“The Ramsay Show” co-host Jade Warshaw discusses Gen Z’s credit card debt and offers advice for Americans struggling to live within their means.
“Always the bridesmaid, never the bride.”
Oh wait, were we talking about buying a home? Ahh… Always a tenant, never an owner.
Many of us feel that way. We watch our family and friends buy homes, smile as they celebrate with housewarming gifts in hand. We rejoice in their happiness. But there’s always a voice inside us asking, “Why not me? When will it be my turn? How on earth did they get all that money?”
Honestly, it’s hard not to feel a deep sense of envy for those who can buy in this market, or who were able to buy before interest rates skyrocketed. They are the lucky ones. We can’t help but feel that somehow we’re behind in the race to homeownership, and that somehow we’re unlucky and wronged. I remember that feeling all too well.
While homes are overvalued in most parts of the U.S., the problem is even worse in five states:
In 2007 my husband Sam and I got married.At first, we moved into his small townhouse, but within a year, instead of upgrading to a bigger house, we “stepped back” – we sold the townhouse and all our furniture and moved into the one-bedroom apartment we could afford.
If I could give you one piece of advice it would be to not be afraid of long timelines, time will pass anyway.
Then a year later, we took it a step further and rented a cheaper place where we could have roommates. Yes, roommates to help with rent. Two married people living with two married people. I can almost hear some of you saying, “Wow, this is just like Friends or Three’s Company.”
“Friends” aired on NBC in the late ’90s and early 2000s. (NBCU Photo Bank/NBCUniversal/Getty Images/Getty Images/Getty Images)
No, we weren’t. We were at rock bottom. Trust me, there’s nothing great about living in an apartment complex and sleeping on an air mattress while your friends are buying houses and having kids. It makes you feel behind in life. But we were about $460,000 in combined consumer and student loan debt. We knew we wouldn’t feel comfortable buying a home until we paid off all of our debt and were on our way to being financially healthy.
Renting is slightly cheaper than buying, and Gen Z is renting more often than buying.
For us, renting was a necessary step on our road to homeownership. Renting gave us the time we needed to pay off debt and save up to buy a home the right way. In truth, our goals were very simple in concept, but very difficult to achieve. But if we could do it, so can you. Our goals were:
1. Save $1,000 in an emergency fund.
2. Pay off all your debts.
3. Save 3-6 months’ worth of basic expenses.
4. Make sure you are playing with a stacked deck.
DECK means:
D. Down Payment: Save at least 5% (if you can save 20% and avoid PMI, even better!).
E. Deposit: You should be prepared to pay this amount up front when you make your offer to show you’re serious about purchasing a home. (This amount will be applied as your down payment at closing.)
C. Closing costsThese fees are about 5% of the purchase price and are usually rolled into your mortgage (this is important because it will affect your monthly payment.) You can pay these fees in cash or offset them by increasing your down payment.
K. Remember and save For miscellaneous expenses like inspections, appraisals, and the actual move!
Click here to get FOX Business on the go
The hardest part for us was the timeline. These aren’t goals you can accomplish in just 6 months. They aren’t goals you can accomplish in 6 years. It takes time to save up to do all these things when you can’t afford it. You need time to save and time to increase your income to save even more. It took us 10 years to accomplish everything on our list. Yes, we rented for 10 years. We hit rock bottom in 2008 and turned the keys on our first house in 2018.
Ramsay Solutions personality Jade Warshaw talks about how Americans are taking control of their finances on “Making Money.”
If I could give you one piece of advice, it would be to not be afraid of long timelines. Time will pass anyway. You can either spend it feeling overwhelmed, jealous, and blaming yourself for all the misfortune you have endured, or you can get busy building the future you want. Trust me, comparison is pointless. It’s just a waste of your precious time and mental calories.
For more information on FOX Business, click here
The problem is, there will always be someone “ahead of you” (if there is such a thing), and there will always be times in life when wages aren’t high enough, the cost of living isn’t low enough, or real estate deals aren’t as good as you’d like. But if you don’t have control over your finances, these situations will hurt you that much more.
If you’re anything like me, getting the keys to your first home will probably be a journey of getting your finances in order. Even without debt, just saving up for a down payment at this price will take time. But don’t let the time take you down and give up on your dreams. It may take longer than you’d like to get your home, and that’s okay, because the joy you’ll feel when you do get it will be that much greater, and your feelings of gratitude and appreciation will be that much stronger.
Jade Warshaw is a personal finance coach, bestselling author of Money’s Not a Math Problem, and co-host of The Ramsey Show. Jade has a professional career in entertainment and has performed in over 92 countries around the world. Since paying off over $460,000 in debt with her husband Sam, Jade now teaches others how to get out of debt and take control of their money. As co-host of America’s second largest talk radio show, The Ramsey Show, Jade helps people take back their power by teaching them how to change the way they think and act about money. Follow Jade at: Instagram, Facebook, Tick tock and Xor online From jadewarshaw.com.
