The Decisions You Make Now Shape Your Success

**SPEAKER_2** (0:04)
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**Jade Warshaw** (0:13)
Normal is broke, and common sense is weird, so we're here to help you transform your life from the Ramsey Network in the Fair One's Credit Union Studio. This is The Ramsey Show. I'm Jade Warshaw. Next to me, GK, George Kamel. Taking your calls for the next couple hours on the phone lines. We've got Katherine, who's in Atlanta, Georgia. Katherine, you are on the line, my friend.

**SPEAKER_4** (0:35)
Hey guys, can you hear me?

**Jade Warshaw** (0:36)
Yes, ma'am.

**SPEAKER_4** (0:38)
So my husband and I, we are 20 and 22
We've been married for a little over nine months now and we're really starting to think about our future and being wise with our money early on. And our biggest goal is to buy our first house before we have kids Lord willing in the next two to four years. And we want to put 20 percent down so we can avoid Pima. We both work full-time jobs. We have a budget and we just want to make sure we're doing everything we can to reach that goal. So my question is, how aggressively do you think we should be saving for a house while still kind of enjoying this season of life? Should we cut back on fun things and kind of go in for the next couple of years to reach our goal faster? Or is there kind of like a healthy way to balance where we can still travel, do date nights and things here and there?

**Jade Warshaw** (1:27)
I mean, I do think I love the goal of buying a house and I even love your time frame. You said it in the next two to four years. And I think the balance that you need to strike is considering the following. If you don't have debt and you are in a phase where you could also be investing this money, there's a give and take, right? You want to save for that down payment, but you also don't want to lose out on unnecessary time in the market. And so you want to balance that. If you can do both at the same time, I really love that and still hit your goal. But if it means, hey, we're not going to be able to invest 15 percent because we need to put all of our extra margin towards this down payment, then yeah, you might want to go at a more intense pace so that we're not losing time.
So that's one thing to think about. And also a thing that I want you to think about is, I love that you're trying to avoid private mortgage insurance, PMI.
However, in today's market, 20 percent down is generally just the starting point, right? Because we want to make sure that payment is no more than 25 percent of your take home pay. And for that reason, many folks, depending on the amount of house that you're getting, many folks are needing to put upwards of 30 and 40, maybe even more, down so that they can make sure that that ratio is okay in their monthly budget.

**George Kamel** (2:44)
Yeah, it's less about the down payment and it's more about how does this actually factor into your budget as a monthly payment? And so I would crunch the numbers. What's your income here, your household income?

**SPEAKER_4** (2:55)
Yeah, our household income after tax is about $87,000.

**George Kamel** (2:59)
Awesome. And you guys are debt free with an emergency fund. Where are you at?

**SPEAKER_4** (3:03)
Yeah, we are debt free with an emergency fund. We have also three months of our monthly income saved. So we're basically done all the baby steps up into a house and putting money aside for our kids' college funds and things like that.

**George Kamel** (3:17)
Yeah, so you're at baby step three B and that's saving up for a down payment. And to choose your own adventure, like Jade mentioned, you can invest anywhere from zero to 15%.
And what I would do personally as a guy who went, we went a little too hard in the paint when we bought our house, we paid it off in 26 months. That was not the goal. We just ended up kind of sprinting and we couldn't stop. And so I would encourage you guys to live your life and prioritize realistic enjoyment. Like plan for a vacation, plan for regular date nights. You guys are newlyweds. This is a very exciting time. I don't want you to look back when you have kids in a house and go, man, we never got to enjoy anything. We just sort of sped walk through it like a mall walker.