"You've Made a Colossal Mess"

Summary

Podcast Summary: The Ramsey Show Highlights – "You've Made a Colossal Mess"

Episode Details:

• Title: You've Made a Colossal Mess
• Host/Author: Ramsey Network
• Release Date: March 17, 2025
• Duration: Under Ten Minutes

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Introduction

In the episode titled "You've Made a Colossal Mess," hosted by the Ramsey Network, listener Jeremy reaches out seeking financial and relational advice. Jeremy and his wife recently embarked on Dave Ramsey’s "Baby Step" program, specifically Baby Step Two, which focuses on paying off debt. Their journey, however, has encountered significant hurdles involving borrowing from family members and unexpected purchases that have strained their relationship with their in-laws.

Main Issue Presented

Jeremy outlines his financial predicament, explaining that about eighteen months ago, he and his wife borrowed approximately $80,000 from Jeremy’s father-in-law and mother-in-law. This loan was used to purchase a manufactured home placed on the in-laws' property. The couple has been diligently making monthly payments on this debt. However, Jeremy recently made an impulsive decision to purchase a four-wheeler for $6,000, which he financed and is now almost paid off. This purchase has caused tension, as the in-laws believe the couple should refrain from spending money while still owing a substantial amount.

Notable Quote:

Jeremy [00:03]: "My father in law and mother in law are thinking we shouldn't be spending money when we owe them money."

Dave Ramsey's Analysis and Advice

Dave Ramsey delves into the complexities of Jeremy’s situation, identifying multiple layers of issues that contribute to the "colossal mess" Jeremy finds himself in.

1. Understanding the Debt Agreement:

   • Dave [00:06]: "Do you want me to get harder, Jeremy, or do you want me to leave you alone?"
   • Dave emphasizes the importance of clarifying the terms of the loan. He suggests that Jeremy and his wife should have a candid conversation with their in-laws to understand any unspoken expectations beyond the agreed-upon monthly payments.

2. The Four-Wheeler Purchase:

   • Dave critiques the purchase as an imprudent use of funds, especially given the outstanding debt. He advises selling the four-wheeler to alleviate financial strain and maintain trust with the in-laws.
   • Dave [04:53]: "I'm telling you, sell the four wheeler and get yourself out of debt with that money."

3. The Risks of Using Family Property:

   • Dave highlights the dangers of placing significant collateral on someone else's property. He outlines potential legal and financial risks if unforeseen circumstances arise, such as accidents leading to lawsuits.
   • Dave [05:09]: "You guys have made a colossal mess. You violated about six things here and you're going to get. It's going to turn out well. I'm afraid."

4. Long-Term Financial Implications:

   • The depreciating value of manufactured homes is a critical concern. Dave points out that unlike appreciating assets, trailers lose value over time, making the investment unsound.
   • Dave [05:09]: "Trailers go down in value, they don't go up in value."

5. Relationship Dynamics:

   • Borrowing such a significant amount from family alters relationship dynamics, creating a power imbalance where the borrower becomes a "slave to the lender." Dave warns that this can lead to increased tension and deteriorating relationships.
   • Dave [07:28]: "You're playing Russian roulette and there's three bullets in the gun, not one."

6. Strategic Exit Plan:

   • Dave advises Jeremy to consider selling the manufactured home and potentially relocating to disentangle financially and personally from his in-laws. This step aims to restore financial stability and repair familial relationships.
   • Dave [07:09]: "If you can get out of it, I would sell it and start fresh renting somewhere and give them their money back."

Caller Interactions and Additional Insights

Throughout the episode, callers chime in to reinforce Dave’s advice and offer additional perspectives.

• Caller 1 [07:00]: Praises Dave’s guidance and acknowledges the severity of Jeremy’s situation.
• Caller 2 [07:33]: Emphasizes the need to "walk away from this" to prevent further complications.
• Caller 3 [08:29]: References the wisdom in the phrase "leave and cleave," suggesting the psychological necessity of distancing from the current problematic arrangement.

Notable Quote:

Dave [08:46]: "You know, how could you do this differently?"

Key Takeaways and Conclusions

Dave Ramsey summarizes the critical errors in Jeremy’s financial decisions, outlining six primary violations that have led to the current predicament. He underscores the importance of:

1. Avoiding Significant Debt from Family: Borrowing large sums from family members can complicate personal relationships and financial stability.
2. Maintaining Clear Agreements: Ensuring all terms of a loan are explicitly understood and agreed upon to prevent future misunderstandings.
3. Prudent Spending: Avoiding unnecessary or impulsive purchases, especially when significant debt remains.
4. Asset Ownership: Understanding the implications of collateral and ownership, particularly when involving family assets.
5. Risk Management: Recognizing and mitigating potential legal and financial risks associated with property use.
6. Strategic Relationship Management: Prioritizing healthy relationships over financial entanglements to maintain personal harmony and financial well-being.

Dave concludes by urging Jeremy and listeners to address the situation proactively, emphasizing that without immediate and strategic action, the financial and relational strains will only intensify.

Final Notable Quote:

Dave [08:46]: "You carve up your property, you put a property line on it, and you give a parcel of it to your daughter."

Practical Advice for Listeners

For those navigating similar financial challenges, Dave Ramsey advocates for:

• Transparent Communication: Engage in open dialogues with lenders, especially when they are family members, to ensure mutual understanding and agreement.
• Financial Discipline: Adhere strictly to budgeting plans and avoid unnecessary expenditures that can derail debt repayment goals.
• Asset Evaluation: Assess the value and implications of any collateral used for loans, understanding the long-term effects on financial health.
• Relationship Preservation: Balance financial obligations with the need to maintain healthy personal relationships, seeking professional advice when necessary.

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This episode serves as a cautionary tale about the complexities of borrowing from family, the risks of using their property as collateral, and the importance of disciplined financial decision-making. Dave Ramsey’s insights provide a roadmap for listeners to navigate and rectify similar financial missteps, ultimately striving for both financial freedom and harmonious relationships.

Transcript

[Jeremy]

We borrowed some money from a family member, my father in law and mother in law.

[Dave]

And what do you owe them?

[Jeremy]

About 80,000.

[Dave]

Oof.

[Jeremy]

They're thinking we shouldn't be spending money when we owe them money. And I just wanted your advice on that.

[Dave]

Do you want me to get harder, Jeremy, or do you want me to leave you alone? Brought to you by the EveryDollar app. Start budgeting for free today.

[Jeremy]

I just started your book this last month with my wife. We are on baby step number two. And long story short, we basically borrowed some money from a family member, my father in law and mother in law, about a year and a half ago, and we put a manufactured home there, used the money for that. We're paying them back pretty quickly, it feels like. Made a dumb decision again before I started your book and went out and bought a toy. And it's kind of putting some stress on our relationship with them. They're thinking we shouldn't be spending money when we owe them money. And I just wanted your advice on that.

[Dave]

What'd you buy?

[Jeremy]

Four wheeler.

[Dave]

Okay, what'd you spend on the four wheeler?

[Jeremy]

Six thousand. And we financed it, but it's almost paid off now.

[Dave]

Okay, and what do you owe them?

[Jeremy]

About 80,000.

[Dave]

Oof. So they loaned you the money to buy a house, put a manufacturer, a trailer?

[Jeremy]

Yeah. Yes, sir.

[Dave]

On their property?

[Jeremy]

Yes, sir.

[Dave]

So you have an $80,000 trailer and you don't own the dirt?

[Jeremy]

Correct.

[Dave]

Oh, God. Okay, wow. Well, what are the terms? I mean, did you have a payment system with them? A certain amount you're supposed to pay them every month?

[Jeremy]

Yes. Yeah. And we've been paying that on time, every time.

[Dave]

Obviously you were not. Well, not obviously. I mean, you've never been late and yet they expected that you would prepay them rather than do anything else. Why did they expect that?

[Jeremy]

You know, that's a good question.

[Dave]

Okay.

[Jeremy]

You know, our thing is we have a pretty good relationship with them and things just kind of got awkward. So do I sell the toy, take a loss and move on? Do I? You're. You're the expert. I guess that's my question.

[Dave]

Yeah.

[Caller]

I'm curious to know if there was any pressure that you felt at any time or your wife felt at any time to a borrow 80 grand from them to then get a pre mod trailer and put it on their property. Was there pressure there or was it just they threw it out? You guys love the idea.

[Jeremy]

So basically we sold our house and had some money set aside to do this project, and it was just an idea that got thrown out there and nobody thought it would really work. We were able to make it work and we were pretty excited about that. There wasn't too much pressure there. It will most likely be. It will be our property at some point. So there wasn't too much for us on worrying with that.

[Dave]

Okay. There's two layers to this situation. The first layer is the simple four wheeler question. Okay?

[Jeremy]

Yes sir.

[Dave]

On the simple four wheeler question, I think you and your wife need to go over, ask them if you can come over and talk and have a cup of coffee and bring a pie. And you just sit down and say, we thought that we had a monthly payment arrangement with you. And as long as we were doing that, we thought we were doing the right thing somehow. There must have been more to the agreement than we understood because if we go on vacation, you're gonna be mad. If we buy a four wheeler, you're gonna be mad. But we didn't know that was part of the deal. And so we need to get on the same page about what our deal is. Because I thought our deal was I pay you monthly payments and you're happy, but now it's I pay you monthly payments and I have to check with you before I buy anything. And that's not a deal I'm okay with now. Agreed. You shouldn't have bought a stupid four wheeler in this situation. Okay, that's aside and you can say that I made a mistake. I shouldn't have bought the toy. But I'm trying to figure out what our boundaries are here so that I don't upset you again into the future and basically call them out because they're out of line. You did a stupid thing. But. But they don't have a right to be upset about it because you're kept your part of the deal.

[Jeremy]

Yep.

[Dave]

I'm telling you, sell the four wheeler and get yourself out of debt with that money. Yeah, definitely do that. But that not paying towards them. Okay, that's layer number one. That's the, the easiest layer. Do you want me to get harder, Jeremy, or do you want me to leave you alone?

[Jeremy]

Nope. I want to hear it.

[Dave]

Okay, you guys have made a colossal mess. You violated about six things here and you're going to get. It's going to. It's not going to turn out well. I'm afraid. Colossal Rule number one is you never build a property, you never put $80,000 worth of collateral on someone else's dirt. I don't care whose dirt it is, period. Because you do not have control of the situation. If they are in a car wreck in the middle of the night, fall asleep at the wheel and these sweet little people hit somebody head on and they get sued for $200 million. The dirt under your trailer is gone in that lawsuit and they have no control over that. And you have no control over that. So you have set yourself up. And I've seen this a thousand times in 30 years of doing what I do. Not owning the dirt under your trailer is a massive mistake. Number one, borrowing 80,000 from your in laws for anything for any reason is a massive mistake. Number two, the borrower is slave to the lender. And as you have figured out, masters change the rules. Sometimes you're the slave. Rule number problem. Number three, you spent $80,000 on something that's going down in value, not up in value. Trailers go down in value, they don't go up in value. So in 15 years, what's this $80,000 trailer worth? Nothing. You're burning $80,000 on your kitchen table every night a little bit at a time. So you got a massive entanglement of mess here. And I don't know exactly how to get you out of that one as easy as I did the other one. This is not a cup of coffee and a pie, so. But if I'm in your shoes, I'm going to start trying to unravel this thing if I can figure out a way to honorably do that. I'm guessing the trailer won't bring 80 grand now, right?

[Jeremy]

No.

[Dave]

Okay. What would it bring now?

[Jeremy]

It might get close. You know, there's. There's not a lot of them around to get a good idea, but okay, if you can.

[Dave]

If you can get out of it, I would sell it and start fresh renting somewhere and give them their money back and keep you from owning an asset that's going down in value sitting on dirt that you don't own. Man, this is just. It's. You're playing Russian roulette and there's three bullets in the gun, not one.

[Caller]

Yeah, Dave, you.

[Dave]

You.

[Caller]

Yeah, he's been sufficiently burned. I'll offer some salve and the same.

[Dave]

I got permission.

[Caller]

No, you're right. No, you couldn't be more right. I just can't add anything to it other than to say this, walk away from this. To realize it could have been way worse. And this thing can get nastier if you don't fix it now. And I could not say that enough. You can dig out of this, but I would start digging quickly and make all these changes and you'll look back on this and go, I'm glad I did it.

[Dave]

It's gonna get worse. The relationship's gonna get worse. The finances are gonna get worse. Every. Everything's going to get worse. There's nothing in this story that turns out good. Yeah, it's. It's. It's. It's. And. And the problem is, to stop and say that out loud is like walking up in the middle of the town square and saying, the emperor has no clothes. Everybody's going to look at you and go, but wait, your wife's going to look at you, their precious little daughter, and go, my daddy would. Oh, yes, he did. He already bitched about the four wheeler. Of course he's going to do it. It's coming. You know what your daddy's going to do, right? Okay, I already know what your daddy's going to do. I read his mail.

[Caller]

Well, Dave, this makes me think of the classic line in the wedding vows, leave and cleave. There is a psychological reason for doing that. There's wisdom in that phrase.

[Dave]

And not living on their land. Well, mom and dad have got some money and they've got some land, and they were trying to do something nice, and they did a good thing in a dumb way.

[Caller]

Yeah, that's a great way of putting it.

[Dave]

You know, how could you do this differently? All right, I'll tell you how you could do it differently. You carve up your property, you put a property line on it, and you give a parcel of it to your daughter. And if you want her to have an $80,000 property, have her build something on there that will go up in you. And give her $80,000 of your money. Don't loan it to her and make her your slave and change the quality of your relationship. Thanksgiving dinner tastes different when you eat with your master. Create your free every dollar budget today. The simplest way to budget for your life.