Did You Buy Too Much House? - Dave Ramsey Rant

Charlotte is in Colorado and says I have a question regarding the 25% rule for home mortgages. We live in Steamboat Springs where property prices are high, only condos will be in our price range if the HOA fees are included in the 25% HOA. Dues are very high here because of the high cost of snow removal, sometimes up to $350 a month, well, here's the situation, the whole thing about saying don't put more than 25 percent of your take-home pay into the paying for a

house

in 15 The two-year fixed-rate mortgage is so you don't end up homeless. I grew up in the real estate business.

I got my real estate license in 1978. I'm old. I've seen a lot of people do a lot of stupid things. real estate and I've seen a lot of people make a lot of money in real estate, you know, who makes money in real estate, people who don't put themselves in a position where they're forced to sell real estate that sells fast. It's known as cheap, it's a good buy for me because I'm going to buy it for someone who is in trouble, so you can go back in, well, you know I live in New York or Steamboat Springs, there is snow or you know there is.

There I get a pass in math no you don't get a pass in math math works exactly the same everywhere so if you don't earn enough to live in an area where real estate is expensive that means I don't earn enough to live in an area where real estate is expensive. I live in Williamson County in Tennessee. It is the richest county in the state. It is the eleventh richest county in the country. It is absurd that the median home price in our county is twice that of any other county. the cray cray state I mean it's crazy here, it's just a little suburban bubble outside of Nashville, there are those kind of maritime areas all over the United States and I can't afford to live in Williamson County, maybe not, maybe maybe not yet to earn more to live there.

I can afford to live in Manhattan, I probably don't have to make six figures to live on the island, honey, so the most expensive real estate on the planet Orange County Manhattan Miami Beach Tokyo London are fine Singapore, they're all together and you just have to earn a lot of money living there, that's why I get this question all the time, well I live in California, maybe you don't anymore or maybe you'll move to a different part of California, but you're probably not going to live in fucking Laguna Beach. You know, if you make forty-five thousand dollars a year, the numbers don't work.

Sorry, you don't get a pass in math, so you can factor in HOV fees. You can talk about snow. You can't talk about that, but at the end of the day the question is not if my 25 percent works or if what is included in the 25 percent the question is after you pay, finish paying for your

house

, are you bankrupt? and when? take out a house payment HOA fees piti taxes principal interest and in Texas Maori or high yes well I understand you live in one of those areas where stupid people have increased the tax base and then wonder why everyone left and that's what's happening you know, so you have to ask yourself if I fit in here, but when you add it all up and you finish paying for your house, are you bankrupt?

That's called poor house and when you get

much

more than 30% of that, you start to get the problem. 30% of your take home pay now, a mortgage company with a thirty year adjustable rate will qualify you for about double what you actually You can pay, but you can't do anything else, so after you pay your payment, when your children are going to be skinny please don't talk to me about vacations please don't talk to me about saving for your children's college please don't ask why can't you fund your retirement when you have your house strangle yourself strangle yourself I love real estate owning your own home and getting paid is one of the two main pieces of financial data that will lead you to being a millionaire owning real estate is absolutely vital to your financial future but owning them the wrong way will destroy your life biting off more than you can chew and you will choke will destroy your life so real estate is a double edged sword Oh everyone should buy real estate real estate is the answer when the poor don't have access to real estate when broke people can't buy real estate we need a policy change there are systemic problems with our way of life capitalism doesn't work no you're full of crap and you just can't do the math because when a bunch of broke people buy houses, you know what happens, they securitize that stupid thing and sales and hedge funds, oh wait, then they take it to the main market, oh wait , you can almost destroy the entire way of life known as the United States.

Do you know what happened in 2008, when a bunch of broke people bought houses they couldn't afford and mortgaged them and overpaid for them and securitized that shit, which means they bundled up the mortgages and sold them as blocks of bonds. of Fannie Mae and then they all failed, well, bankrupt people buy houses, make them brokers, that's why they call them mortgage brokers, don't do it. I love real estate. I want you to get a house, it's a key part of you getting rich, but when you rationalize your ass and think the map is set, try to find. somehow I can find a way that I will overpay for this and everything will be fine because in my situation we have snow that is just fake, it doesn't work it's like the guy who says I have to have a full snow truck with drive on snow wheels it snows once a year, you will have a four wheel drive truck, so you will go into $40,000 in debt to drive once a year, so this is just a rationalization, so no, you count everything, you don't count public services, but how

much

does it cost you to own this property?

Will that be your owner? That is the question you must answer. The rule of thumb we use is that you shouldn't put more than about 25% of your income into your take-home pay. That then leaves room and the other 75% to buy things like food, college funds, retire with dignity, save and pay cash for the next car, so you don't go into debt. Save and pay cash for the next sofa, so as not to go into debt. and pay cash for your little vacation so that you are not in debt and when you have so much debt in your house that you have no margin or disposable income in your budget, all the other things start to become debt and it accumulates like a snowball and falls on your head.

It's not a pun so check it out folks we have to use common sense if you think you have house fever and you're getting ready do something stupid with a house you'll take a cold shower and it will help you get over house fever