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## The Calculation

(All numbers are based on an after tax calculation)

The Dave Ramsey Misery Index consists of four numbers made out in the form of money lost due to Dave Ramsey’s advice related to home purchases. They are as follows:

1. Home Price Appreciation (Calculated based on actual data per market)  I calculated the actual price difference between the average home price in October 2011 (when I read Dave’s advice about home buying) and the average home price for March of 2014. The first area is represented by Orchard Park, New York, 14127. The average home price increased 19.42% for that time period. Using the example of a \$150,000 home in that market as of October 2011 would cost \$29,130 more or \$179,130 as of  March 2014.
2. Rent versus Mortgage. This is based on a mortgage for a home priced at \$150,000 and the median rent in that market. Between October 2011 and March 2014 it was \$747 cheaper to rent so the \$747 is a negative number. Median rent for Orchard Park was \$861 per month back in 2011. We have removed this part of the Dave Ramsey Misery Index from future posts (June 2014) until such time as they have a significant positive or negative effect on the Misery Index number.
3. Interest Rate Difference. The third number is the difference in interest rates between then and now. Interest rates only changed slightly so it made a difference of \$210. We have removed this part of the Dave Ramsey Misery Index from future posts (June 2014) until such time as they have a significant positive or negative effect on the Misery Index number.
4. Higher Mortgage Payment. The fourth number is the difference between what the mortgage payment would have been in 2011 and what the mortgage payment is now, calculated over the life of the loan secured in 2014.

Expressed in numbers the Dave Ramsey Misery Index for Orchard Park, New York would be as follows:

Home Price Appreciation                                        \$29,130

After tax rent vs. After tax mortgage                       -\$747

Interest rate difference in payment                           \$210

After tax mortgage payment next 360 months   \$41,542

## TOTAL MISERY               \$70,135

Each time I post a new misery index it will be for a particular community showing the misery Dave Ramsey has caused his followers regarding his advice to wait to purchase a home. Back in 2011 I was screaming at the top of my blog posts and videos that it was time to buy a home, an investment property or a primary residence. With interest rates as low as they were and home prices at unbelievable prices it was almost impossible not to see the writing on the wall as to what was going to happen. It has happened. Going forward it appears to me that we are faced with a high probability of increased inflation. With that being said, it is still a good time to buy while interest rates are low and before prices go higher! And, please don’t listen to Dave Ramsey when it comes to buying a home. His advice has created a lot of misery for folks!