Personal finance expert Dave Ramsey, known for his practical and straightforward approach to money management, recently shared advice for a 59-year-old caller who was grappling with a common financial dilemma many face as retirement nears. The caller had sold a $518,000 home, paid off most of her debts, and was left with $290,000 in cash. However, with no retirement savings in place, she sought Ramsey’s guidance on how to manage the funds to secure her future. Her dilemma was whether to invest the money or put a portion of it toward purchasing a new home.
The caller explained that she was considering buying a new home priced at $300,000 just north of Palm Beach, Florida. She planned to use $200,000 of her funds for a down payment and take out a mortgage on the rest. However, she wasn’t sure whether this was the best course of action, especially since she understood Ramsey’s principles against borrowing money to invest.
Ramsey’s response focused heavily on the importance of financial security and planning before retirement. He emphasized that while owning a nice home is an admirable goal, it should not come at the expense of securing a stable retirement. In his signature no-nonsense style, Ramsey told the caller, “Retiring with zero money or close to zero money and a nice paid-for house is not a plan.”
Instead of taking out a mortgage, Ramsey advised the caller to consider purchasing a more affordable $200,000 home with the funds she had available. This would allow her to live without monthly mortgage payments, freeing up more money that could be directed toward building her retirement savings.
Ramsey’s plan was to give the caller time to rebuild her finances and focus on securing a comfortable retirement. He suggested that the caller live in the $200,000 home for the next 3-5 years, during which time she could focus on saving and investing. After that period, if the market conditions were right and she had built up her nest egg, she could consider purchasing a more expensive home.
By taking this approach, Ramsey emphasized that the caller could prioritize her future financial well-being and avoid relying on assets like a paid-off home to carry her into retirement. Ramsey’s advice underscored his core philosophy that financial stability, especially when approaching retirement age, should be centered around saving and investing, rather than accumulating debt or expensive assets.
His words serve as a valuable reminder for individuals in similar situations to take a step back, reassess their financial goals, and put retirement security first—especially when approaching the final years before retirement.
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