My Parents Took Out A HELOC To Help Me With A Car Repair

Summary

The Ramsey Show Highlights: "My Parents Took Out A HELOC To Help Me With A Car Repair"

Release Date: July 13, 2025
Host: Ramsey Network
Participants: Dave Ramsey, Jade Warshaw, Caller

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Introduction

In this episode of The Ramsey Show Highlights, a caller reaches out to seek financial advice after his parents took out a Home Equity Line of Credit (HELOC) to assist him with an unexpected car repair. The discussion focuses on debt management, family financial dynamics, and responsible borrowing.

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Caller's Situation

The caller explains his predicament, detailing how his car engine failed last October, coinciding with a hurricane evacuation that left him jobless for several months. During this challenging period, his parents stepped in to help by obtaining a HELOC on their home to cover the necessary expenses.

• Caller: "So my car engine went out last October and it took a few months to get my vehicle back because it actually broke down when I was evacuating for the hurricane... my parents floated a rental car and then I ended up losing my job."
  [00:06]

He reveals that his portion of the HELOC amounts to $11,500, though he is unaware of the total sum or the other parties involved.

• Caller: "My portion of it is 11. About 11,500."
  [01:00]

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Parents' Involvement and Financial Decisions

Jade Warshaw probes into the circumstances surrounding the HELOC, questioning the caller's awareness and approval of his parents' decision to incur debt on their home.

• Jade Warshaw: "How much is this HELOC?"
  [00:55]
• Caller: "So my portion of it is 11. About 11,500."
  [01:00]

Upon realizing the substantial amount taken, Jade expresses concern over the lack of transparency and the potential exploitation of family trust.

• Caller: "I saw a receipt sitting on a table that I shouldn't have."
  [06:16]
• Jade Warshaw: "That's my theory... I never approved this message. I never said go into debt... I never said go 11,500 into debt."
  [05:07 - 08:10]

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Financial Advice from Ramsey Network

Dave Ramsey’s Guidance

Dave Ramsey equates the HELOC debt to obligations like the IRS, emphasizing the importance of prioritizing its repayment to safeguard the family's financial stability.

• Dave Ramsey: "I think I would treat this like the IRS and put at the very top and pay this off as fast as humanly possible."
  [00:56]

He suggests negotiating a manageable repayment plan and ensuring that the debt takes precedence in the caller’s financial strategy.

• Dave Ramsey: "Tell them you'll pay them 238 and that's a minimum payment and put in the debt snowball."
  [05:42]

Additionally, Dave advises obtaining detailed documentation of the car repair to verify the legitimacy of the expenses.

• Dave Ramsey: "I would ask... call the mechanic and ask for an itemized receipt, because I want to see."
  [07:29]

Jade Warshaw’s Perspective

Jade Warshaw underscores the emotional and ethical complexities of taking on debt for family assistance. She highlights the imbalance created when parents refinance their home to support their child, emphasizing the caller's lack of control over the decision.

• Jade Warshaw: "You didn't tell your dad to take out a HELOC because I need the money and you need to risk your house for me."
  [02:37]
• Jade Warshaw: "I'm going to pay you back this 11,500. I'm not going to pay it back at 8% interest because I would not."
  [06:10 - 08:10]

She also touches on the strain such financial arrangements can place on family relationships, advocating for clear boundaries and open communication.

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Analysis of the HELOC and Financial Implications

The discussion reveals that the HELOC not only covers the car repair but may also encompass additional expenses, potentially totaling around $30,000. The caller is now obligated to repay his portion with an interest rate that initially stood at 8%, later reduced to 7.5%.

• Caller: "Like 30."
  [06:22]
• Caller: "So like 6,600 was the engine, and then the rest was labor and taxes."
  [07:58]

Jade Warshaw expresses skepticism over the fairness and necessity of the arrangement, pointing out that the caller had minimal influence over the decision to take out the HELOC.

• Jade Warshaw: "I'm not paying interest on this... I never said go into debt... you had very little say in what took place."
  [06:10 - 08:10]

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Potential Issues and Concerns

Several concerns emerge from the conversation:

1. Lack of Transparency: The caller was not fully informed about the total amount or the conditions tied to the HELOC, leading to confusion and potential distrust.

2. Family Dynamics: The parents' decision to take on significant debt impacts their financial security and alters the parent-child relationship dynamic.

3. Financial Burden: The caller now faces the responsibility of repaying the HELOC portion, which may hinder his progress through Dave Ramsey’s Baby Steps—a structured plan for financial peace.

4. Interest Payments: The caller grapples with the ethical dilemma of repaying the loan with interest, feeling it is unjust given his lack of consent in the debt acquisition.

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Conclusion

The episode sheds light on the complexities that arise when family members intercede financially, especially through debt instruments like HELOCs. Dave Ramsey and Jade Warshaw collaboratively offer guidance emphasizing swift repayment, clear communication, and reassessing the ethical implications of such financial support. The listener is left with a nuanced understanding of balancing familial support with personal financial responsibility, advocating for transparency and mutual respect in financial dealings within the family.

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Notable Quotes:

• Dave Ramsey [00:56]: "I think I would treat this like the IRS and put at the very top and pay this off as fast as humanly possible."
• Jade Warshaw [02:37]: "You didn't tell your dad to take out a HELOC because I need the money and you need to risk your house for me."
• Jade Warshaw [06:10]: "I'm going to pay you back this 11,500. I'm not going to pay it back at 8% interest because I would not."
• Caller [03:42]: "Yeah, I was not happy with it and I haven't been back to him for services."

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This episode serves as a crucial reminder of the importance of clear financial agreements and boundaries within family relationships, advocating for responsible borrowing and open dialogue to prevent misunderstandings and financial strain.

Transcript

[Dave Ramsey]

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[Caller]

So my car engine went out last October and it took a few months to get my vehicle back because it actually broke down when I was evacuating for the hurricane. And in the meantime my parents floated a rental car and then I ended up losing my job.

[Jade Warshaw]

Oh no.

[Caller]

Yeah, so they said. My parents ended up helping out and what they ended up doing was taking out a HELOC on their house cover. That and a few other things. And I wasn't aware of this until afterwards, but they're the kind of people where strings are attached. And I'm just trying to figure out if I should be debt snowballing this, which would make it the second to last debt to be paid off or if I should be prioritizing it because it's. It's on their house.

[Dave Ramsey]

That's a great question.

[Jade Warshaw]

How much is it? How much is this HELOC?

[Caller]

So my portion of it is 11. About 11,500.

[Jade Warshaw]

That right there, what you just said tells me all I needed to know. 11,500. Just for, for kicks and giggles, tell me how much the other portion is and who got that.

[Caller]

I don't know because they didn't tell me.

[Jade Warshaw]

Do you want to know what I think? Very briefly? I think they wanted to take out heloc and I think you gave them a good excuse to do it.

[Dave Ramsey]

And I think I would treat this like the IRS and put at the very top and pay this off as fast as humanly possible.

[Jade Warshaw]

Uh huh.

[Dave Ramsey]

How much are you putting towards debt every month?

[Caller]

So I actually just found you guys a little over a month ago and I just finished baby step one.

[Dave Ramsey]

Welcome to the cult. Welcome.

[Caller]

Thanks.

[Dave Ramsey]

Send you some Kool Aid in the mail.

[Caller]

Oh cool.

[Dave Ramsey]

I'm just kidding. We won't, but it's cool. All right, so you just finished baby step one and then what?

[Caller]

So I have this big spreadsheet I have with all of my debts and the payments and what's owed and interest and all that.

[Dave Ramsey]

How much per month? How much per month are. Are you able to put towards debt?

[Caller]

So I've been. They wanted me to pay about three hundreds monthly. So I've been actually paying them weekly because I get paid weekly, your parents, to pay back my portion of it.

[Dave Ramsey]

Okay, you know what I would do, Jade? Stop me if I'm wrong. I would go down to a local credit union and take out a loan for 115 and I would write them a check. I would rather you owe a credit union for that, you don't. You can't do that.

[Caller]

That's. Yeah, that's why they ended up helping out in the first place. I'm coming out of a bad marriage where a lot of bad decisions were made.

[Jade Warshaw]

Then. Then let me just say this. So you. There's. There's part of this that's on you, and then there's part of it that isn't in the way of. They saw you needed help and they said, we'll help. They chose to take out debt to do it. That wasn't your choice. You didn't say, mom, dad, go take out a heloc because I need the money and you need to risk your house for me. You didn't say that right?

[Caller]

Correct.

[Jade Warshaw]

How did it happen that you got the money? Did you ask for it even, or did they just see you needed it and gave it to you?

[Caller]

I never saw the money. My dad and his friend ended up going and collecting the car because the dealership was actually avoiding us because it was four hours away. So he ended up going and collecting the car and dropping it off at one of his friends who's a mechanic, and the money went straight from them to him.

[Dave Ramsey]

This sounds super shady.

[Jade Warshaw]

It really does.

[Dave Ramsey]

Is your dad trustworthy?

[Caller]

So when it comes to this kind of stuff, yes.

[Jade Warshaw]

Okay, so he.

[Dave Ramsey]

How bad would. Dude, my wife just wrecked our car, like, and it was awesome. She wasn't even drinking. She just crashed it. It was like, just ran it down the side of a concrete pillar. And I said, she never drinks. So. But the whole repair was about 11,000 bucks. Every panel had, like, for. For that kind of repair. From a buddy, from a friend. I'm calling. No way.

[Caller]

Yeah, I was not happy with it and I haven't been back to him for services.

[Dave Ramsey]

No, no, no. That's your dad's friend.

[Jade Warshaw]

But my thing is, like, did you even know they were doing that? And did you approve it or they just up and did it?

[Caller]

He said he was going to help me. He wasn't specific.

[Dave Ramsey]

Yeah, that's not helping me.

[Caller]

That place because I had no income.

[Jade Warshaw]

And this is my theory.

[Caller]

A three year old.

[Jade Warshaw]

But that's my theory. That's. That's the point that I was trying to make is if you said, hey, there's strings attached. If they put those strings on there, that's on them. You did not tell your dad to do any of this. You didn't tell him to take out a HELOC. You didn't tell him to spend 11,500. You had very little say in what took place. Now they took out a he lock, clearly for more. Who knows what they did with that, but that was their choice. And now they're like, man, this is kind of heavy on us. We want this money.

[Dave Ramsey]

Yeah, now you're an ATM machine.

[Jade Warshaw]

Exactly. And now they're pressing you, hey, $300, you know, whatever it is that they totally retract.

[Dave Ramsey]

What I said, they go in the baby steps order. What's the minimum payment on that loan?

[Caller]

So the monthly payment for it is 2. 3834. I, I will.

[Dave Ramsey]

So how'd you get it? How'd you get at that number?

[Caller]

I put it through a loan amortization schedule based on my amount and the interest rate and what the payments I was planning on making.

[Dave Ramsey]

Great. Tell them you'll pay them 238 and that's a minimum payment and put in the debt snowball. I, I retract what I said earlier.

[Jade Warshaw]

By the way, what's the interest? Is this the interest you came up with or they're charging you? Interesting.

[Caller]

So it was originally 8%, but it just went down to 7 and a half percent.

[Jade Warshaw]

That's the interest on the HELOC.

[Caller]

That. Yes.

[Jade Warshaw]

And that's again, I'm wondering about that because they took out a greater amount for this heloc and I don't feel like it's.

[Dave Ramsey]

Oo, girl, I'm telling you, we just take these calls for a living because.

[Caller]

I saw a receipt.

[Dave Ramsey]

You saw a receipt for what?

[Caller]

I saw a receipt sitting on a table that I shouldn't have.

[Dave Ramsey]

What's the total?

[Caller]

He was for more.

[Dave Ramsey]

So what's the total?

[Caller]

Like 30.

[Jade Warshaw]

See, I just don't, I'm just, I'm, I'm going to keep it 100 with you because it's the only way I know how to keep it in my mind. There's no way I'm paying interest on this. There's no way. Because I'm going, hey, dad, love you, but you did this. I never, I never approved this message. I never said go into debt. I certainly never said go 11,500 into debt. I certainly never said and please do it at 8%. You did that. And I'm, on the one hand I'm grateful that you went to fix my car, but on the other hand, I'm grateful that you kind of tied my hands behind my back. And now I'm on the hook for something that I don't know if I would have done that. And now I'm feeling the pressure and that's unfortunate because we're family and we love each other. I'm going to pay you back this 11,500. I'm not going to pay it back at 8% interest because I would not. I would not have told you to go into debt to do this if you had asked me. That's. That's what Jade Warshaw would do. You and your dad, you know, you know the dynamic. But if you're asking my advice, that's mine, John. What would you do?

[Dave Ramsey]

The. The other thing I would do is I would ask. I would call the mechanic and ask for an itemized receipt, because I want to see.

[Caller]

I. I did see the receipt. It's. I have it in a packet for my car care.

[Dave Ramsey]

And they. And they did $11,500 worth of work for a friend.

[Caller]

So about 6,600 was the engine, and then the rest was labor and taxes.

[Jade Warshaw]

I tell you what, I. I'm not questioning that part so much. Maybe I. I don't know enough about cars to question that part, but I am questioning the way it all went down. Yeah, I don't, you know, help get.

[Dave Ramsey]

Your kid a 1500 used Camry with 300,000 miles on it to get you from A to B. Yeah. You don't take an $11,000 loan and 8% interest and then haggle your single mother daughter over it. That's what you don't do. Create your free everydollar budget today. The simplest way to budget for your life.