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Tracy Evangelista
Apr 30th, 2009

Dave Ramsey’s Newest Fan

That new fan would be me. Ever since Chad and I took Financial Peace University at our church in the fall, I cannot get enough of his teaching. If you are familiar with his teaching or ever read any of his books, you may recogize this enthusiasm as being from the “nerd”. Yes, I am the nerd and my husband,Chad, is the free spirit. I have been embracing the principles Dave teaches and are excited to finally have a written plan to acheive our goals of being debt free.

Dave has a lot to say regarding real estate. He recently answered this question:

Buying To Invest vs. Buying To Live


Question:

I currently rent in

California at $2,000 a month. Right now, I can buy a similar to slightly better home with a monthly payment of $3,500. I can afford the payment. But here’s my concern, is real estate in

California a good investment for the long haul?Philip in

California

Answer:

In your situation, buying a home based on investment reasons is probably the wrong approach. A home is first and foremost a place to live. Only buy a home if it makes sense as a place to live long term – at least 5 years.

Appreciation on the home should only be a secondary concern.

Whatever you decide, just make sure you don’t become “house poor.” Here’s how you can do that:

  • complete Baby Steps 1 – 3
  • have a 10 – 20% down payment
  • get a 15 year fixed rate loan
  • make sure the monthly payment isn’t more than 25% of your take home pay

This is so true. Many of us did not expect the values of our homes to decrease when we bought a few years ago. As long as your mortgage payment fits your budget and you do not need to sell anytime soon, remember you purchased your home primarily to live in so enjoy it and more importantly the memories that have been and continue to be created in your home. ~ Tracy