How Can I Afford A Home In California?!

How Can I Afford A Home In California?!

All right up next is going to be alex in california hey alex how are you doing very well mr. ramsay how about you better than i deserve what’s up so my wife and i got hooked on to your podcast here we were reading the book that beyond blessed book was robert morris and he’s won over the total money yes he is and then switched over to the total money makeover love

That and then turnout about the free app and we live in the heart of silicon valley which we’re at that point and in the area in the country where we’re looking to buy a home and gone whoa i guess we can get the little patch over here yeah and here was the question that we we’ve decided through we’re somewhere between baby steps 2 & 3 we have an emergency fund

Set up with six months of payments i am currently in school she is working full-time we are 23 and 29 and we’ve listened to your podcast multiple times and the running theme was the 15-year mortgage is what you stand by and the question is how do we afford a home in this area with the 15-year well silicon valley is some of the most expensive real estate in all the

United states right which means when you’re a 23 year old college student you can’t afford a home there you simply can’t afford to live there you don’t have enough money i mean it’s just mathematically you just simply cannot afford to live there i mean and you cannot afford to drop a bentley either and so there’s no shame in that you’re just now you’re just where

You are you’re at the beginnings of your career so if you rent until number one let’s go back and correct one thing you don’t do baby steps 2 & 3 at the same time you need to reread total money makeover you take all your savings and you put it on your dad until your debt is gone with the exception of the fact that your cash flowing finishing college now when

Are you going to finish college about two and a half years good and your degree is in what chemical engineering okay and you’re studying that where san jose out of community college currently yes sir yeah and i don’t know their way of learning where are you going to school yet they’re in san jose okay i was guessing okay because i didn’t think there’s a college

To my knowledge of that type in actual in silicon valley okay but so and you’re renting in that area right now no sir so the situation was my wife and i were living with our parents going to school she graduated we got married we moved in with my parents and they have in grace you know gracious enough to let us live there yeah saving and scraping everything we can

And we’ve been feeling that the call it’s time to look look to move on you you know our own area and it so the options really for us are renting or buying yeah you’re renting and renting okay now you’re renting for right now because you’re finishing school and getting your incomes up and again you live in the most expensive real estate market in the whole freaking

United states with the possible exception maybe the upper east side in manhattan i mean per square foot silicon valley is unbelievable and so it’s a wonderful area but people that make two three hundred thousand dollars a piece and i’m both working live they’re not college students with one of you getting and you just got married and one of you just got the first

Job what’s your wife make she we make a household income about 120 yeah she’s got a great job what’d she do she’s in business marketing great good okay that’s a great start and see when you get out with chemical engineering and you’re making 100 and a half so you got a 270 income or something you know yeah we can talk about buying a house and silicon valley sorry

The number start to make sense then or at least closes they’re going to and so that’s the direction i would go but but for today there you haven’t done anything wrong nor is there anything wrong with my advice when you’re 23 year old broke college student now you’re not really broke you’re married to a lady making 120 but but i mean you see my point you’re in a

This stage of your life is the stage that you rent as cheaply as possible and you know you remember that horrible apartment that you tell your grandkids about someday you know that kind of that’s the stage of life you’re in and the problem is making 120 is actually still going to put you in a horrible apartment in your area anywhere else in the u.s. we would be

Debt-free in a year anywhere else in the u.s. you’d be living in a really nice place you know but again you live in a high income neighborhood and a high expense neighborhood definitely yes so that that’s what we’re facing and it’s okay to have the patience to finish up so i agree with you i want to get out of my parents house if i were you too but you’re renting for

A couple years until you get your income that matches the cost of real estate in the neighborhood that you’re in and there’s no shame in that you didn’t do anything wrong but no i would not buy a house you can’t afford a house right now you know the money you’re gonna making 120 you can’t really go buy shanty not that that’s what i’d be in that area i mean just i

Empathize and others i know the real estate cost and what you’re dealing with there so the only other option is a long commute to school and change the neighborhood you live in and then you can rinse something a little better while you’re doing this and talking about a pretty serious commute because you talked about some traffic around there that’s real real for

Sure hey man thanks for the call five years from now you’re gonna be sitting pretty you’re doing the right stuff

Transcribed from video
How Can I Afford A Home In California?! By The Ramsey Show – Highlights