Q. I've paid off more than $50,000 in credit card charges with the help of a debt-management program. I'm considering getting a mortgage when I'm debt-free in a few months because it's cheaper to buy a condo where I live than it is to pay rent. Are the monthly savings worth taking on a $150,000 obligation at this stage in my life? I'm 52.
A. You're not free of debt yet, and you're asking if you should take on more? Why not ask me how to build a solid financial base so you never fall into a hole like this again? I don't care how high rent is where you live. Building up your savings should be your priority, not buying a condo.
Besides, you've already made a huge mistake in your calculations: By comparing your monthly rental cost with a projected base mortgage amount, you've dangerously underestimated the real cost of homeownership.
If after reviewing my rules of the road (see The Rental Crunch), you still want to buy, then take out a 15-year, fixed-rate mortgage on a condo you can afford. (Don't even think about trying to save on your initial payments with an adjustable-rate loan.) That way you'll be debt-free before you turn 70. Go with a 30-year mortgage, and you will still be making payments well into your 80s—that's a risky gamble. As a homeowner, you should always plan to have your house paid off before you stop working.
Next: Suze Orman's guidelines to see if you're really ready to buy