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Dave Ramsey Says This Financial Mistake Is Like Dropping an Atomic Bomb on Your Budget – The Motley Fool

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Could Ramsey’s advice help you avoid a huge financial disaster…….

Image source: Getty Images

Could Ramsey’s advice help you avoid a huge financial disaster?


Key points

  • Dave Ramsey is a finance expert who has provided lots of advice about budgeting.
  • He’s warned against making a major home-buying mistake that could destroy your financial security.
  • Ramsey believes it can be devastating to purchase more home than you can afford.

No one is immune from financial mistakes, whether they involve missing a credit card payment or accidentally overspending and blowing your budget. 

Some mistakes, however, are more serious than others — and can be harder to recover from. Avoiding these big errors is crucial to protecting your stability, but you need to know what they are to protect yourself.

Finance guru Dave Ramsey has identified one of these big mistakes, and has issued a strong warning to his followers about it. In fact, Ramsey described this error as being akin to “dropping an atomic bomb on your finances.”

The big mistake that Dave Ramsey said could ruin your financial life

So, what’s the big mistake that Ramsey has identified and urged people to avoid? It’s buying more house than you can afford.  

As Ramsey’s blog explains, taking out a bigger mortgage in order to buy a costlier house than planned is like dropping a bomb on your financial life because the large monthly payments that you’ll end up taking on can destroy your ability to do other important things with your money.

“You’ll wipe out all your other money goals (say goodbye to that vacation you planned),” Ramsey’s blog warns. “You may even struggle to pay bills and put food on the table. That’s not what you want. When life happens, you need some wiggle room in your budget!”

Is stretching to buy a house really so bad?

In warning against buying a home that’s too expensive, Ramsey is spot-on. There are a few big reasons why this mistake is so difficult to recover from.

First and foremost, when you take out a mortgage loan, you commit to paying it for a long time. If you’ve borrowed more than you can comfortably pay back, you’ll be stuck with your high payments for decades. During that entire period of time, you could struggle to cover your costs — causing you a lot of unnecessary stress and leaving you without funds …….

Source: https://www.fool.com/the-ascent/mortgages/articles/dave-ramsey-says-this-financial-mistake-is-like-dropping-an-atomic-bomb-on-your-budget/

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