Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.
Dear Dave,
I can’t decide whether to sell or keep a rental property. Except for the property in question I’m debt-free, and I make $90,000 a year. I owe $20,000 on the property, and it is worth $65,000. What do you think?
George
Dear George,
You’re in pretty good shape financially, and you could probably pay off the rental property in a year or two. So really, it’s a matter of personal preference. I will say this; there’s nothing worse than being a landlord if you don’t want to be one.
It’s not a bad thing to feel that way. Some folks have fun and enjoy landlording for a while, but then other things become more important. It’s your life and your feelings that matter at this point.
If you still enjoy dabbling in real estate and being a landlord, go for it. If the shine has worn off, get rid of the place. If the latter is the case, you’ll get the responsibility of being a landlord off your back and become debt-free all at the same time!
—Dave
Dear Dave
I’ve been following your advice for about a year. I’m almost out of debt, and I live on a budget, but looking toward the future it seems like it will be very difficult to save up for a down payment on a home. I live in Chicago, and property prices are very expensive. I have a friend in Georgia who suggested I buy a less expensive property there, then fix it up and flip it to make the money I would need for a down payment. What do you think of this idea?
Erik
Dear Erik,
When you take on the kind of work you’re talking about, you need to oversee what’s happening every step of the way. You’re working out details, keeping an eye on the crew, and having to handle a dozen other issues tied to the project. Plus, you can’t just walk up to a house or see it online, buy it, and expect to come out ahead in the deal.
People who flip houses for a living professionally eyeball dozens, sometimes hundreds, of properties to buy just one. It’s not an easy way to make money, and it’s definitely not something I’d recommend doing from a distance. In short, I wouldn’t do it, Erik. Fixing and flipping properties is a hands-on business, and trying to do it from 700 miles away would be a nightmare.
Just keep on working the budget and save as much as you can. I’d consider getting a part-time job for a while to add to the down payment fund before I’d try to fix and flip a house that far away.
—Dave
Dear Dave,
My husband and I are both 29, and we have good jobs that allow us to bring home $100,000 a year combined. Recently, we began talking about starting a family. We live on a budget, but we still have about $15,000 in credit card debt and student loans we’re working hard to pay off. Do you think couples should wait until they are debt-free to have children?
Missy
Dear Missy,
You and your husband are chipping away at your debt, and that’s a good thing. It sounds like you two are determined to get it paid off and take control of your finances. You’re also making pretty good money, so keep up the good work!
Ok, so the truth is kids can be expensive. From medical costs and diapers, to childcare and beyond, it costs money to raise a family. But here’s the thing: If you let money alone, or the perfect financial situation, determine whether you have kids or not, you may never have them. Now, would it beeasier from a financial standpoint only to wait on having kids until you’re debtfree and there’s a huge pile of cash in the bank? Sure, it would. But children are worth more than any amount of money. If you love each other and want to be parents, and you’re mature adults in every other area, don’t let this debt stop you.
A child isn’t going to derail your journey to financial peace. Having kids might cause you to press pause for a while on some financial matters, or slow your pace a little bit, but as long as you both stay focused and determined to manage your money wisely, chances are things will work out fine.
Just don’t make the mistake lots of parents do—especially first-time parents. Many of them think they have to run out and buy a new, “safer” car, spend a fortune on a fancy crib, or buy all things baby from some overpriced boutique. Do you get what I’m saying, Missy? Why buy a brand-new, $400 stroller, when a friend or relative has a perfectly good, barely used one they’re willing to giveyou?
It’s easy to get carried away spending for a baby. But children will be just fine as long as they have food, clothing, shelter—and most importantly—loving, caring parents. God bless you two!
—Dave