Mormon Life - House tag

Dave Says: Downsizing House to Get Out of Debt?

Tue, 17 Apr 2012 00:04:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Is it ever a good idea to sell a home and buy a smaller one to get out of debt?

Dear Dave,

Is it ever a good idea to sell your home and buy a smaller, less expensive one in order to get out of debt more quickly?

Autumn

Dear Autumn,

It’s a good idea in some situations. If you don’t really like the house, or maybe you were thinking about selling it anyway, then I’d say go for it. It would also be a smart move if you simply have too much house and the payments are eating you alive.

I usually recommend that your monthly mortgage payment or rent be no more than 25 percent of your take-home pay. If your house payments are taking 40 to 50 percent of this figure, then it’s time to unload the house.

But selling your home can be a tough thing emotionally. I’d never advise someone to sell the place they love and move down in house if their payment is reasonable. In these situations there are usually other areas where you can cut back, keep your home, and still get out of debt in a reasonable amount of time.

—Dave

For more financial help, please visit daveramsey.com.

Green House

Thu, 01 Mar 2012 00:01:00 -0700

by Kate Ensign-Lewis
source: MormonLife.com

Mormon Life says: Small efforts in your home, room by room, can add up to big savings—for both you and the earth.

The earth could use a little relief. And every year around Earth Day - April 22, this year - we really think about what that means. Like many other corporations (and the Church itself), we at LDS Living make efforts to reduce our "footprint"; but we also know there are many more, individual things each of us around the world can do to lessen our impact on the earth. After all, as Henry David Thoreau said, “What is the use of a house if you haven’t got a tolerable planet to put it on?”

With that in mind, here are some suggestions—small and large—that you can use to make your house a little greener. Some are suggestions to keep in mind as you think about replacing some of your worn-out items; others are measures you can take immediately.

Laundry Room

What you’re looking at: detergents and washers.

Ever wonder why you can always smell when somebody is doing laundry? It’s because of all of the fragrances in detergent, fragrances which have been linked to everything from asthma to cancer. Fabric softeners are even worse for you and the environment, and have been found to contain neurotoxins. Instead of traditional detergents, try one of the many eco-friendly detergents, which sell for comparative prices and clean just as well, such as, Seventh Generation, Ecover, ECOS, and BioKleen brands. And stay away from fabric softeners altogether, which dull clothing color and prevent absorption anyway.

But what are you putting that detergent into? Invest in a front-loading washing machine as soon as you can. Most full-size washers of this kind use eighteen to twenty-five gallons per load, compared with forty gallons in conventional (top-loading) washers. Not only does this conserve, but it saves for you: you’ll use an estimated 7,000 gallons less of water each year. If you buy an Energy Star model, you will be using 40 percent less of water and energy for laundry. Today’s dryers, on the other hand, are the same as yesteryear’s; keep the one you have.

Living Room

What you’re looking at: furniture and carpet.

What makes furniture eco-friendly, anyway? First off, companies trying to reduce their footprints, like Crate and Barrel, Green Culture, and IKEA, frequently use sustainable wood—or wood that comes from fast-growing forests (like bamboo, cork, and eucalyptus), wood from old buildings, and salvaged wood from streams and rivers. They also avoid varnishes that gas VOCs (volatile organic compounds), favoring instead finishes that use natural ingredients and pigments.

Eco-friendly furniture of comparable price to conventional furniture is available at many stores, including those well-known and lesser-known companies listed above. Just make sure to look for certification, something the FSC (Forest Stewardship Council) can help you with at their website, fsc.org.

What your furniture sits on is equally important. Because even eco-friendly carpets can cause environmental concerns—partly because they hold on to dirt, chemicals, and mold so easily—sustainable wood and tile the best flooring options. (They’re easier to clean, too.)

If you do choose carpet, there are some useful guidelines to help your family and your environment. Consider everything: carpet, carpet pads, and installation. The carpet should be made of natural fibers (like wool—naturally flame retardant) or recycled materials, such as carpets made out of newspaper or plastic bottle fibers. For carpet pads, buy those made from wool, jute, or natural rubber, and when installing, favor tacks rather than chemical adhesives.

Kitchen

What you’re looking at: trash and fridge.

Trash is one of the most obvious ways we hurt our environment. From the plastic bags we toss it in to the amount we generate, it’s hard to know the earth’s condition and not feel guilty when you look at your nearest trash can. The first way you can resolve trash problems is to cut down: avoid buying foods that require a lot of packaging (pre-cut vegetables, fast food meals, etc.). Use towels, not paper towels; use food containers, not plastic bags. Doing these things will significantly cut down on your use of (and spending on) disposable items.

Next, if you live in an area that composts garbage, use bio-based trash bags, which can be composted. (You can find out about composting programs in your area by going to epa.gov.) If you live in one of the areas where trash goes to landfills—which are so air tight that even bio-degradable items can’t break down—buy recycled plastic bags. If you’re really ambitious, consider composting your own garbage (see sidebar).

The next place to evaluate is your fridge. Most homes waste energy and money on inefficient refrigerators. To avoid this waste, first look at the door: can you feel it catch and seal when you close the door? Next, look at the temperature; it should be between 38 and 40 degrees. To test this, put a thermometer in a glass of water inside the fridge. Finally, make sure to clean your coils every three months. Coils attract dust like a moth to a flame, which makes the fridge inefficient, wastes energy, and costs you money. Simply vacuum or use a wet sponge (after unplugging) to clean.

Office/Den

What you’re looking at: computers, electronics, ink cartridges, and paper.

Of all the rooms in the house that you’d like to make green, this is the most confusing. Most of the products constitute hazardous waste. You know to recycle your computer (don’t you?), but what about the other stuff?

You’re in luck. The folks at earth911.org have put together a database where you can find your nearest electronics recycler; you can also go to freegeek.org to find similar service. (For TVs, contact Best Buy or Office Depot.) Hewlett-Packard will also recycle electronic hardware for $13-$34, and they’ll recycle inkjet cartridges for free—you don’t even have to pay postage. Go to hp.com/hpinfo/globalcitizenship/environment/recycle/ to order or print postage-paid envelopes. For non HP ink cartridges, go to Staples. (Note: before you recycle your computer, make sure all personal information is taken off the hard disk.)

Other than electronics, you also have all that paper. For this, follow the “reduce, reuse, recycle” program. While recycling is good, it is the least ideal option. Resources are still used and wasted in recycling, so first reduce your consumption; read that article on the computer instead of printing. Reuse what you can, and then recycle the rest. Then, look in the government section of your phone book for the City or County public works refuse department to find out about the local recycling programs, and find out where you need to take the paper. Sometimes it’s only as far as your curb.

Bathroom

What you’re looking at: toilets and soaps.

Toilet technology has boomed within the last few years, including waterless urinals and waterless composting toilets. Most airports have incorporated the dual-flush toilet, which uses 1.6 or 0.8 gallons of water to flush—depending on the type of waste—and reduces water usage up to 67 percent. The award-winning Coroma dual-flush is priced between $150 and $450 and virtually eliminates blockages with its four-inch trap. If you plan on keeping your conventional toilet, encourage your kids to use less toilet paper, at the very least.

Soaps in the bathroom also contribute to environmental problems, causing many of the same problems as laundry detergent. When buying eco-friendly soaps, look for specific claims (“paraben-free” vs. “natural”); avoid fragrances, antibacterials, and ingredients that sound manufactured. Burt’s Bees, Method, Kiss My Face, Aubrey Organics, and Green Ridge Organics offer good cleansers of comparable cost to conventional soaps and shampoos.

Aside from details, one of the best guidelines for creating a green house is to reduce what you use, reuse what you have, and recycle whatever is left. If we all turned down our thermostats by two degrees, we’d save an estimated 500,000 barrels of oil each day; if one of us just fixed our leaky faucet, we’d save roughly 3,000 gallons per year. With just small efforts (and hopefully more large ones), we can make our houses green . . . and we can make a difference.

- - -

And for outside . . .

DIY Composting

Composting recycles organic material (plants—including food—and manure); the recycled product is compost, or fertilizer. Because air is required for organic matter to break down, compost piles usually sit somewhere in your yard for the few months it takes them to break down. Here’s how to create your own:

Separate compostable items from your garbage to create “green waste” (visit epa.gov/wastes/conserve/rrr/composting/basic.htm to see what can and cannot be composted).

Gather 2 to 3 parts of green waste for every 1 part of brown-dry waste (dried leaves and soil).

Place composting material in an open pile (when you do it right, it won’t stink) or a container (plastic with air holes on the sides or a wood box with burlap on top).

Let it sit. The microorganisms in the brown waste will break down the waste and create the compost. If the compost isn’t breaking down as well as it should, buy a compost starter from your local garden center ($5 to $20). If it’s working, it will get very hot (about 150° F).

Stir the composting material around when it starts to cool or you notice it’s shrinking, which moves outer material into the middle where bacteria works best.

Spread it over your garden—the compost is nutrient-rich. Using this method, and depending on how much you want it to decompose, compost will take a couple months to break down. It will no longer heat when it has completely broken down.

Dave Says: Get Your Priorities Straight

Tue, 28 Feb 2012 00:03:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: My husband might get laid off, and all his job options are out of town. Should we use our savings to make our house more sellable?

Dear Dave,

My husband’s company recently told everyone that massive layoffs are coming, and they should start looking for other jobs. Right now, all of his options are out-of-town. A real estate agent told us we’d have to remodel our kitchen in order to sell the house. We’ve got $3,500, but remodeling would take about $2,000. Should we get a second mortgage to get the work done?

Pamela

Dear Pamela,

You might want to get another opinion. Sure, a new kitchen would be nice, but is that the end-all, be-all? Either way, there’s no way I’d go into debt to make this happen. Your house isn’t even on the market yet. There’s no reason to fix up a house that’s not for sale, especially when you only have $3,500 to your name!

There is, for sure, a financial storm brewing on your horizon. Start right now living on rice and beans and saving up piles of cash to build a bigger umbrella.

Wait until he actually lands another job before you make any big decisions. What if something pops up where you are? If you end up moving, then you might take $2,000 from savings to fix up the kitchen and get the house sold. Don’t do it unless you’re going to pay cash, though! You don’t want a second mortgage hanging over your heads, making everything even more difficult.

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: Leave the 401(k) Alone!

Tue, 28 Feb 2012 00:03:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Should we borrow against our 401(k) to help pay mortgages and other debt?

Dear Dave,

My husband has been transferred again in his job. Right now, we have three houses and about $60,000 in other debts. He just found out that he can borrow against his 401(k) without hardship at the beginning of the year. Is this a good idea?

Yvonne

Dear Yvonne,

Three houses? Do you buy a new house every time you move? You guys need to stop doing that. The “other debt” isn’t the problem. It’s those houses that are killing you!

I would never recommend that someone borrow against their 401(k) just to pay bills. It might be a different story if you were facing foreclosure or about to file bankruptcy, but that doesn’t sound like the case here. I think you’ve just made some really bad decisions, and these decisions are following you around and messing up everything else.

Most of the time in situations like this I have to say: “Sell the car!” In your case, it’s: “Sell the houses!” I know the market isn’t great in some areas, but these things are eating you guys alive. You’ve got to put some effort into getting rid of them. Then, start living on a really tight budget and clean up the other debt!

—Dave

For more financial advice please visit daveramsey.com.

Young Women Lesson 7: Homemaking

Fri, 03 Feb 2012 00:02:00 -0700

source: MormonLife.com

Mormon Life says: "I believe it is by divine design that the role of motherhood emphasizes the nurturing and teaching of the next generation." - L. Tom Perry

Discussion Questions

• What kind of feeling do you want in your future home?

• What gifts and talents can help us contribute to a happy home now and in the future?

• What skills and attitudes do we need to further develop to have successful and happy homes?

Excerpt from "Mothers Teaching Children in the Home" by Elder L. Tom Perry, April 2010 General Conference:

I recently had the opportunity to travel with Elder Donald L. Hallstrom to visit five cities in the great central area of the United States. In each city we visited, we would hold a meeting with the full-time missionaries, followed by a meeting with the stake and ward leaders regarding missionary work. Between each of the two meetings, the stake Relief Society would prepare a light dinner for us to afford us time to meet with the stake presidents. When we reached Milwaukee, Wisconsin, two young families appealed to the Relief Society to let them prepare and serve the dinner. The two husbands manned the kitchen. The two mothers supervised the table arrangements and the serving of the food. Three young children handled the table setting and the serving of the food under the supervision of their mothers. This was an opportunity for the mothers to have a teaching opportunity with their children. It was very special to watch the children respond to every detail as they were taught by their mothers. They carried out their assignments completely and fully.

The experience caused me to reflect on the training I had received from my mother. Like the prophet Nephi and also like so many of you, I was born of goodly parents (see 1 Nephi 1:1).

One of my nieces recently shared with me four notebooks my mother had filled with notes as she prepared to teach her class in Relief Society. I would imagine these notebooks—and there are others I have not yet examined—represent hundreds of hours of preparation by my mother.

Mother was a great teacher who was diligent and thorough in her preparation. I have distinct memories of the days preceding her lessons. The dining room table would be covered with reference materials and the notes she was preparing for her lesson. There was so much material prepared that I’m sure only a small portion of it was ever used during the class, but I’m just as sure that none of her preparation was ever wasted. How can I be sure about this? As I flipped through the pages of her notebooks, it was as if I were hearing my mother teach me one more time. Again, there was too much in her notebooks on any single topic to ever share in a single class session, but what she didn’t use in her class she used to teach her children.

I believe it is even safe to say that while my mother was an enormously effective teacher among the sisters at Relief Society, her best teaching occurred with her children in the home.

To read the full talk, click here.

Dave Says: Finding Foreclosure Homes

Tue, 31 Jan 2012 00:03:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: What are your suggestions for finding a good repo home?

Dear Dave,

We’ll be completely out of debt in September and looking to buy a home in the next year or two. We’re thinking of buying a repo home. Do you have any suggestions on where to find these?

Levi

Dear Levi,

One way is to buy the home from the owners before the sale happens. It’s better for them because they realize some money and it stops the foreclosure. It’s better for you, too, because you won’t find yourself in a bidding war later on the courthouse steps!

You can also find listing in your local newspaper under the legal notices section, and if you live in a metropolitan area it’s not hard to find a legal newspaper that lists incorporations, real estate transactions and foreclosures.

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: Stick with Term

Tue, 10 Jan 2012 00:02:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Should we get mortgage life insurance on our new house?

Dear Dave,

My husband and I both work, and we just bought a great house for $150,000. He makes $50,000 a year, and I make about $30,000. We’ve been getting lots of different mortgage life insurance offers in the mail. They say they will pay off the house if one of us dies. Do you think we should take advantage of this?

Blasha

Dear Blasha,

No! These kinds of offers are terrible unless you’re uninsurable, because most mortgage life insurance policies are a lot more expensive than term life insurance.

You and your husband both need about eight to ten times your annual incomes wrapped up in good, level term policies. Forget that overpriced stuff. These will take care of you both, and the house, for a lot less if something unthinkable happens.

—Dave

For more financial advice please visit daveramsey.com.

Dave Says: Business and Friendship

Tue, 13 Dec 2011 00:02:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: My friend wants to rent part of my duplex, but I'm worried this could jeopardize the relationship.

Dear Dave,

I’m about to buy my first home. My plan is to buy a duplex and rent out the other side to help pay down the mortgage quickly. A friend of mine wants to be my renter, but I’m worried that this could jeopardize our friendship. What do you think?

Jerry

Dear Jerry,

This can work, but the odds aren’t in your favor. When you do business with friends you always face the risk of running into a situation that can damage the relationship.

Does this mean you can never do business with friends? Of course not. I do a lot of business with friends. But I make sure that the specific requirements of our relationship are laid out very clearly, in writing.

It would be a good idea to make sure he understands that he absolutely must come talk to you ahead of time if there’s even a chance that he might not make the rent one month. Most problems can be worked out, but you’re not running a charity. This needs to be emphasized in a kind-but-firm manner.

Sometimes friends have unrealistic expectations on both sides. The friend who is renting may think he’ll get some slack on the payments, or the friend who’s the landlord may assume the renter will be a model tenant. These dangerous myths need to be addressed and ironed out before anything is signed.

You can make it work, Jerry. Just be straightforward, and make sure the rules are understood by everyone involved. Then, when you have to enforce the rules, do it gently but firmly.

—Dave

For more financial help, please visit davesays.com.

Dave Says: Ready to Buy?

Tue, 06 Dec 2011 00:03:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: With a good job, great savings, and no debt, am I ready to buy a house?

Dear Dave,

I graduated from college in May, and I already have a job in my field. It was a part-time position that went full time, so I already have $15,000 in an IRA and about $23,000 in savings. I’m also debt-free, because scholarships paid for my education. Am I ready to buy a house?

Zack

Dear Zack,

This is an awesome position you’re in right now! Financially, you’re okay to buy a house. I do have one slight hesitation, though. There are going to be lots and lots of things happening in your world during the next few years, and there’s a possibility you’ll end up moving—maybe for a girl, or even another job—during this time period. It’s going to be a time of transition, and having a piece of real estate tied around your neck could be a huge pain. But if you’re sure that’s where you want to be for a while, then it’s not such a big deal.

Keep in mind that there’s a word for real estate that sells quickly, and that word is cheap! Lots of times, the only way to get out from under something like that fast is to practically give it away. It’s a great time now to buy a home, though. It’s like they’re on sale. Interest rates are really low, too.

Don’t use the entire $23,000 as a down payment on a place, and keep an emergency fund of three to six months of expenses set aside. Make sure you get a 15-year, fixed-rate mortgage, too. If you play this right, Zack, you’re going to be sitting pretty!

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: Mobile Homes Are Bad Investments

Tue, 29 Nov 2011 00:03:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Living in a mobile home has saved significant money for us. Why do you tell people not to buy mobile homes?

Dear Dave,

I’ve heard you tell people not to buy mobile homes. We bought one when we moved out of our apartment, and it’s been much cheaper for us. Why do you feel this way?

Debbie

Dear Debbie,

It’s simple. Mobile homes go down in value. When you buy a house, it goes up in value in the long run. From a financial standpoint, mathematically, when you buy a mobile home, you’re buying a very large car in which to live.

Now, I’m not necessarily against manufactured homes. But the phrase “manufactured home” can mean different things to different people. My test goes something like this: If it’s a type of housing that doesn’t look like it had the wheels yanked off, then it will probably go up in value over the years.

There’s nothing wrong with renting an apartment for a while. When you pay out rent, that’s all you’re losing in the deal. But when you buy a mobile home, you’re losing out with the payments and you’re losing money every day as the thing goes down in value.

That’s why I tell people not to buy mobile homes!

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: Selling House at Auction

Tue, 22 Nov 2011 00:03:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: What are your thoughts on auctioning homes?

Dear Dave,

I have a couple of rental houses, and I was thinking about unloading them at auction instead of renting them out again. What are your thoughts on selling homes at auction?

Shannon

Dear Shannon,

First, let’s take a look at the two types of real estate auctions, absolute auctions and auctions with reserve. With an absolute auction, whatever the house sells for, that’s it. When the hammer drops, you’ve sold the house. An auction with reserve is where the seller, or his agent, reserves the right to accept or decline any and all bids. A minimum price may or may not be disclosed, and the seller reserves the right to accept or decline any bid within a specified timeframe.

As a general rule, auctions are not going to bring retail price. People who go to them are looking for a deal, so you’ve got to be willing to accept less than what the property’s actually worth. Essentially, what you’re doing is drawing out the vultures and hoping one of them will get excited and pay a price close to retail.

Take a good look at your properties, the neighborhoods they’re in, and decide what you’re willing to accept. Then, talk it over with a quality auctioneer in your area. I’ve done pretty well selling properties at auction, and I’ve also found some great deals buying properties at auction. Of course, that meant someone else didn’t do so well!

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: Everything Down!

Tue, 01 Nov 2011 00:04:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: What should I be doing with my money if I want to use your "100 percent down" plan to buy a house?

Dear Dave,

I’m 21 and make $45,000 a year. I’ve heard about your 100 percent down plan to buy a house. I’d like to know more about this, and where I should put the money I’d be saving.

Dear JP,

I like the way you think! But there’s really no big “plan” to what I’m talking about. It’s not rocket science. It’s just a matter of saving like crazy and living on rice and beans for a few years, so you can save up the cash to buy your home outright.

If you’re looking at buying a place in less than five years I’d put it in a money market account. In this case, you’re not going to be saving long enough for interest to be a huge factor. Your best buddy is going to be a low-key lifestyle.

If your timeframe is more like 15 or 20 years, then you should look into mutual funds. Most people don’t stretch the idea out over that period of time, but if you do you’ll get some great help from a friend named compound interest.

I don’t beat people up for taking out a 15-year, fixed rate mortgage. But I’m always for people living like no one else so that later they can live like no one else!

—Dave

For more financial help, visit daveramsey.com.

Dave Says: Not a Good Idea . . .

Tue, 18 Oct 2011 00:04:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: I'm thinking of buying and flipping a house in another state to get money for my own house. What do you think?

Dear Dave,

I live in New York, and even though I follow your advice and live on a budget, it’s really hard to save up for a down payment on a house. My family in South Carolina advised me to buy cheaper property down there, fix it up and flip it to get the money I need. Does this sound like a good plan to you?

Adrian

Dear Adrian,

I wouldn’t do it. Fixing and flipping properties is a very hands-on business, and trying to do it from another state could be a nightmare – especially with the weirdness in today’s economy.When you take on this kind of work you need to oversee what’s happening every step of the way. You’re also working out the details, and keeping an eye on the crew to make sure they’re doing things right. Besides, you can’t just walk up to a house, buy it, and expect to get a great deal.

Professionals who flip houses for a living often look at 100 or more properties to buy just one. It’s not an easy way to make money, and it’s definitely not something to consider doing from a distance.

Just keep on working the budget and save as much as you can. You might even consider getting a part-time job for a while to bring in some extra cash. But waiting and saving up is a lot smarter plan than fixing and flipping houses 900 miles away!

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: Let's Wait a While . . .

Tue, 11 Oct 2011 00:03:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: I'm in college and have a good amount of money saved. Should I use it as a down payment for a house?

Dear Dave,

I’m a sophomore in college, and I earn about $1,500 a month at my job. My rent is $500 a month. I don’t really have a credit history, but I’ve saved $20,000, and I’m thinking about using it as a down payment on a $140,000 home. Would this be a good idea?

Gil

Dear Gil,

I wouldn’t do it. I love the fact that you’re working while you’re in school. Saving that much money is fabulous, especially for someone who’s not even 20 years old!

I almost did the same kind of thing when I was in college. I was into real estate, and I really wanted to test my wings and buy something. Looking back on it, though, I’m glad I didn’t. It would have been a huge mistake.

College can be a bumpy enough ride, even for the most responsible student. If you lost your job you’d be in a real mess, and with your stated income you wouldn’t have a lot of breathing room. Plus, the two years following graduation have the potential to be the most permanently life-changing period you’ll ever experience. You could move across the country for a new job, get married, or decide to attend graduate school. In any of these situations, a house would turn into an anchor around your neck.

Being a renter is a great thing while you’re still in school. In the meantime, keep piling up cash until you’re ready to settle down!

- Dave

* For more financial help please visit daveramsey.com.

Dave Says: Investments Using Home Equity?

Tue, 04 Oct 2011 00:04:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Do you recommend making investments with a home equity line of credit?

Dear Dave,

Right now our debt is keeping us from investing. Do you recommend making investments with a home equity line of credit?

Paul

Dear Paul,

Let me answer this very, very carefully. No!

You don’t borrow on your home, Paul. You never want to put something as precious and important as your home in jeopardy just for the sake of investing.

Follow the Baby Steps. First, get $1,000 in the bank to start your emergency fund. Second, pay off all debts from smallest to largest – except for your house – using the debt snowball. This will lead you to Baby Step Three, which is fully funding your emergency fund with three to six months of expenses. Once you’ve done all this you’re ready for Baby Step Four, which is investing in Roth IRAs and other pre-tax retirement.

When you’re debt-free except for your house, you’ll find investing is easy because you’ve freed up your most important wealth building tool – your income!

—Dave

For more financial help, visit daveramsey.com.

Dave Says: Big Down Payment

Tue, 13 Sep 2011 00:04:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Should you always pay the maximum amount you can afford for a down payment on a house?

Dear Dave,

Is it always a good idea to put the maximum amount of money you can afford into a down payment when buying your first home?

David

Dear David,

Absolutely! Even though most people can’t pay cash up front for a home, you always want to make as big a down payment as possible on any home you buy. Making a down payment of at least 20 percent helps you avoid private mortgage insurance, plus the whole idea is to pay that sucker off and become debt-free as fast as possible. Also, avoid 30-year mortgage plans. Stick with a 15-year, fixed rate loan.

Now, when it comes to putting money toward your down payment, make sure you don’t touch your emergency fund of three to six months of expenses or your retirement savings. Those things are off limits. But scrape together any other extra cash you can, pile it up, and apply it to your down payment. You’ll be glad you did!

—Dave

For more financial help, visit daveramsey.com.

Dave Says: Is Downsizing the Answer?

Tue, 02 Aug 2011 00:03:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Should we move to a smaller home in order to be more financially comfortable when our baby comes? Dear Dave,
My wife and I are about to have our first child. She’d like to stay home with the baby after it’s born, so we’ll be losing about half our income. We’ve looked at our budget, and we can stay in the house but things would be very tight. I’ll make $42,000 this year, with a potential bonus of $23,000 at the end of the year. Our house payment is $1,550 a month. Do you think we should downsize to a smaller home and live more comfortably?
Mike

Dear Mike,
I hate it when people have to leave their homes. It can be a hurtful thing to the heart and spirit.
If you had $65,000 as a steady income the house payment wouldn’t be a big deal. But you can’t count on a potential bonus, and from your guaranteed income, more than half your take-home pay will be wrapped up in a house payment. You’d probably have to take a part-time job, or save any bonus you get to subsidize your income just to have a realistic chance of making ends meet.
I’m all for mom staying home with the kids – especially a little baby – whenever possible. But when it comes right down to it, Mike, you and your wife have to decide if it’s worth the part-time work and budget hassles to stay where you are.
Moving is no fun, especially when it’s something you’re forced to do. But you don’t want to be a slave to your house payment either!
—Dave

* For more financial help please visit daveramsey.com.

Dave Says: Refinance Questions

Tue, 02 Aug 2011 00:03:00 -0600

source: MormonLife.com

Mormon Life says: What should I know about refinancing before I make the deal? Dear Dave,

We’re thinking about refinancing our home, and will be talking to a loan officer next week. What kinds of things do I need to know so we can protect ourselves in the deal?

John

Dear John,

It’s not really a big deal. You’ll get a Truth in Lending Sheet and an Estimated Settlement Sheet. You might want a little more detail, so ask them to give you a sample settlement sheet based on the size of your loan.

Watch out for points and origination fees. These are nothing but pre-paid interest. You might get a little lower interest rate if you pay them, but the break-even point is between seven and 12 years to get your money back. Since the average mortgage is refinanced every 5.6 years, paying points and origination fees is not a good deal.

And don’t worry if the loan officer tells you this isn’t normal. They can make just as much money from the sale. They’ll just have to work a little harder to do it!

—Dave

* For more financial help please visit daveramsey.com.