My vacation home is a tent. Only used it four times, but at least I paid cash for it.

I’ve had a vacation home since 1986. The first one cost 44k and was summers only. We were skiers, so we sold it 10 years later mid 60k and bought a year round vacation home for 110k in 1997. It’s now worth 500k. We use it all the time, year round. Just like Dave Ramsey rambled on about. I rent it out for $1500/wk in July /August. It makes your family much closer and the memories hanging out in the boat at the sandbar every weekend are worth it.

I owned a vacation home for a while and I used it a lot at first but soon we were only going there a few times a year. Makes more sense to just rent lodging.

This guy got shot down hard. But Ramsey is right..a vacation house is more of a status symbol than an actual need.

Guy was dead in the water the second he mentioned Suze Orman haha

"It doesn't fit into the Ramsey plan"... Then WHY are you calling Dave Ramsey to ask if you should do it?

You know it’s bad when he doesn’t even ask what their household income is. This guy never stood a chance.

I don't think you can make a comparison with a depreciating asset like a car with an appreciating asset like a holiday home.

I got a vacation home, bought on debt. It cash flows on Airbnb and my family uses it months out of the year. Best decision I ever made.

Vacation homes are not an investment, the times you can actually rent them is the time you want to use them

I’m not buying a second home because I’m not interested in looking after a property from miles away! It’s just a hassle and expensive liability! Just rent a holiday home! Would put the money into making my life comfortable and easygoing!

Avid Dave listeners knew this was over before Dave spoke.

This is why I love this channel and show. Thank you for the amazing insight. Something I was thinking about 10 years down the road.

Once you’ve watched enough Dave Ramsey videos you can simply just predict what he’s going to say. At this point I don’t get much of anything out of the videos anymore beyond a small amount of entertainment. Don’t fall into one frame of mind like I did only watching and listening to Dave’s principles. I’ve learned a lot and am thankful for Dave and the others, but time to move on!

I really admire how consistent Dave is in his philosophy. Laser focus No need to change if it works!

We paid cash for a share of a lake house 21 years ago and we have loved it but I can see in retrospect that a payment would have been a huge mistake. Life happened and it would have been like a millstone around our necks.

Say what you want about Dave he’s on point about this one life happens & most of the time things don’t go as plan.

Dave: "do you have cash?" Caller: "rice and beans"

I paid off my first home and bought a lake house years ago with a mortgage. So many options, you can always sell it rent it out and make a ton of money! Enjoy life you can’t take it all with you.

This is an excellent video. People in my group of friends and family often talk about having a vacation property. While looking at getting a vacation property, it is far more expensive than renting from somewhere, and it ties you down to that specific property. If you're going to go on vacation, you're probably going to go to that property. If you own the property, you are now responsible for maintaining it and ensuring it stays in good shape. It's a huge commitment. I completely agree with Dave here. A vacation property only makes sense if you can pay for it in cash, and if the cash you're putting towards it is a small amount of your net worth. If it's a large fraction of your net worth, it ties your money into something that may not be a good investment or that ends up being a emotional and financial drain that keeps you from getting further ahead. It was only lightly mentioned here but didn't actually get talked about, but a lot of people justify it by renting it out on AirBnB. Renting out a piece of property on AirBnB or just as a regular rental requires a very different evaluation when looking at it. A lot of people love to say a vacation home is an investment and so their numbers end up skewed. If you're looking for an investment, you need to look in places where you're going to maximize the rent potential vs the cost of the house vs the cost of the upkeep. Renting out a mountain home on a lake (in this example) may be very expensive to maintain (even with hiring out property management) because of its remote location. Furthermore, you do deal with a lot of risks when renting out a property. For example, some people will trash the property. Some people will stay and live there until you can evict them (which in some jurisdictions can take over a year). AirBnB has had a lot of crackdowns, so if you're in certain areas, the zoning laws could prohibit AirBnB, and if you're not able to rent the property out on the regular market or in some other way hold it, you're facing a foreclosure, and you're likely going to sell below market value so that you don't bankrupt yourself or get a foreclosure on your credit. Doing an AirBnB or VRBO investment can be lucrative if done with the correct numbers and safeguards against the risks, but a lot of people jump in because they see it as a way to fund their vacation home only to find out that they're losing money or to have it quickly become a nightmare. For most people, most of the time, the more financially wise choice is to just invest your money, then rent a place when going on vacation. It's far cheaper, and keeps you from getting tied down. Then if you end up with the money to pay cash and the total amount of buying/maintaining/improving the property is small compared to your overall net worth and income, then it can be a great purchase.

I have purchased vacation homes with the ability to do a minor land partition and profited. I have purchased vacation home lots and profited. A vacation home is just a tax category for the smart investor to profit. The best one I purchased was when I climbed a tree and saw the most spectacular ocean view. Put in a culvert, apron, drain field permit and cleared the bench for construction. Sold the lot and house for profit. My vacation is making money.

I thank you Dave and what your family went through in order to be a blessing to someone like me. I paid my home off in thirteen years, have a b.a. in underwater basketweaving, but my memory of you started when you were on TV. I will run away with wisdom or good advice regardless of disagreement in other areas. Stay blessed!

Mortgage payment, property tax, maintenance, home insurance-> why bury yourself more in debt?

I bought a vacation home with the intention of moving into it when I retired. Went into it eyes wide open. Worked out just fine.

I like his decription of it as a toy. That was perfect.

A vacation home is never "paid off". There are lots of ongoing expenses: insurance, security contracts, real estate taxes, HVAC repairs, water damages, window replacements, utilities, HOA fees, dock/accessory building repairs, dead tree removal, landscaping fees, mowing service, etc. If you save some money by doing some maintenance chores yourself, it becomes work instead of vacay.

I very much appreciate how need-focused the Ramsey clan is. That discriminating awareness is important no matter what, even as I know I don’t make all the right decisions regarding want and needs.

Love how Dave tells it like it is and doesn’t care about feelings or bursting peoples bubbles. I respect him for that

I guarantee you this guy wants a home in Summit County because his weekend ski commute is miserable. I have friends who’ve done exactly this and can’t sell their properties that now have insane HOA’s others don’t want, and also realized the time people want to rent the place…is when they want to use it.

I bought one when I was 26. Rented it out. Fully paid off by when I retired. Pretty simple and I made a shitton off of it during all those years. Debt makes you wealthy if you use it wisely.

Most Billionaires would disagree with this. Dave doesn't understand the power of leverage. If you want a vacation home: 1)Form an incorporated entity 2)Get others to invest in it (reduces your risk) 3)Have the company take the debt (leverage) 4)Stay there personally when vacant 5)Rinse and repeat 6)If it doesn't work out, do corporate bankrupcty which allows you to restart essentially.

This was excellent Dave & John!! Thank you.

Dave: Do you have Cash ? uhm no .. I wouldn't do it, it is a toy.

It only works when it works. Classic Dave comment - and absolutely correct!!

Dave's overall plan is great for the vast majority of people, but applying every principle as a blanket to every situation just doesn't make sense. Every person's life is different from the next person's. My wife and I have a second home that we rent out and it's been a fantastic decision. It's only 25 minutes from our primary home so we get to use it a lot when it isn't being rented, it's easy to care for/clean given that it is so close to us, and the rental income has been awesome. It completely pays for itself. It would have been nice to hear more about this property this guy wanted to buy, but Dave shut him down right away. If it's close to ski mountains like he said it is it could be a great source of income for him as well as an appreciating asset to help him build wealth for later on in life. Dave always says your most powerful wealth building tool is your income and a rental property fits right into that philosophy.

a guy I worked with told me he bought a hilton head beach house. I thought it was a bad idea but didn't say anything. Three years later he was selling it at a loss. The real-estate management company ate up all the profit and renters were always damaging something.

I love how his advice is always "if you can't pay cash don't do it" but there's no solid realistic advice to saving up that cash. That's what these callers are trying to do by making these investments

My vacation home was paid off over 50 years before I was born! My Great grandfather built it and it stayed in the family it wasn't his vacation house it was his house. He built a lot of the houses in the ronkonkoma area of long Island.

My RV cost me $1700/month every month I owned it. Paid off, just depreciation. Finally told wife we could enjoy expensive hotels instead for less money.

I don’t think I will ever buy a vacation home. Just the thought of having to take care of another home far away sounds too stressful

I’d like to see a picture of the parking lot at Ramsey Solutions to see how many hoopties are parked there. Or is it full of new cars like most lots.

I love the way Dave thinks, so laser focused, clear cut, understanding and really helps in decreasing stress, he has really helped out my life

This is why we sold our camper. I do miss it, though!!

He has a point. If you are paying a mortgage on one home and have a down payment on for the vacation home but would still have to make payments , life happens and what happens if you can’t make that mortgage on two homes ? Like a pandemic or what if you got really sick and couldn’t work for months etc. I have been dreaming of getting a cheaper beachfront condo unit at Myrtle beach. I seen some affordable ones but I don’t think I can make two mortgages. I am currently trying to pay my one mortgage off early as I’m making double payments when I can on the principal. I think the smartest thing for me to do is pay my mortgage off while putting away as much as I can monthly and when mortgage is paid off I see how much I can pay toward rhat Myrtle beach property. Thank you for this harsh realization !

A short-term rental that pays for itself when you have a very modest primary residence which you hold seems like a wise example since we’re able to bless others presently with “free” weeks with it. Buy and hold. Yes, there are costs as you go, but the feeling to bless others the whole time is great. Not everyone gets to become a millionaire radio/podcast host after a bankruptcy. I think for the person who’s managing finances responsibly and methodically, long-term managed debt is fine. While also paying mind to liquidity thoughts. Long-term rentals are tougher to justify because renters may not pay up front and govt edicts and pandemics can roil them more easily.

"The best laid plans of mice and men." 👍🏾 Tell it like it is, uncle Dave 🤣

We have two beach homes, one in Florida and one at the Jersey Shore. Paid cash for both. The Jersey Shore home pays for itself by renting a few weeks each summer and we use it during the free weeks. The Florida home we spend winter at. No debt and both have increased in value nicely.

Love his description and the flying monkeys!

I paid cash for my vacation home. I love using it. Yes, a hotel or airbnb might be cheaper. But its nice to stay here during peak season without rent, rental deposits, and without hotel extra charges. Repair costs and service charge are not negligible. Would i buy again..yes, but probably a more expensive one.

I say this very same thing about RVs. We have a very affordable travel trailer that we paid cash for and can really enjoy. Every time we go to a campground, we see these giant 5th wheels and motorhomes that folks are paying giant payments on to use half a dozen times a year. Ours has truly paid for itself too by not getting hotels and having to eat out every meal when we go on a trip. We have a place to stay at the cost of a campsite with a full kitchen and still get to enjoy "camping" because it's not a penthouse on wheels. It's all relative, no matter the income level. Just buy what you can afford!

Amen Dave! Even for investments, if you can't pay cash you can't afford it!

Great advice.

man i keep going back and forth from this too. Thanks for slapping sense into me Dave. Hotels/renting means you can change locations too. I absolutely feel the want though haha

Good answer!

If you wait to pay all cash for a vacation home, you probably won't own one until it is too late to matter and enjoy. I was looking at vacation homes in Montana during Covid. I saw one I liked. It was listed at 1.7 million. On the lake...gorgeous. I looked at the price history and the home sold for $270K just ten years earlier. If you had waited to pay in cash...well, someone else now owns it and has a 1.7 million dollar home on the lake and you have some cash in the bank. If you have a plan, have savings that can carry you a few years in the worst of any economic crisis and you put enough down that your payment is manageable, then you mitigate the risk leveraging some debt. I abhor debt, but I also don't want a life where everything is only in the far distant future.

😮😮Why does anyone think they can call Dave and get permission to go into debt???

Unless you have enough money for someone to do repairs on a vacation home then I don't think it would be worth it, you spend your whole vacation fixing the vacation home.

If you got so much time off you can enjoy vacationing so often just Move to your 'vacation home' and sell or turn your home into a rental property. If you are like the rest of us and you got 2-3 weeks free a year to vacation, probably best to just Rent a place for a week or two..... Upkeep, maintenance, taxes, and such, its gonna be a lot.

Thought about buying my grandfather's home in order to make it an Airbnb. He's moving out to go to a retirement community. Ultimately decided against it after doing research and having student loans to still pay for

I have a vacation home in Big Bear California and its paid for. I love it and wouldn't tarde it for anything. Its the bomb

💯 Agree with Dave. Vacation home should be paid in full. (Cash)

Sometimes things work out better than you think too….

Vacation homes only make sense if you can pay for it in cash 💰

My parents paid cash for a lake house when they retired. They also paid cash for a nice home near Greenville SC. When they past away a few years ago, I sold my home with a mortgage and moved to the Lake house. My brother sold the home in Greenville and paid off his mortgage. My wife and I live full time at lake Hartwell. We have no debt. We live in a low tax county. The cost of living in Oconee County SC is low. We are both retired. We live about an hour drive to the north side of Atlanta. Also our country was designated an Internet impoverished county and the Feds dumped piles of cash into a fiber optic to the home internet infrastructure. You could work from home and commute one or two days to an office in Atlanta.

It's like this with RV's and boats too. 90% of owners use them only a few times a year at most. Considering not only the purchase money but also the maintenance money, storage costs, and effort and annoyance, for most people It's better to just rent things.

We bought a vacation home in a different state as our home was paid for. We have lived in the vacation home now over a year and plan to sell the original home. Dave is right in defining a vacation home as a toy. But we need to have toys in our lives too. Choices.

Good point

This makes more sense than I want it too.

If it's $14k/lb to get the bass boat, maybe your friend is just REALLY bad at fishing 🤣

5:45 ... Dave is that a FLEX? 😂

He tried to do a “can I afford it?” and Dave denied. Lol Suze likely would’ve also. 😂

Mr. Dave, we didn't quite have a million dollars but we bought a new car with cash ( that cost almost as much as our first house. Alarming! LOL but the repairs on the old one were costing nearly a car payment every few months, and there are warranties on new ones...we drive em 20+ years ( until the wheels fall off ) so depreciation doesn't apply to us! We are not going to sell it any time soon. The free repairs for ten years makes it so worth it. That old car stranded us out of town more times than I can count. Incidentally after paying cash for that we still had enough from "beans'n ric'n it" to pay our house off 14 years early! Yay. That was a very good couple of weeks we had last year. Yippeee. Saving up now to buy the second one for when my husbands 22 year old truck bites the dirt. Hi Dr. John! Bless.

I love how Dave didn’t even give this guy the time of day…just one question, “are you paying cash for this?” Caller: “Well. No…I have a down payment.” Dave: “Well then, No; You have no business buying a second home…you cannot afford it.” Sometimes, you just need someone to call you out on stupid. Ps. I bet the guy still buys the second house.

Sure am glad they let the caller speak...

We love our lake house upstate NY and it is closed to ski resorts, paid for it CASH. I invite family and friends all the time. It didn’t harm our financial situation and it is a lifestyle choice.

When you factor in taxes, insurance, repairs/maintenance, etc....it almost never pays to own a vacation home and it's much better to rent. Unless of course your family's beach home bought in the 1970's was passed down to you and dropped in your lap with $0 cost basis

Agreed, my thoughts were, when you add up annual taxes, insurance, HOA, maintenance, and mortgage plus interest, (travel airfare too in some cases) you can rent a air b&b for a fraction of the costs, no headaches. On the other hand, if you have the cash to buy and costs are a no brainer, then you should buy..

I’m always surprised how little they listen to the caller before passing judgement. I have nothing against it .. I just think there’s nuance to things and Dave only has a sledgehammer .. lol

We have a vacation home in whatever city we choose to go to. It’s called VRBO and only costs us about $1,000 per week. Let someone else carry the risk!

We bought a second home on a lake with the plan it would be our retirement home. We were spending a lot of time and money on renovations so we decided to turn it into a short term rental to cover the mortgage and improvements. It has turned into a great financial investment, but now we are not able to enjoy it at all and is actually work.

For me, I would prefer to rent someone else's property. Then, I don't feel obligated to go and maintain a second home. We like variety and like to see new places. The funds tied up in a second home would likely impact our travel. We also have some freeloaders in our family who I'm sure would try to take full advantage.

What about buying a retirement home ahead of retirement? Where does that fit in the good/bad idea ?

My sports car, boat, vacation homes were all financed. I invested the cash I could have used to purchase them outright and make the payments with the profits from my investments. The underlying assets from my investments have also increased in value. If you wait until you have the money to buy your toys in full you’ll most likely never get them. If you do pay cash for your toys, I recommend sharing those purchases with a small group of trusted friends and family.

I have a $500 car its reliable has no air con and one of the doors don't lock. Doesn't brake down I just gota remember not to leave valuables in there lol

I agree with Dave 100%. Would never buy vacation home or fancy car like Ferrari and porsche with loan!

I think he didn't let the caller finish his question. What if it's a vacation rental that makes money primarily when you aren't using it? It's only a "toy" if it depreciates and you rarely use it.

he cut him off so fast

I had a vacation home (financed for 10 years). Interest rates were low, I was able to deduct the interest, and I sold it for 60% more than I paid for it. It was the best 10 years of my life.

You can go on A LOT of vacations at REALLY nice resorts all over the country to go skiing for what it costs to buy a vacation home at one location. Now in theory, if the home appreciated greater than the cost of closing costs, it didn't cost you more than the overhead to own it, and you can also rent it out to temporary tenants to offset those overhead costs. Sometimes that's more leg work than most people realize and/or are prepared to do in reality.

If life is ONLY defined by money, Dave can make SOME good points. Other than this, he’s pretty much a bombastic *ss.

I've considered a purchasing house on the outer banks, but tying up that much capitol, plus the cost of maintaining two houses seems like a bad idea from a cash flow standpoint. Much cheaper in the long run to rent houses as needed. Plus, we don't want to do a vacation to the same place every year, plus worrying about renters destroying the place (and if you want to rent for top dollar, you need to be replacing appliances, TV's, carpets couches etc frequently or else you won't get those high dollar rents).

My house at a ski area can be rented for 400$ a night regularly even in the summer And my house rents for 7,000$ for the week of Christmas I purchased my home for 290,000$ in 2003

100% correct.

Second home? Many Americans that are living in their vehicles would like a first home! Just don’t over extend yourself financially. Remember sometimes unforeseen things happen.

With the amount of money you pay in interest, you can rent the best vacation accommodations anytime and anywhere.

I'd probably rather just live in places where I want to vacation

I had a cabin in the mountains, was glad to sell it. Easier to just rent one now and then, plus I’d prefer to go different places.

We have the perfect way to buy a vacation home, fractional ownership. 😎

My timeshares save me a ton of money vs hotel rates. I know Fave hates, but I love. Only a great deal if you use it and buy used.

Vacation homes are the most fun when you are young and active with young kids, but that's when people don't have enough to buy with cash. Then, when you can afford it, you are less active, a vacation home becomes a chore to maintain, and kids are too busy with their adult lives to visit. (According to my neighbor with a lake house they are now trying to sell)