crypto today to be able to follow through on this and in whatever and you need to have twenty thousand dollars cash in the bank after you close on this house do not close on this house and put every dime you have into it because as soon as you move in crap's going to fall in you're going to need a new roof you're asking for trouble you're asking for trouble being broken buying a house and so uh it's not a blessing to buy a house when you're broke you just got the 28 year old fever i gotta have a house especially a three-quarter of a million dollar house and you do make 130 grand which feels like a lot but you bought a three-quarter of a million dollar house, and you do make 130 grand, which feels like a lot, but you bought a three-quarter of a million dollar house with no money.

Yeah. You're broke. Your 401k and your Roth IRA does not count, because you cannot get to that without penalties and taxes. You start cashing this stuff out, you're going to get hit with a 10% penalty plus your tax rate. So you're going to get hit with 40%. Dave, I want to borrow money at 40 percent interest to buy this house i would say no don't do that that doesn't sound wise and that is exactly what i'm sure wouldn't take out a mortgage for 40 percent yeah right interest jeez nuts and but i'm

keeping my freaking crypto and i know it's cool to yeah to sit at some cool hipster bar and be like, I got crypto. You're broke. Sell it. Typical crypto investor. Put $30,000 cash under your pillow for crying out loud. Yeah. Yeah. You need to put $20,000 in the bank and put the other $10,000 in the crypto with the $55,000 and put a $65,000 down payment on this house and close on it. Yeah.

For God's sake, put it on a 15-year fixed and then... Get a six-month emergency fund. And then work on your $20,000 and start building up your emergency fund there. So, yeah. Whew. I don't even... It's tough, man. It's...

It's what we talked about in another segment. It's just you get this picture in your head and you start getting this fever and all of a sudden, I'm going to do this and move that and sell that and hold on to this and all these competing pictures when you collide when you force a deal yeah you always do a bad deal man and you're forcing this one for sure but yeah you had a whole bunch of stuff going on you need to clean up here anyway so that's good you had the stock options you need the employee stock options you need to clean up you need to need to clean up. You need to clean up the crypto, and you need to get over. And now you can sit down and build your emergency fund and start investing steadily into building some wealth in your 401k once your emergency fund's in place.

And quit screwing around with the rest of this stuff. Yeah, still mess with it. It's not going to get you where you want to go. Yeah. But, hey, thank you for the call, and I hope that helps you john deloney dr john deloney good show today and also with you james childs kelly daniels great work i am day ramsey your host we'll be back with you before you know it in the meantime remember there's ultimately only one way to financial peace and that's to walk daily with the Prince of Peace, Christ Jesus.

This is James Child, producer of The Ramsey Show. Did you know The Ramsey Show is one of the most popular podcasts in the world? Subscribe or follow today wherever you listen to podcasts.