When is the right time to buy a house?
When is the right time to buy a house when someone is following your Baby Steps plan?
That’s a good question. Let’s start by going over the first few Baby Steps.
Baby Step 1 is saving $1,000 for a beginner emergency fund. Baby Step 2 is paying off all consumer debt, from smallest to largest, using the debt snowball. Baby Step 3 is where you increase your emergency fund to the point where you have three to six months of expenses set aside.
Once you’ve done all that you can begin saving for a home. I’ll call it Baby Step 3b. For folks looking to buy a house, I advise saving enough money for a down payment of at least 20 per cent.
I don’t beat people up over mortgage debt, but I do advise them to get a 15-year, fixed-rate loan, where the payments are no more than 25 per cent of their monthly take-home pay.
Doing it this way may take a little more time, and delay your dream of becoming a homeowner a bit, but buying a house when you’re broke is the quickest way I know to turn something that should be a blessing into a burden!
My father died recently. He walked out of my life 25 years ago when I was a teenager, and he never wanted anything to do with me after that. His brothers, who have already paid for some of his final expenses, asked if I wanted to pay to have his body cremated. They didn’t ask for money, they just offered it as a chance to be part of things. I’m in good shape financially, and I could easily afford the cost. Morally, I wonder if I have a responsibility to help with things. Do you feel I’m obligated in any way?
I’m sorry for your loss. I’m sorry, too, about what happened with your father. I can’t imagine the mixed emotions you must have in your heart.
When someone asks me a question like this, I try to put myself in their shoes. Under the circumstances, I don’t think you have any obligation whatsoever — morally or legally — to help pay for anything. If you want to help, and you can afford to do so, then follow your heart. At the same time, I don’t think you should lose one wink of sleep over this if you decide not to contribute.
Twenty-five years is long, long time. I don’t know your dad, and I have no clue about his situation or state of mind back then and in the time since. I can’t imagine doing that to a child of any age, though.
Do what you feel in your heart is best. But in my opinion, there’s no obligation here. God bless you, Julie.
• Dave Ramsey is CEO of Ramsey Solutions. He has authored seven bestselling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 14 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey