Use My Kid's College Fund To Pay Off My Debt?

Summary

Podcast Summary: The Ramsey Show Highlights

Episode: "Use My Kid's College Fund To Pay Off My Debt?"

Date: December 5, 2025
Host: Ramsey Network (featuring George Kamel & Jade Warshaw)
Duration: ~10 minutes

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Main Theme

This episode tackles a listener’s dilemma: Should he use his children’s 529 college savings funds to pay down his debt, or should he keep the accounts intact and look elsewhere for solutions? The hosts, George Kamel and Jade Warshaw, provide tough love and practical advice, focusing on long-term benefits and responsible money management.

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Key Discussion Points & Insights

The Listener’s Debt Situation

• Debt Progress:
  • Listener started with $90,000 in debt (10 credit cards, 2 vehicle payments).
  • Over 10 months, reduced debt to $65,500.
  • Cut up 7 credit cards; 3 remain open with balances.
  • Vehicles make up the majority of the debt.
  • ([00:02]–[00:35])
• Debt Snowball Success:
  • “Anytime I’ve got extra income, I’ve put it towards the debt snowball. I’m trying to get out of baby step two as fast as possible.” (Caller, [00:35])

The 529 College Savings Dilemma

• Background:
  • Two 529 accounts—originally $4,000 for each child, now totaling $11,500 due to growth and transfers after older child opted out of college.
  • Eight to nine years before youngest might use the funds.
  • Question: Should he withdraw the 529 savings (with penalties) to pay off debt, or leave them to grow for college?
  • ([00:45]–[02:04])

Car Purchases and Financial Decisions

• Car #1:
  • 2022 Hyundai for wife: $15,000 left to pay. Value unknown but likely not upside down.
  • Motivation: Desire for family reliability after “driving hoopties.”
  • ([02:13]–[03:14])
• Car #2:
  • 2024 Toyota truck: Bought new after receiving a large bonus; $54,000 purchase, $30,000 still owed.
  • Motivation: Emotional spending, feeling justified after years of frugality.
  • “I’m gonna spoil myself with a new vehicle…” (Caller, [04:31])

Income and Family Dynamics

• Listener earns ~$72,000/yr; wife works part-time but recently started increasing hours. Combined pre-tax income reportedly near $120,000/yr (~$7,000–$7,500/mo net).
• Wife not interested in managing finances; listener handles budgeting and debt payments.
  • ([03:14]–[06:18])

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Expert Advice & Notable Quotes

On Raiding the College Fund

• George Kamel:

  “I would not crack open my child's piggy bank to essentially make my truck payment.” ([06:34])

  • Emphasizes avoiding penalties and lost future growth by leaving 529s untouched.
  • “That $11,000 quickly turns into $7,000 [after penalties], and you’re unplugging the growth… that’s going to, you know, double, triple by the time your kid’s in college.” ([06:41])
  • Advises listener to seek sacrifices in present consumption, not the child’s future.
  • “I would sacrifice for my own life before hurting the kid’s future. Sell the truck, work extra— I would not touch the 529.” ([07:13])

On Vehicle Debt

• Jade Warshaw:

  "It's just too much of your world to have this much tied up in vehicles that are going down in value.” ([07:13])

  • Points out risk and poor value of holding onto depreciating assets instead of building wealth.
  • Recommends reassessing car ownership and selling expensive vehicles to free up cash.

On Emotional Spending

• George Kamel:

  "All your caveats, all of the things that you were trying to qualify. It’s emotional, and I get that... You wanted to feel like your income was being spent on the things that you enjoy. Right? Am I wrong?" ([04:53]–[05:15])

  • Validates the emotional triggers behind big purchases but urges practical action to regain financial control.

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Memorable Moments & Tone

• Lighthearted banter about justifying purchases:

  “I don’t want to hear about the ex-girlfriend this car...” (Jade Warshaw, [03:43])

• Hosts show empathy while giving tough love:

  “You’re a man. You want your wife to feel like she’s, you know, that you love her and you want to spoil her a little bit. I see it, I hear it, I have felt it. And you called in, trying to figure out how to get out of debt faster. True.” (Jade Warshaw, [05:17])

• Direct call to action:

  “Sell the truck, work extra— I would not touch the 529.” (George Kamel, [07:13])

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Timestamps – Important Segments

• [00:02]–[01:45] – Caller describes debt, student loan, and 529 situation
• [02:13]–[04:44] – Explanation of car purchases and financial motivations
• [05:15]–[05:34] – Hosts unpack emotional motivations and provide validation
• [06:34]–[07:21] – Final answers: Do not use 529 funds, sell vehicles instead

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Final Takeaways

• Don’t raid kids’ college funds for personal debt: The penalties, taxes, and lost compounding outweigh any short-term relief.
• Address the source of debt—especially vehicles: Expensive, depreciating cars are a major drag on household wealth.
• Sacrifice now to build for the future: Success comes from enduring current discomfort, not mortgaging your children’s opportunities.
• An honest look at emotional spending is key to making better choices moving forward.

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Summary:
If you’re tempted to use your kids’ college savings to plug debt holes, the Ramsey team has one word: don’t. Take a hard look at your assets, cut lifestyle costs, and remember—short-term pain paves the way for long-term gain.

Transcript

[A]

If your private student loans are in default, you're not out of options. Go to yrefi.com ramsey in January, when I put all my debts down on paper, total of 10 credit cards and two vehicle payments, two vehicle notes, I was around $90,000 in debt. I've brought that down to $65,500 in the past 10 months.

[B]

Good.

[A]

I cut up seven of the 10 credit cards. There's three that are still open that have a balance on them. And then the two vehicles are the majority of that balance.

[B]

Okay.

[A]

So my question is, anytime I've got an extra income, I've put it towards the debt snowball. I'm trying to get out of baby step two as fast as possible.

I have a unique situation and I have. My stepson is 19, our child is 9. Back in 2019, I had a little bit of extra income. I put it into a 529 account for both of them, about 4,000 each. That has gone up. When my 19 year old graduated high school in 2024, he went to a local community college totaling about $3,000 for both semesters, which is very affordable. After the semester ended last year, he came to us, said, I'm not interested in college, I don't want to go. So I was told the people that would manage the 529 account, I can just roll his amount into my son, my younger son's amount.

My question is, between their two 529 accounts, about $11,500. I have roughly eight to nine years before my youngest even will go to college. I know I get penalized for taking money out of the 529 account for you if I'm not using it for school.

[B]

That's right.

[A]

Is it worth it taking that money out now, getting penalized and putting it towards my debts and then, you know, building it back up for my younger son after I'm debt free. Or is it better to keep it in those accounts for the time being until he goes to school eight, nine years from now? If he goes to school eight or.

[B]

Nine years from now, I have some thoughts in my head about it. Can you tell me more about these cars though, before I tell you my thoughts?

[A]

Yeah. I'm sure it's not the Dave Ramsey way, but these were purchased. We moved to South Carolina three years ago and we drove hoopties for a long time. So in 2022, right after we moved, I did end up buying my wife a more reliable vehicle. I bought her a 2022. 2022 Hyundai that has about 15,000 left on it.

[B]

15,000? What's it worth if you sold it? Just curious.

[A]

That I don't have upside my head. I do not know.

[B]

Do you think you're upside down?

[A]

No, no. Honestly, I. One of the things why I took fpu, the reason I took it was that I was like, I make good money. My wife makes okay money. So like, how do we just never have money? And when I looked at stuff, I was like, oh, we're paying for this. We're paying for this. So I feel like the last 10 months we've really turned our life around financially, where I handle the finances solely. Not that I don't keep my wife involved. It was just when we got together, she's like, I'm not into finances.

[B]

Did you hear the last call?

[A]

I did. And I was actually laughing during it because it's the exact same thing. My wife. I tell my wife all of our financial stuff, but she just is not. She doesn't want to pay the bills. She lets me handle that. And that was even before we got married. When we got engaged. She's like, I'm going to have you handle the finances.

[B]

Interesting. We'll talk more about that later. Tell us about car number two.

[A]

Car number two is a vehicle that I bought for myself. It was a 2024 that I bought in 2024, a Toyota truck. The vehicle I had before it, I drove literally until.

[B]

No, tell us.

[C]

I don't want to hear about the ex girlfriend this car. Because why did you get a brand new truck?

[B]

You're qualifying it before you tell us. And we don't care. We don't care.

[C]

I don't care if the engine blew up on the last one. And so you went to the dealership and you guys sure they sucked you in.

[B]

We want you to be debt free and we're not going to let you excuse yourself out of it. We want you to hit your goals. So tell us about two. This 2024 truck number.

[A]

Yeah, car number two. I planned on at the time this. Before FPU, I planned on buying a used vehicle. When I went to the dealership, the used vehicle, this was not that much more expensive than the used vehicles at the time.

[B]

Tell us the amount, please.

[A]

Oh, it was. It was 54,000 out the door.

[B]

Okay, what do you owe now?

[A]

What? I have 30 on it.

[B]

Okay, so you've been paying it down.

[A]

Yeah. And I know you're talking about emotional spending. I did get a nice bonus that year, like a very large bonus. So that was like I'M gonna spoil myself with a new vehicle instead of.

[C]

Paying off the other debt. You were like, you know what? Let's still go into debt.

[A]

This is. But, yeah, this is pre fpu. Before I knew all this stuff.

[C]

Sure. But common sense would say, let's maybe try to get out of the hole before we dig a new one.

[B]

It would. And I'm taking my glasses off because yet again, George, this is all. Is all emotional, all your caveats, all of the things that you were trying to qualify. It's emotional, and I get that. I want you to hear me. All day, you were tired. You were tired, you were frustrated. You wanted to feel like your income was being spent on the things that you enjoy. Right? Am I wrong?

[A]

You were tired of driving.

[B]

You're tired of driving hoopties. You're a man. You want your wife to feel like she's, you know, that you love her and you want to spoil her a little bit. I see it, I hear it, I have felt it. I understand. And you called in, trying to figure out how to get out of debt faster. True.

[A]

Yeah. Yeah. So the plan, the, you know, the debt snowball is working for me, but I'm. Any extra money I'm having come in, I'm trying to throw at that. I just want to get that debt down as fast as possible. What's your income after tax? I make about 72 a year.

[B]

That's with your wife?

[A]

No, no, my wife makes. Probably about. Hers is kind of up in the air because when we moved, she doesn't work full time, so she kind of has the luxury of what's a normal.

[C]

Can she work full time?

[A]

She. Yes, she's actually. In the past two, three months, she has started working more hours.

[C]

Okay. Because right now we don't have the luxury of working part time. We both need to be working full time.

[A]

Plus, so between the two of us, pre tax, we're probably closer to 120 a year.

[B]

Okay, and so what, like 7,000amonth? 7,500amonth?

[A]

Yeah. Just around. Yeah, I'd say that's the sweet spot right there.

[B]

Oh, go ahead, George.

[C]

I just want to make sure we answer your question. I would not crack open my child's piggy bank to essentially make my truck payment.

[B]

No.

[C]

And so I would be selling that truck. And the truth is, you're going to pay income tax on that college money. You're going to pay a 10% penalty. So that 11,000 quickly turns into seven grand, and you're unplugging the growth, which that's going to you know, double triple by the time your kid's in college and that's if you do nothing to it. So I don't want to unplug the growth. I don't want to pay all these taxes and penalties while this money's growing tax free and for that reason I would sacrifice for my own life before hurting the kid's future. So that's what I personally would do is sell the truck, work extra. I would not touch the 529.

[B]

Yeah, I agree and for other reasons too. It's just too much of your world to have this much tied up in vehicles that are going down in value.

[C]

Yeah, that is very true. You got some nice cars in that driveway. I'd rather see you guys building wealth instead of driving a truck that's going down in value every day.

[A]

Why Refi Refinances Defaulted Private Student loans for Struggling borrowers. Learn more at Y r e f y.com Ramsey.