If You Can’t Afford It, It’s Not a Dream Home (Hour 2)
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What is the main topic discussed in this episode?
Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm your host, George Campbell, joined this hour by Christina Ellis, and we're taking your calls at 888-825-5225. You jump in, we'll talk about your life and your money. If it's uncomfortable, if you're scared, hey, we'll change your name, we'll change the information. We just want to make sure that you get the help you need to take the right next step. with your money. 888-825-5225.
Should we rent in a bad area to save money?
Teresa's up first in Atlantic City, New Jersey. Teresa, welcome to the show.
Hey there. So we're a family of six and we're relocating due to a promotion and just wanting to be close to the family. And while we're selling our home, we are now renting from our family with low payments, but it's in an area that has some gun violence and drug trafficking. you know, drugs close by. Now we can use what we earn from selling our house to pay off student debt and medical debt, or we can put a large down payment on a new house that would be in a much better area. So, but we would still be paying about, in that house, we would still be paying about 30 to 35% depending on the interest rate once we purchase.
Okay.
Of our... Yeah.
What is Kristina's #FrugalFebruary challenge?
So this house that you're renting, you guys have moved already or you're going to move?
We have. We have moved. We have lots of boxes unpacked because we're ready to move again. But yes, we are here. We're here.
And what is the rental cost? What are you paying per month?
$800,000.
And what's the new take-home pay with the promotion?
Household? Well, right now, $124,000 a year.
How can we get a good return out of an IRA?
And that's take-home? Or is that just a gross salary? That's a gross, yeah. So I'm not sure what that would be.
If you weren't renting from family, what's the average rent in the area for a similar house? Not in a rough area.
Um... Probably over $2,000, I would guess, or just around there. I'm not too sure because we just kind of moved back here. But I would think around $2,000.
Should we build credit to buy a house?
Okay.
So then you mentioned debt and that the money that you had from the home sale could pay off that debt. How much debt is that?
So we have about $16,000 in student loans. And then I'm not sure about medical, but maybe $5,000 or something.
And that's everything?
Yes, that's everything. And what was the equity from the sale of the home?
A little over $100,000. So is that how much is kind of sitting in the bank right now?
What is the best way to improve your credit score?
It's not here yet. So we still haven't closed. We closed on the 13th of March.
Okay. So a month from now-ish, you'll have $100,000 in the bank. How much money do you guys have right now aside from that?
We just finished paying off all our credit cards, so we have very little in the bank because we tried to pay everything off so we could just be in a better place. So, you know, we don't have much. Maybe, I don't even know. It's not much.
Okay. We'll call it your $1,000 starter emergency fund?
What should I do if my mom stole my savings for a car?
Yes. Does that work?
Okay. Yes. So who are you renting this house from? Which family member?
My father-in-law.
Okay.
How can we manage our spending to save for a house?
And he's had this house for a while. Has he had a lot of problems with tenants in that area?
So he, he was living here and he's, you know, he's a pretty low maintenance guy and he doesn't, it's not like, you know, he comes home and it's not the same. It's not functioning the same as with me with four kids, you know? So of course he's not going outside and letting kids play around outside. You know, he's kind of passed that in his year.
So can you guys get out of this rental at any time?
Yes.
Okay. Here's what I'm doing if I'm in your shoes. As soon as that check clears in that bank, I am paying off all my debt, and that leaves you with, what, $40,000 in the bank?
Yes.
And with that $40,000, we're going to set aside a big portion of that for your emergency fund, which I imagine for a family of your size, if we set aside three to six months of expenses, it's going to be somewhere in the ballpark of $20,000? Yes. Okay. And I would be moving somewhere else because you have a great income.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:30–1:02
2
Should we rent in a bad area to save money?
1:02–1:57
3
What is Kristina's #FrugalFebruary challenge?
1:57–2:24
4
How can we get a good return out of an IRA?
2:24–2:54
5
Should we build credit to buy a house?
2:54–3:27
6
What is the best way to improve your credit score?
3:27–3:59
7
What should I do if my mom stole my savings for a car?
3:59–4:08
8
How can we manage our spending to save for a house?
4:08–39:29