Buying pool shouldn't be dive into debt

By Dave Ramsey

Published: August 25, 2008

DEAR DAVE • We're thinking about adding an in-ground swimming pool. We have no debt, two kids and we make about $58,000 a year. The pool will cost $32,000, and we have $53,000 in savings. We don't know what it will do for our home's value, but it's currently worth about $180,000. Do you think we can swing it?

Kelly

DEAR KELLY • It's really hard to get your money back from installing a pool. In your case, you might see the value of your home go up $10,000 or $15,000, but you won't get your $32,000 back in the deal.

I think you're probably looking at trading several years of vacations for this pool. But if you're cool with that and you guys really love swimming that much, I'd say go for it!

I'd shop for a cheaper price. You can definitely get a nice, in-ground pool for less than $32,000.

DEAR DAVE • I've heard you say that it's really bad to lease a car, but then sometimes you talk about renting a house or apartment as a good thing. How can it be good to rent your home with a lower payment but not a car?

Corey

DEAR COREY • You're confusing a temporary situation with a permanent one. People lease cars with a permanent mind-set. Car payments are just a way of life for most middle-class people who have resigned themselves to never getting anywhere financially. I try to get people to reverse that mind-set, because it's virtually impossible to build wealth while you've got car payments.

Now let's make sure you understand where I'm coming from. I don't recommend that people lease a house or live in an apartment their entire lives. I've never said that. But sometimes — if you're in a big enough mess — it's a good idea to step back and be a renter for a short period so you can get your finances back on solid ground.

Great question, Corey!

DEAR DAVE • My daughter is 16 and has just started driving. Since she got behind the wheel, our insurance rates have been through the roof. She's going to pay her portion, but is there anything we can do to lower the cost without going completely bare bones on coverage?

Barbara

DEAR BARBARA • I know exactly where you're coming from. I've got one of those animals called a 16-year-old in my house, too.

Never go bare bones with a teenager behind the wheel. You need good, high-liability amounts of coverage. Liability is the best buy across the insurance world today, and that includes car insurance. It doesn't change the pricing much, either, to run heavy on liability. I'd advise looking at a minimum of $500,000.

Some companies give discounts for kids who complete driver education courses. Some companies will give you a break if the teen is on the honor roll consistently. About the only other thing you can do is get a high deductible.

E-mail questions for Dave Ramsey to davesays@daveramsey.com. For more financial advice, go online to www.

davesays.org or call (888) 227-3223.

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