Dave Ramsey says: Work out the details before launching a complex financial task

Dear Dave,

I follow your advice and live on a budget, but it’s really hard to save up for a down payment on a house because property is so expensive on the West Coast. My family thinks I should buy a cheaper property back home, fix it up and flip it to get the extra money I need. How do you feel about this?

Alan

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Dear Alan,

When you take on this kind of work, you need to oversee what’s happening every step of the way. You’re working out details, keeping an eye on the crew and it’s all on you to make sure everything’s being done right.

It’s not unusual for pros who flip houses to look at 100 or more properties to buy just one. It’s not an easy way to make money, and it’s definitely not something to consider doing from a distance. All that being said, can you guess what my answer’s going to be? Fixing and flipping properties in the area where you live is hard enough work. Trying to do it from hundreds of miles away would be a nightmare. There’s no way I’d sign on for something like this.

Keep working on your budget, and start saving as much money as you can. You might even consider getting a part-time job for a little while to bring in some extra cash for your house fund. But waiting and saving up is a lot smarter than trying to fix and flip a house in another state.

— Dave

Making an emergency fund can be a complex financial task

Dear Dave,

I work for a construction company. The closer we get to winter, the more I think about work slowing and my income dropping. I’ve had couple of winters in the past where things were pretty lean. Do you think I should begin building an emergency fund for the slow times?

Carl

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Dear Carl,

I love that you’re thinking about the future. I also think it’s great that you’ve learned from past mistakes and are determined not to repeat those mistakes.

You’ve got a smart idea, but you’re going to have to get on your horse to make something happen for this winter. Also, you might want to think about calling it something other than an emergency fund. How about your “Offseason Fund”? You might think I’m being silly playing with the name, but hear me out. This sort of saving isn’t really for emergencies, is it? It’s a budget issue, because you’re planning and setting aside cash leading up to something you know is coming.

Remember, we’re not talking about some random amount of money. It’s an exact amount that you can budget for accordingly. This winter you may have to think about picking up a side job, depending on the weather and other circumstances. But after that, it’ll be a simple matter of planning ahead for the down time and setting aside something each month to see you through!

— Dave

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