70 Year Old Only Has $900 to Her Name

I was just watching a Dave Ramsey video on Youtube where a retired 70 year old woman called into the show. She wanted advice on possibly financing the cost of a garage she'd like to have built on her property. She lives two hours west of Olympia, Washington in a small town called Ocean Shores. Basically, here's the rundown:

- She has a mortgage on a house that's worth $190,000.
- She owes $136,000 on the mortgage.
- She's living off her social security and teacher's pension of about $30,000 per year.
- She's got a total of $900 in the bank.

The caller would like to refinance her house to take $20,000 in equity to pay for the garage. The result would be that her property may be worth more with the garage built, but she'd also have a larger mortgage, not to mention higher property taxes.

Can you guess what Dave's response to this woman was? Yep, he said there is no way he was going to advise her to go further into debt, just to have a garage built. I'm assuming he considered the garage a want as opposed to a need. Personally, I consider the garage a want as well as an investment. If it raises the value of the property in a housing market that's climbing, that might be a good thing. If the market is falling though, it would be a terrible investment.

The real issue with this situation is that this retired woman is in no position to be investing in anything when she's barely scraping by and only has $900 in the bank. I think Dave was correct in putting the smack down on her.

I'm attaching the video below. Listen to the woman's voice closely at the beginning. Notice how she starts off justifying her terrible idea by saying the "small house has no garage" and that she's "wanted to build the garage for a long time." It's terrible how people talk themselves into terrible things, isn't it?

 
70 Year Old Only Has $900 to Her Name was posted on 08-05-2020 by CampFireJack in the Finance Forum.
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