Dave Ramsey Fall 2013

Student loans and paying back family debts.

Dave Ramsey is a personal money management expert, popular national radio personality and the author of three New York Times best sellers:  The Total Money Makeover, Financial Peace Revisited and More Than Enough. Ramsey offers life-changing financial advice as host of a nationally syndicated radio program, The Dave Ramsey Show, which is heard by 5 million listeners each week on 500 radio stations throughout the United States.
Dave Ramsey is a personal money management expert, popular national radio personality and the author of three New York Times best sellers: The Total Money Makeover, Financial Peace Revisited and More Than Enough. Ramsey offers life-changing financial advice as host of a nationally syndicated radio program, The Dave Ramsey Show, which is heard by 5 million listeners each week on 500 radio stations throughout the United States.

Dear Dave:

Our son is about to graduate from law school. He took out a loan to cover the cost, but we’ve been paying on it for two years to help him out. Right now, the balance on the loan is about $76,000. We could continue paying it off, but my husband is hesitant. How do you feel about this situation? — Patty

Dear Patty:

It’s not a bad thing if you guys decide to continue helping him out by paying off the rest of the loan. But I don’t want you to feel as if you’re obligated in any way. No deal has been broken here, and you haven’t reneged on a previous agreement. But there’s absolutely nothing wrong with a young lawyer earning a living and paying off his own debt. He can roll up his sleeves and clean up the mess he participated in making.

If you do decide to pay it off, that’s an incredibly generous gift. In my mind, it should be met with much gratitude and appreciation. It should also be accompanied by a signed letter of agreement from him stating that he will never, except in the case of a 15-year fixed-rate mortgage, borrow money again.

In other words, I’d want to see some kind of permanent commitment. I’d want this kid to be affected in a deep and profound way by this gift; so much that his kids would also be affected in a positive way by your behavior and by his in the years to come! — Dave


Dear Dave:

I borrowed $30,000 from my aunt to buy a condo eight years ago. We had a deal that she would get her money back, plus a piece of the profits, when it sold. If there were no profits, she would get back her original $30,000. Recently the condo sold and I lost the money I put into it, plus my aunt’s money as well. I make good money and don’t have any other debt, but I’m a little resentful now that she wants me to pay her back. Do you have any suggestions? — Christine

Dear Christine:

I don’t want to be mean, but you have no right to be resentful toward your aunt. This is the deal you signed up for, and she did nothing wrong. Wanting her money back now isn’t greedy or malicious on her part, and it’s definitely not worth putting a family relationship at risk.

I know what you’re thinking, because it’s just human nature. You just went through a lot, and the situation didn’t work out as planned. Plus, it doesn’t sound like your aunt is hurting financially if she put $30,000 toward helping you. Part of you is thinking she has plenty of money, why doesn’t she just forgive the debt?

If you were barely scraping by, I might suggest that you sit down and explain the situation and ask her to forgive the debt. But the grown-up Christine knows better.

Pay her back as quickly as possible, and get this bad deal behind you for good. You said you make good money, so just take care of your responsibility. It’ll hurt some, but it’s better than taking a chance on ruining the relationship with a very generous and loving aunt. — Dave