Ramsey warns caller against quitting banking job to build house in debt
Dave Ramsey told a caller on The Ramsey Show that her husband’s plan to leave a stable banking career to enter residential construction using debt was “setting yourself up for bankruptcy.”
Personal finance expert Dave Ramsey has advised a caller against her husband quitting a stable banking career to enter residential construction using debt. The caller’s husband, who earned between $80,000 and $100,000 annually, wished to return to contracting work learned through his father’s business. Ramsey warned that purchasing land and building without secured buyers in an uncertain housing market was setting the caller up for bankruptcy.
Instead, he recommended the husband maintain his banking income while undertaking smaller projects, such as decks and renovations, as a side hustle. Ramsey advised waiting until the husband had signed contracts for two or three custom homes before leaving banking full time. Co-host Rachel Cruze noted that the husband’s frustration with banking was causing tension in the couple’s 10-month marriage.
The couple had previously demonstrated financial discipline, having paid cash for their wedding and saved $40,000 for land. However, they were considering using credit cards or loans to fund the construction of a house after spending approximately $2,000 on classes and exams. Ramsey expressed belief that the move into construction could eventually double the husband’s income due to his upbringing in the business.
Ramsey pointed to common custom-home arrangements where the buyer funds the project directly or through a construction loan. As the project reaches milestones such as the foundation and framing, the contractor gets paid in stages while the homeowner remains responsible for the loan. He warned against buying land and starting construction before buyers were secured.
Laura, the caller from Alaska, said her husband struggled to figure out how to start the business as a new contractor. Cruze encouraged Laura to tell her husband honestly what she was thinking and feeling instead of avoiding the disagreement. Ramsey said supporting a spouse did not mean backing decisions that went against her judgment.
