The cost of housing
Daniel's lack of a mortgage helps his extraordinary savings rate. He and his wife are currently renting an apartment. However, Ramsey says his National Study of Millionaires suggests that very few wealthy people don’t own their own homes.
Housing costs are likely to be the biggest line item in most people’s budgets, and buying a house at an attractive 30-year fixed rate could, at the very least, stabilize this cost.
In states like Texas, housing is more accessible, which makes buying even more appealing. As of November 2024, the median listing price for a home in Houston was $330,000, according to Realtor.com, just 65% more than Daniel’s household gross income.
Nevertheless, in the current economic environment, this decision to rent instead of buying a house could also be justified.
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Learn MoreThe rise of wealthy renters
In recent years, relatively high interest rates have made home ownership less attractive. As of November 2024, the 30-year fixed mortgage rate is 6.78%.
Meanwhile, home prices are also up in recent years. The median home in Texas has appreciated 40% from 2019 to 2023, according to the Houston Chronicle.
This unfortunate mix of high prices and mortgage rates has made homebuying a bad deal. In fact, renting is cheaper than buying in much of the country, according to Realtor.com. As of July 2024, an average renter had the potential to save roughly $1,067 per month, or 61.3% more than homebuyers.
This is why many affluent families have ditched the traditional mortgage for a lease. According to 2023 U.S. Census data published by Self, 8.6% of renter-occupied housing units were leased by households with incomes of 150,000 or more.
“I’m a multi-millionaire, and I rent my house,” says Ramit Sethi, host of the Netflix special How to Get Rich. “In fact, I’ve rented for 20 years and I’ve made more money renting than I would have owning a place.”
Ramsey caller Daniel’s choice to rent isn’t unusual and could help his family reach financial freedom faster. Given their household income and disciplined savings, the family will likely get there even if they choose to buy.
“He’s going to call in, several years from now, in a millionaire-themed hour,” co-host Ken Coleman said. “Baby-steps millionaire. He’s that guy!”
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