Today's Habits Create Tomorrow's Progress
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Should I refuse to co-sign a $250k HELOC for my parents?
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normal is broke and common sense is weird so we're here to help you transform your life from the ramsey network and the fairwinds credit union studio this is the ramsey show i'm george camel here with jade warshaw taking your calls at 888-825-5225 we'll try to help you take the right next step your life and your money sarah is up in new york city what's going on sarah
Hi, thank you for taking my call. Absolutely. My question is, my parents, they're pressuring me to sign a $250,000 HELOC, and I feel very uncomfortable doing it.
You should.
Yeah, they already owe me $20,000. Oh, man.
So they went, hey, Bank of Sarah hooked us up last time. Let's try to 10X our loan.
Why is this even a conversation? Why is this even gone beyond the point of an immediate no?
Honestly, they cannot pay their debts. And I'm very worried for my little siblings.
Okay.
Because the siblings are living with them. You are not.
Yes. No, I'm also living with them as well.
Oh, wow.
How old are you? Very hectic. I'm 23. Okay. And how old are the siblings? They're 14 and 8. Okay, 14 and 8. And is the HELOC, you said they can't pay their debt. So is the HELOC supposed to be used to pay the debts? Is that the point?
Yes. But the thing is, another twist, they already took a HELOC on our primary home. They want to take a HELOC out on their rental property.
Oh, boy. What's the rental property worth?
It's worth about $950,000. And what do they owe? They owe $250,000.
So they got $700,000 sitting in equity in that thing. Yes. Why not sell it? They refuse. I guess they want to keep it in the family, but... There's not going to be anything to keep in the family if they keep this up. They're going to HELOC their way into oblivion to where there's no equity anywhere. and they're gonna be forced to sell it one day. So no, the easy answer is you get to say no.
Go back to the kids though, when you say you're worried about them, in your mind, what do you think is gonna happen?
I'm worried that there's not going to be any money left for them. Like as far as inheritance? Yeah. And then I also think, I feel like the primary house is going to get foreclosed on because they have no cash.
But they do have, here's the problem. What you're saying is likely true. Maybe they will get foreclosed on. Maybe they will destroy property. any inheritance or anything like that over the course of time. All those things are very possible. So hear me say that, because if they don't change course, yeah, they're really setting that path for themselves very clearly.
Inheritance is the last thing I'm worried about.
Yeah. And the truth is, if they do foreclose, the truth is they do have some assets here that they have at their disposal if they choose to do so. The hard part here is these are grown adults who are going to make their own choices. And the hard part is you just having to sit back and watch despite them maybe having some better advice, them not taking the advice. That's the hard part. If you had told me, hey, I'm really worried that the kids aren't having food at night or they're, you know, The lights are getting cut off and things like that. I think we'd be in a different discussion right now. But if truly your only worry is, gosh, when we become adults, there's not going to be any inheritance. I don't know that there's much you can do to stop that.
Yeah, that's true. I also I feel like the lights might come off because my parents, they don't work. They're both retired and they don't have any cash.
Well, you're there. Are you there without are you there staying rent free or what's your deal being there? No, I give them $1,000 every month. So why don't you, let me say this, instead of you giving them $1,000 in cash, why don't you say, I will pay the utilities. If I'm going to be there, I'm going to pay the water so that you know that those things stay on and maybe the other bits you pay groceries or whatever it is that you're doing. But in this case, I would be hard pressed to be handing somebody my money in cash, hoping that they're doing the right thing with it, which is keeping the utilities in the place that I'm living.
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Chapters
6 chapters
1
Should I refuse to co-sign a $250k HELOC for my parents?
0:06β18:42
2
What are my options if a service-funded job contract would charge 3x tuition for leaving?
18:42β1:06:50
3
Why do Jade and George say a $1,000 emergency fund can speed up debt payoff?
1:06:50β1:08:48
4
Should we sell a second vehicle to become debt-free faster?
1:08:48β1:13:58
5
Do I pay off a solar lien or my mortgage when the lien is in my ex-inβlawsβ name?
1:13:58β1:18:54
6
How can someone avoid homelessness while handling IRS and child support payments?
1:18:54β2:06:49