Dave Says: How Much Income Do I Put Toward Buying Land?

Dave Ramsey
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Posted: Nov 17, 2009 2:10 PM

Dear Dave,

My wife and I make about $85,000 a year. We’re debt-free, and we have no kids. We’d like to start saving money to buy some land in the near future. What percentage of our savings should we put toward this? --Dennis

Dear Dennis,

I don’t know if there’s necessarily a specific percentage for this kind of thing. Since you guys are already debt-free you need to make sure that you’ve got a fully-funded emergency fund of three to six months of expenses in place, along with retirement funding. In your case, anything else you have sitting around after that is simply wealth.

If you’ve got $50,000 sitting in a savings account in addition to these things, and you’d rather have $50,000 worth of dirt instead of a bank account, I’m cool with that. It’s really more a matter of ratios than percentages. Now, all this might change if you make $15,000 a year instead of $85,000 a year. I’m not going to put retirement on hold for 10 years to save up to buy dirt, either.

There needs to be a sensible balance, and you’ve got to make sure you have the important things covered first! --Dave