Finally got it

http://markmail.org/message/fiw7dupsgejaqvui
michael_teter had the answer
cd into ruby-1.8.7.../ext/openssl
AFTER installing Ruby
THEN
ruby extconf.rb --with-openssl-include=/usr/local/ssl/include 
--with-openssl-lib=/usr/local/ssl/lib
make
sudo make install

then start using Ruby

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