Personal finance author and radio host Dave Ramsey has some harsh criticism for those who like to overspend their hard-earned cash and complain about not being able to afford a house.
In a recent episode of “The Ramsey Show,” the radio personality first acknowledges that it is indeed challenging for individuals to buy a house amid the current economic climate.
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“It is mathematically tough right now, it is economically tough, but I think more than those two, it's just psychologically tough right now because there's just this perception, this dark cloud over the subject of buying a house right now,” said Ramsey.
In the U.S., the median home-sale price in April was $412,100, which is a 5.6% increase from what it was during the same time period last year, according to recent data from the National Association of Realtors. Home affordability in April also significantly decreased, when compared to a year ago, as the average monthly mortgage payment spiked by 12.9%, and the median family income only increased by 5%.
Ramsey claims that housing prices are not going to come down anytime soon, but buying a home is still achievable, so the first thing people should do before they buy a house is to clean up their debt.
“Don't buy a house where you have to buy an extra bedroom for Sallie Mae cuz you had a student loan so long you think it's a pet,” said Ramsey.
He said that one of the main reasons why people have so much debt is because of their “stinking overspending.”
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“You're sitting there with stinking car payments around your neck, a bass boat payment and paying for last year's Disney vacation on your credit card, and you can't figure out why you can't afford a house,” said Ramsey. “Well, I just told you why you can't afford a house, you're stinking overspending…Go anywhere you want to go, but you're spending money you don't have to do crap you don't need to be doing, and you go in debt to do it, and then you're broke, and you can't figure out why you can't buy a house.”
He also advises people to build an emergency fund that contains “three to six months of expenses” for their future house after they pay off their debt.
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“If you move in a house without an emergency fund, your hot water heater will go out that week, and the next week, the roof will leak, you're going to learn about homeownership, baby,” said Ramsey.
Being unprepared for hidden costs associated with owning a home is one of the main regrets of homeowners. According to a recent survey from Bankrate, 40% of homeowners have listed maintenance and other hidden fees being more expensive than they anticipated as their No. 1 regret with buying their house.
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