Dear Dave,

I’m coming up on a transition phase in my life. I’ll be leaving the military soon, and I’ve been evaluating my living situation once I am out. My parents said I could live with them for a while, but I am not sure that would work out well. I have done some research on renting versus buying a home, but I understand that you hate VA loans. Can you clarify as to why you feel this way and give some advice for a person in my situation?

Tyler

Dear Tyler,

Hate might be a strong word for how I feel about VA loans, but there are some things you should know about them. Number one, VA loans are usually more expensive, with the interest rate and all the fees, than FHA or conventional loans. Number two, the reason most people gravitate toward a VA loan is they can get a house with no money down. But if you’re trying to buy a house with no money down, it means you’re too broke to buy a house!

When you buy a house, and you’ve got no money in the bank, that house is going to be a curse instead of a blessing. What happens if you buy a home this way, and the air conditioner goes out next week? What happens if your car needs a new transmission next month? Most people who find themselves in situations like this start piling on debt to fix things, and that’s not a wise answer.

VA loans and other “no down payment” mortgage loans allow you to buy a home from a position of financial weakness rather than a position of financial strength. Don’t get me wrong, I want you to own a home someday. I just don’t want the home—and a bunch of other debt stacked on top—to own you.

My advice is to rent a decent, affordable place for a while and concentrate on getting your new life and career off the ground while saving some money. You might even consider a roommate situation for a while to help cut costs. But you don’t need to be buying a home right now.

Good luck and God bless, Tyler. And thank you for your service to our country! 

—Dave

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

Dear Dave,

I am on Baby Step 2, and I started a YouTube channel earlier this year that led to a new opportunity to make additional income. I try on and review clothing, and I’m paid $30 for each clip that’s anywhere from 30 seconds to two minutes long. Right now, I have about 1,000 viewers. This requires me to buy items from several brands. I usually return the items when I’m through filming, but I’m currently funding this with a credit card I only use for this project. I only pay the minimum each month until I get the refund, so at any given time there can be up to $4,000 on the card in rotation. I make about $86,000 at my normal job, so is this an okay way to fund my project and chalk it up as a business expense?

Amber

Dear Amber,

You’re taking a risk here, from a business perspective, by playing around with $4,000 in debt to make $30 a pop. That’s inordinate. And you shouldn’t be paying for the clothes in the first place. These brands should be giving you clothes to review—that you keep—for the marketing exposure, but I’m not sure you’ve got enough eyeballs on you yet to justify them giving you the clothes for free.

Basically, it sounds like you’re trying to put yourself in a position to be an influencer. And the way influencers get paid is by monetizing eyeballs. Obviously, YouTube and other platforms will pay you if you can get the eyeballs. But 1,000 viewers really aren’t a lot these days. You’re getting there, though, and I’m glad you’re working at it and trying to make things happen.

You make good money, Amber. I want you to set aside $2,000 or $3,000 for this business, maybe out of the business income, and prime the pump one time. By that, I mean open a separate checking account that’s for your clothing exchange process only. Here’s the thing, let’s say you bought $1,000 worth of stuff from one of these companies, and they suddenly decide they’re not taking it back. You just ate that $1,000. And guess what else? Now, you really have credit card debt.

There are three things you can always be sure of in business. One, it’s going to cost twice as much as you think it will. Two, it’s going to take twice as long as you think it will. And three, you are not the exception to these things. While we’re at it, add this to the list of stuff you can always be sure of—you’ll never find me advising or endorsing credit card debt!

—Dave

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.