I recently read some stuff from financial guru Dave Ramsey, because I’m looking to buy a used car, but I only have my current car as a “down payment”, which isn’t much, so I wanted some advice. I read this, and thought, “wow, that is so true!”
Dear Dave,
My wife and I are recent graduates with advanced degrees. We also have about $300,000 in student loan debt. We’re thinking about buying a rental property, and the plan is to get a mortgage with monthly payments of $400 and charge $800 in rent. We could use the extra to help pay off our debt. Do you think this is a good idea?
— Jeremy
Dear Jeremy,
Are you serious? You’re in a financial crisis, and you ask if it’s okay to buy a rental property? No, no, no!
Right now, you guys are acting like Congress. You have a huge mess on your hands and you’re both going to have to work like crazy to clean it up. That means living on rice and beans for the foreseeable future. It means no vacations, and you should not see the inside of a restaurant unless you’re working there to make extra money.
Again, no! You should not buy a rental property. Even if you did, this plan assumes that it’s constantly occupied and the renter actually pays. Those are two pretty big assumptions. Use whatever money you have to get out of debt, and live simple, inexpensive lives until you get this behind you.
Stop trying to borrow your way through all of your dreams, Jeremy. Doing that will only turn those dreams into nightmares.
— Dave
For me, I am going to try to stick to this sort of advice. I am not in huge debt, my credit cards are paid off, and I pay my bills on time. But, I do have a loan out currently, and I’m not really saving any money. I have a budget, that I try to follow. I do take trips though, because in my head, I am single, it’s the perfect time to go to places I’ve never been before, and I want to go somewhere new at least once a year to cross off my bucket list. It’s hard to say, I won’t spend any money on anything fun until my debt is paid off, but at the same time it makes so much sense. Thank you, Dave Ramsey!
mooshky22 