My Parents Asked Me For A $50,000 Loan (I'm 25)

Summary

Podcast Summary: The Ramsey Show Highlights

Episode: My Parents Asked Me For A $50,000 Loan (I'm 25)
Release Date: March 2, 2025
Host: Ramsey Network

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Introduction

In this episode of The Ramsey Show Highlights, Michael seeks guidance on a challenging personal financial dilemma. As a 25-year-old who has recently achieved financial stability, Michael is confronted with his parents' request for a substantial loan to purchase a second home. The discussion provides valuable insights into managing family financial requests, setting boundaries, and maintaining healthy relationships.

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Caller’s Dilemma: Seeking Financial Advice

Michael's Situation
Michael initiates the conversation by explaining that his parents, who currently live ten hours away from him and his siblings, are requesting a loan of $40,000 to $50,000. The purpose of the loan is to secure a down payment for a second home, which would allow his parents to be closer to the family during significant life events, such as upcoming marriages and the desire for grandchildren.

• Michael:
  “They currently live about 10 hours away from the rest of us siblings and they don't have the down payment for that home... I'm 25 years old, just got out of my own debt. I'm really unsure what to do.”
  [00:18]

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Expert Advice from Dave Ramsey

Initial Response: A Firm No Dave Ramsey immediately advises Michael against lending the money to his parents.

• Dave:
  “Oh, God, no, don't do that.”
  [00:11]

Understanding the Parents' Position Dave elaborates on the parents' request, highlighting that while they have set personal principles for their lives, they are unable to afford them and are turning to their youngest, most financially secure child for assistance.

• Dave:
  “So they come to their 25 year old child and say, you make our dreams that we can't afford. You make our principles concrete because we can't.”
  [00:57]

Impact on Relationships Dave emphasizes that lending money in this situation is not only financially unwise but can also damage the parent-child relationship.

• Dave:
  “And by the way, this will mess up your relationship with your dad.”
  [01:28]

Advice on Financial Boundaries He advises Michael to firmly decline the request and suggests setting clear financial boundaries to preserve the relationship.

• Dave:
  “I love my dad more than life itself... I have a person, he's got a person. And that helps preserve our relationship.”
  [02:00]

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Sharon's Perspective: Balancing Gratitude and Autonomy

Acknowledging Parental Support Sharon concurs with Dave, recognizing the importance of appreciating the support Michael has received from his parents while also emphasizing the necessity of financial independence.

• Sharon:
  “My parents paid for my college... But also, Michael, you're a 25 year old man who made decisions with his income where you could have gotten a second home... you've chosen to do things to get out of debt and to save.”
  [05:11]

Encouraging Personal Responsibility She underscores that as adults, children must make their own financial decisions, separate from their parents' needs and expectations.

• Sharon:
  “From there is... a point that we become adults and we get to make our own decisions.”
  [06:05]

Differentiating Between Necessity and Luxury Sharon differentiates between genuine financial emergencies and requests for luxury purchases, advising Michael to assess the true necessity of his parents' request.

• Sharon:
  “This is a second home... It's a luxury... It’s paying a mortgage on something that's literally just sitting there. It's not good.”
  [07:15]

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Deep Dive: Family Dynamics and Financial Boundaries

The Complexity of Parental Requests Michael explains the broader family context, including the distance between family members and the timing of significant life events that are prompting his parents' request.

• Michael:
  “All of us kids were all over the country when they decided to move down south away from us... my two of my siblings are getting married in the next few months... wanting to have children obviously pretty quickly.”
  [02:31]

Evaluating the Practicality of a Second Home Sharon suggests alternative solutions, such as using short-term rentals like Airbnb, to address the parents' need for proximity without the financial strain of purchasing a second property.

• Sharon:
  “I would ask them that... just do an Airbnb for two weeks... From a financial standpoint, it doesn't make sense if you can't pay cash for a second home...”
  [03:07]

Maintaining Financial Independence Dave reinforces the importance of maintaining financial independence and not viewing parental support as an investment expecting returns.

• Dave:
  “Your parents aren't destitute... They have three amazing kids... This isn't that situation... Your parents aren't destitute.”
  [06:28]

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Concluding Advice: Upholding Financial Health and Relationships

Crafting a Respectful Decline Dave provides Michael with language to respectfully decline his parents' request, emphasizing gratitude while standing firm on personal financial goals.

• Dave:
  “Thank you all so much for reaching out and means a lot to me that y'all have noticed how I've turned my things around... I'm not in a place where I can loan money to family members.”
  [04:09]

Emphasizing Self-Reliance and Boundaries Sharon sums up the discussion by highlighting the balance between being grateful for parental support and asserting one's own financial autonomy.

• Sharon:
  “Our parents have helped us and we will always have that gratitude... But also there's a point that we become adults and we get to make our own decisions.”
  [06:05]

Final Takeaway: Prioritize Financial Well-being Both experts concur that maintaining one's financial health and clear boundaries is paramount, even when it involves difficult family conversations.

• Sharon:
  “This is a second home. If you're looking for food, then I'm all about it... but dude, if it's to pay for their second, like loan of money for a second home, I'm just gonna say no, man.”
  [07:15]

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Key Quotes with Timestamps

• Michael:
  “I'm 25 years old, just got out of my own debt. I'm really unsure what to do.”
  [00:18]

• Dave:
  “Oh, God, no, don't do that.”
  [00:11]

• Sharon:
  “Your parents have helped us and we will always have that gratitude and acknowledgements, always.”
  [05:11]

• Dave:
  “This is a second home.”
  [06:54]

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Conclusion

This episode of The Ramsey Show Highlights delves into the complexities of familial financial obligations and the importance of setting clear boundaries. Through Michael's situation, Dave Ramsey and Sharon Ramsey offer practical advice on maintaining financial independence, preserving family relationships, and making informed decisions that align with one's financial goals. Listeners are encouraged to prioritize their financial well-being while navigating the delicate dynamics of family support.

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Transcript

[Michael]

Brought to you by the EveryDollar app. Start budgeting for free today. So my parents asked me for 40 to 50k for a down payment for a second home.

[Dave]

Oh, God, no, don't do that.

[Sharon]

Okay. Can my.

[Dave]

Sorry. Okay, go ahead.

[Michael]

So they, they currently live about 10 hours away from the rest of us siblings and they don't have the down payment for that home. The reason for them not being able to move and be closer to us is my father is waiting to finish five more years at his job to collect a pension and they're wanting to have the flexibility to be closer, but to have their own Place. I'm 25 years old, just got out of my own debt. I'm really unsure what to do.

[Dave]

Yeah, I would say no.

[Sharon]

Why are they coming to you, Michael, and not another sibling?

[Michael]

I'm the most financially secure right now. My other three siblings are Liv and Paycheck. Paycheck or just getting out of their own student loans?

[Dave]

Okay, so what they're asking you is a couple of things. They've created a set of principles for their life. We're going to stay here for five more years. We don't want to be uncomfortable when we travel. We want to have our own place. Problem is they're grown adults, but they can't afford these principles they've put into motion. So they come to their 25 year old child and said, you make our dreams that we can't afford. You make our principles concrete because we can't.

[Michael]

Right.

[Dave]

And you. That just. It's not your job. And by the way, this will mess up your relationship. I would tell you there's a financial reason to not do this, but the main thing is, dude, it will mess up your relationship with your dad.

[Michael]

Worried about.

[Dave]

Yeah. So I don't. Do you have $25,000 in cash you can just hand them?

[Michael]

Yeah, yeah. I. I'm debt free now. Quite a bit in a savings account right now that he's aware of. Obviously he helps me look at my financials. He's the only one I talk to my financials about.

[Dave]

You need to stop doing that, by the way. Yeah, he's violated that trust. And so you need to get a smartvestor pro and have that person do that. I love my dad more than life itself. And him and I don't go through the, the intimate details of our finance, my. Of our finances together. I have a person, he's got a person. And that helps preserve our relationship.

[Michael]

Right.

[Dave]

I hate this for you, man.

[Sharon]

How do you do? Can you predict at All. Michael, just from the pattern of who they are, is it more your dad wanting this, you think, or your mom?

[Michael]

So it's obviously a complex situation. All of us kids were all over the country when they decided to move down south away from us. And now my two of my siblings are getting married in the next few months and, you know, wanting to have children obviously pretty quickly. So I think a lot of it has to do with them wanting to be closer to us during those times, obviously being stuck at that place that they're at right now due to the. Their current position.

[Sharon]

Yeah, well, they wouldn't be able to come up a ton anyways because he's working still. Right. I mean, how often would they be able to come up, realistically?

[Michael]

Yeah, that's a good question too. And I, I don't, I don't know.

[Sharon]

I would ask them that. And honestly, Michael, for them, I'm like, I mean, just do an Airbnb for two weeks. Like if they're coming up, I mean, for them financially, that makes more sense instead of having an asset here. You know, we had some friends and their in laws. Yeah, we're out of state. They weren't asking them for money, but they were considering buying a condo. And after they ran all the numbers, like, well, we're really probably realistically only going to be here a total of maybe six weeks throughout the year. Like, if you put it all together, your kids are here, you can stay with them or get a hotel. I don't know. It just. From a financial standpoint, it doesn't make sense if you can't pay cash for a second home for it, just to be there for your own leisure. But you're paying, paying a mortgage on something that's literally just sitting there. It's not good. I don't, I wouldn't even suggest that to them. If they called us and we're like, hey, I want to take out a loan on a second home. Here's the situation. I would probably tell them, no, I wouldn't do that anyway, let alone borrow the down payment from your son.

[Michael]

Yeah, I'm planning to talk with them in a few months about it. To the both of them. Yeah, just let them know. But obviously, and you know, you know, wanted some advice.

[Dave]

I would, I would. The language I would use is, thank you all so much for reaching out and means a lot to me that y'all have noticed how I've turned my things around. That's pretty cool. I've got some pretty clear financial goals that I'm Trying to hit. And so I don't, I'm not, I'm, I'm, I'm not in a place where I can loan money to family members.

[Michael]

Right.

[Dave]

And just any, any response they have is they've got to own it, man.

[Michael]

Right. I think, I think the biggest thing for me is my parents have allowed me to be as you know, in this position and, and obviously I feel about it.

[Dave]

What does that mean?

[Michael]

They really pushed and you know, so how I got successful is just I got lucky doing what I do for a job and lean on my parents a lot and they had to take out some loans to get me, you know, to the point where I'm at now. More specifically it has to do with obviously just the job that I have now. And you know, I thought about changing my careers at one point and I'm glad I stayed with it because it's, it's been very, very successful.

[Sharon]

Yeah. And I hear that. And I think we can give. I mean my parents paid for my college. Right. I mean like there are things that our parents do to give us a leg up. That is 100% being aware of that and saying that and the gratitude in that. I mean that I'm not ignoring that at all. But also, Michael, you're a 25 year old man who made decisions with his income where you could have gotten a second home, two cars and you could be living paycheck to paycheck. Even though you make a lot of money, you can make other decisions but you haven't. You've chosen to do things to get out of debt and to save and you've done those, Michael. They didn't do those for you. And your siblings are example of like your parents, I'm sure help them in certain ways as well. But they've chosen a different path. So like I give yourself credit. Do you know what I mean? Like you, you've. Yes, our parents have helped us and we will always have that gratitude and acknowledgements, always. But also there's a point that we become adults and we get to make our own decisions. And from there is.

[Dave]

And this isn't even at that level. Here's what I know for certain. If Dave Ramsey and Sharon Ramsey, I don't know how this happened. They fell on hard times and they had nowhere to go. They have three amazing kids. One of them sit next to me that would say, y'all come stay at the house. Right? We'll help you out, we'll help you get on your feet. This is not that situation.

[Michael]

Sure.

[Dave]

And so your sense of, you're thinking of your parents investment in you as some sort of 401 that they put forward and if they put that on you, shame on them. Parents don't pay for their kids college as some sort of vehicle investment vehicle so that they get a demand, a return so that when they want a different color car, you have to be their bank.

[Michael]

Right.

[Dave]

Your parents aren't destitute. They've made a series of choices starting a few years ago, and they're like, screw this, we're moving out of here. We want to move far away. And they did.

[Sharon]

Yeah, that's a great point. It's a second home.

[Dave]

This is a second home.

[Sharon]

It's a, it's a luxury.

[Dave]

Yeah, you're right. Yeah. So this, this isn't. If, if they, if you're looking for food, then I'm all about it. Yeah, like, we're gonna help out mom and dad. We're gonna honor our father, Mother. I'm all about that. But dude, if it's to like pay for their. Yeah. Their second, like loan of money for a second, I'm just, I'm gonna say no, man.

[Sharon]

And, and I'll say this too, Michael. Knowing my parents with the grandkids, they're very emotional right now with this dream of, oh my gosh, our whole family's about to. There's gonna be babies on like, their emotions are probably driving this as well. And so for five years they're going to be okay. Yeah, they're going to be okay.

[Dave]

They're going to be all right. Mom can come stay with you anytime she wants.

[Sharon]

That's right. Thanks for the call, Michael.

[Michael]

Hope that helps create your free every dollar budget today. The simplest way to budget for your life.