My Parents Want Me To Pay Them Back for This

Summary

Summary of "My Parents Want Me To Pay Them Back for This" – The Ramsey Show Highlights

Release Date: March 9, 2025
Host: Ramsey Network
Duration: Approximately 7 minutes and 32 seconds

In the episode titled "My Parents Want Me To Pay Them Back for This," host Rachel Cruze and guest Dave Ramsey delve into a caller's complex financial predicament. The discussion highlights the challenges of balancing significant debt obligations, particularly those involving family, while striving to adhere to the Ramsey Network's Baby Steps for financial freedom.

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Caller’s Financial Situation [00:06 – 02:03]

Mo, the caller, outlines his current financial status, expressing feelings of uncertainty as he navigates between Baby Step Two and Baby Step Three of the Ramsey Money Steps.

Mo [00:06]: "I have $6,000 right now in my HYSA, so I feel step one is definitely complete."

Mo and his wife purchased a home in California in June 2023. They are setting aside $5,200 monthly in a high-yield savings account (HYSA) to cover their mortgage, property taxes, and insurance. Despite having paid off Baby Step One (saving $1,000), Mo feels stuck in limbo concerning his next financial move.

Additionally, Mo reveals significant debt obligations:

1. 529 Plan Repayment: His parents established a 529 plan for his education and now expect him to repay 50% of the total costs, amounting to $75,000.

   Mo [01:22]: "They only want 50 back of what my costs were."

2. Family Loan: A $50,000 loan from his wife's parents to cover Private Mortgage Insurance (PMI).

Rachel Cruze [02:02]: "Okay, that's okay. Whatever you guys decided, that's the deal."

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Debt Analysis and Emotional Impact [02:24 – 05:41]

Rachel Cruze clarifies Mo's position within the Baby Steps framework, confirming he is still in Baby Step Two, which focuses on paying off all consumer debt except for the mortgage.

Rachel Cruze [02:24]: "You are in baby step two because baby step two is we pay off all of our consumer debt. Anything except our home if we have a mortgage at that point."

Mo highlights the burden of owing money to family members, which differs emotionally from traditional creditors.

Rachel Cruze [03:32]: "Owing money to like debt and creditors sucks, but it kind of feels worse when you owe it to family members."

Dave Ramsey echoes this sentiment, emphasizing the unique emotional challenges of family-related debt.

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Income and Budget Breakdown [05:05 – 06:34]

Mo discloses his and his wife's income:

• Mo’s Gross Salary: $137,000 (projected to increase)
• Wife’s Gross Salary: $80,000

Combined, their gross household income exceeds $200,000 annually.

Despite this substantial income, Mo reveals that approximately 50-60% of their take-home pay goes toward mortgage-related expenses, significantly above the recommended 25%.

Rachel Cruze [05:05]: "I just want to lay this out because I, I think you understand it conceptually... you're at 60% on your mortgage."

This disproportionate allocation leaves only 15% for living expenses and debt repayment, hindering financial progress and increasing stress.

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Recommendations and Strategic Advice [06:34 – 07:32]

Rachel strongly advises Mo to reconsider their housing situation due to the unsustainable mortgage burden.

Rachel Cruze [06:34]: "Nothing's done that can't be undone... you got to get out of this house."

She suggests that downsizing or relocating could alleviate financial pressure, enabling Mo to prioritize debt repayment more effectively.

Dave concurs, reinforcing the need for Mo to reassess his financial commitments to achieve stability.

Dave Ramsey [07:32]: "Mo, please reconsider. Create your free EveryDollar budget today. The simplest way to budget for your life."

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Key Takeaways

1. Mortgage Burden: Allocating 50-60% of income to housing is unsustainable. Adhering to the 25% guideline is crucial for financial health.

2. Debt to Family: Owing money to family members introduces unique emotional stressors that require careful management and prioritization.

3. Budgeting Tools: Utilizing budgeting tools like the EveryDollar app can provide clarity and control over financial planning.

4. Reassessing Financial Goals: It’s essential to periodically review and adjust financial commitments, such as housing expenses, to align with long-term financial goals.

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Conclusion

The episode underscores the importance of maintaining a balanced budget, particularly concerning housing expenses, and thoughtfully managing familial debt. Rachel Cruze and Dave Ramsey provide actionable advice, emphasizing the need to prioritize debt repayment and consider lifestyle adjustments to achieve financial freedom.

Listeners are encouraged to utilize budgeting resources like the EveryDollar app to gain a clearer understanding of their financial landscape and make informed decisions aligned with the Ramsey Baby Steps.

Transcript

[Dave Ramsey]

Brought to you by the EveryDollar app. Start budgeting for free today.

[Mo]

My question is. I. So with the baby steps, I feel like I'm in limbo between baby step two and baby step three. I have $6,000 right now in my HYSA, so I feel step one is definitely complete. So my financial situation, my wife and I, we closed on a home in June of 2023 out in California. Our mortgage is, sorry, expense wise. We're stocking away $5,200 a month into another HYSA to cover the mortgage, property taxes and insurance.

[Rachel Cruze]

Okay, so you move. Let me just make sure I understand. You moved from California, you hadn't sold the house, so right now you're still paying for the house.

[Mo]

No, I'm going to. I'm moving out to California.

[Rachel Cruze]

You're moving out. Okay. Okay, I think I understand.

[Mo]

So that's the mortgage there. And then I have non traditional student loans. My parents, my parents had a 529 plan for me and my siblings and they want half of the money back of what they totally spent for my college and university. And then.

[Rachel Cruze]

Okay, hold on, let me clarify, let me clarify. Make sure I understand that. Are you telling me your parents created a 529? You use the money for education and they're like, hey, pay us back some of what you used from the 529?

[Mo]

Correct.

[Rachel Cruze]

That's wild. Okay, how much do they want?

[Mo]

They only want 50 back of what my costs were.

[Rachel Cruze]

Which is What?

[Mo]

Which is $75,000.

[Rachel Cruze]

Now that's wild.

[Dave Ramsey]

I've never heard of a parent investing in a 529 and then saying, hey kiddo, pay me half of it back.

[Rachel Cruze]

Did you know that on the front side or is this new information?

[Mo]

No, this. This was when I was a teenager in high school.

[Rachel Cruze]

So you knew.

[Mo]

Yes.

[Rachel Cruze]

Okay. Okay, that's okay. Whatever you guys decided, that's the deal. All right, Different. What else? So you owe your parents $75,000. You've got 6,000, the HYSA. Why did you say earlier that since you had 6,000 in the HYSA, you had moved from baby step two to baby step three?

[Mo]

No, no, no. I moved from baby step one. And now I feel like I'm in limbo between baby step two and baby step three.

[Rachel Cruze]

Okay, got it. Well, technically. Well, let me clear that up. You are in baby step two because baby step two is we pay off all of our consumer debt. Anything except our home if we have a mortgage at that point. So you are in baby step two. And, and part of that is taking your savings down to a thousand and putting the rest at the debt. So in this case. Yeah, you'd be dropping that HYSA down to a thousand and throwing the rest at the debt. Is there any other debt aside from the student loans?

[Mo]

The. Yeah, for the. So we, when my wife and I closed on our home, we don't have PMI. So the other 10% came from a loan from her parents.

[Rachel Cruze]

Okay, and how much was that loan?

[Mo]

That now I believe is. I think it's $50,000.

[Rachel Cruze]

Oh, sir. Okay, man. Let me tell you something. I'm going to be flat out, I'm going to be straight up with you. Owing money to like debt and creditors sucks, but it kind of feels worse when you owe it to family members.

[Dave Ramsey]

Because they have a different emotion.

[Rachel Cruze]

It's a different emotion. I want you to get out of debt so quickly. Okay, so you're moving to California, you've got the house. What are you gonna be making?

[Mo]

My gross salary last year was 137 and I'm predicting it'll go up. It's not a, it's not a predictable. It's predictable and that the salary will increase, but it's not a predictable number per year.

[Rachel Cruze]

What about your wife?

[Mo]

She's predictable. I at around, I think her gross last year was 80,000.

[Rachel Cruze]

Okay, so you guys are going to be a little bit over 200, like maybe 210.

[Mo]

That sounds about correct with our gross income for last year.

[Rachel Cruze]

Okay. And so I just want to, I just want to make sure because Your mortgage is 5,200amonth. What's your, what's your month?

[Mo]

The mortgage is $4,252 a month. And then we also sock away extra money. Property taxes are now increasing. It was. It's about $8,400 a year now. And then California does its 2% increase from Prop 13.

[Rachel Cruze]

Yeah.

[Mo]

And then we also sock away extra money for the insurance.

[Rachel Cruze]

I have a question.

[Mo]

Last year was.

[Rachel Cruze]

I have a question in all of this because I'm, I'm trying to track with you on the math as much as I can, but I don't know these direct numbers. How. What percentage of your take home is your mortgage going to be? Because California is expensive tax wise. And what the number you gave me, the 4,000, that's not including taxes and insurance. So what percentage is it? Have you done that math?

[Mo]

He. Yeah, I think it's about 50 to 60%.

[Rachel Cruze]

My guy.

[Mo]

I know it's supposed to be 25%.

[Rachel Cruze]

Yeah. And you're not even a little bit over. We got to go back to the drawing board. And I want that for you. Like, I don't want you to be in this situation because you're about to be stressed to the team.

[Dave Ramsey]

I was going to ask, do you feel stress, Mo, when you start thinking through this?

[Mo]

I have, but now I've accepted the terms of it and I feel relaxed because of the nature of my job. I feel content that my wife, she is 20 minutes away from her parents. In the nature of my job, I'm gone for two weeks at a time. So emotionally I feel okay because I know she has somebody to rely on while I'm gone.

[Dave Ramsey]

But you don't have any negative emotion about the lack of margin because of how much you're paying in mortgage?

[Mo]

I used to, I, I've come to, I've come to terms with it and accepted it.

[Rachel Cruze]

I mean, I'm just like, percentage wise. I just want to lay this out because I, I think you understand it conceptually, like on a very like, not detailed level, but like actual numbers. Putting it in your budget. Because I'm looking at it like this. I'm like, okay, 15% in a little while. 15%, well, not for you. It's going to be a while. But at some point, 15% is going to go to investing. 10% is going to go to giving. You are, you're at 60% on your mortgage. That leaves you 15% to live on. That's not much. And at this point, that, that would be for paying off debt, which is going to take forever at that rate. So I strongly urge you to consider nothing's done that can't be undone. Right. Like, you don't have to stay in this situation. It might be, and I think that it is you not keeping this house. It's too much house for you. You got to get out of this house. That's what I would do. And then I'd work on paying off the debt that you owe to your family.

[Dave Ramsey]

Yeah, I agree. Thanks for the call. Mo, please reconsider. Create your free every dollar budget today. The simplest way to budget for your life.