1/23/2006
Advice from Nashville's leading Financial Aid Advisor Dave Ramsey
Dave Says
By Dave Ramsey
Author of:
Financial Peace and
The Total Money Makeover
"Growing family needs more room!"
Dear Dave,
My wife and I are completely debt-free, and we live in a 1,400-square foot home. Our family is growing, so we need a bigger house. She saw a small, seven-acre farm with a larger house she’d like us to buy, but I don’t ever want to go back into debt or experience the hassle of another mortgage. I make about $100,000 a year, and we have $50,000 in a 401(k), in addition to $15,000 in savings. What do you suggest?
Jack in Louisville, KY
Dear Jack,
With the kind of income you’re talking about and no debt, you should be able to save money like a crazy man and pay cash for this farm in no time.
I’d suggest budgeting at least $2,000 a month for a house payment from your monthly income. That’s what Dave and Sharon Ramsey would do. If we decided to buy a new home today, we’d save up the money and pay cash for it.
Here’s the drill on home-buying. If you don’t pay cash for it, you don’t really own it – at least not for a while. Lots of people don’t have the luxury of being able to pay cash up front for something as expensive as a home. I tell them to save up and make a down payment of at least 20 percent, then go with a mortgage of 15 years or less.
But you DO have the money, Jack, or you will in a very short time if you just SAVE, SAVE, SAVE. When it comes to buying a home, you want the security and peace of mind that goes with owning that sucker outright. And with your income and being debt-free, you can get this deal done fast!
- Dave
To read the next question
"Should we sell our new car?"
Click Here
To Find More Nashville About.com Information About Dave
Ramsey Financial Advice (including previous articles)
Click Here
To Visit Dave Ramsey.com
Click Here
To read an archive of the Dave Says columns
Click Here
*Disclaimer: Questioner's identities have not been verified by Dave
Ramsey.com or
Nashville About.com.
