Being Pressured Into a $250,000 Loan By My Parents

Brought to you by the EveryDollar app. Start budgeting for free today. My parents, they're pressuring me to sign a $250,000 HELOC and I feel very uncomfortable doing it. You should. Yeah, they already owe me $20,000. Oh man. So they went, hey, Bank of Sarah hooked us up last time. Let's try to 10x our loan. Why is this even a conversation? Why is this even gone beyond the point of an immediate no? Honestly, they cannot pay their debts and I'm very worried for my little siblings. Because the siblings are living with them, you are not. Yes. No, I'm also living with them as well. How old are you? Very hectic. I'm 23. Okay. And how old are the siblings? They're 14 and 8. Okay, 14 and 8. And is the HELOC, you said they can't pay their debts, so is the HELOC supposed to be used to pay the debts? Is that the point? Yes. But the thing is, another twist, they already took a HELOC on our primary home. They want to take a HELOC out on their rental property. Oh boy. What's the rental property worth? It's worth about $950,000. And what do they owe? They owe $250,000. So they got 700 grand sitting in equity in that thing. Yes. Why not sell it? They refuse. I guess they want to keep it in the family, but... There's not going to be anything to keep in the family if they keep this up. They're going to HELOC their way into oblivion to where there's no equity anywhere. And they're going to be forced to sell it one day. So no. The easy answer is you get to say no. Go back to the kids though, when you say you're worried about them, in your mind, what do you think is going to happen? I'm worried that there's not going to be any money left for them. And their... Like as far as inheritance? Yeah. And then I also think, I feel like the primary house is going to get foreclosed on because they have no cash. But they do have... Here's the problem. What you're saying is likely true. Maybe they will get foreclosed on. Maybe they will destroy any inheritance or anything like that over the course of time. All those things are very possible. So hear me say that because if they don't change course, yeah, they're really setting that path for themselves very clearly. Inheritance is the last thing I'm worried about. Yeah. And the truth is if they do foreclose, the truth is they do have some assets here that they have at their disposal if they choose to do so. The hard part here is these are grown adults who are going to make their own choices. And the hard part is you just having to sit back and watch despite them maybe having some better advice than not taking the advice. That's the hard part. If you had told me, hey, I'm really worried that the kids aren't having food at night or the lights are getting cut off and things like that, I think we'd be in a different discussion right now. But if truly your only worry is, gosh, when we become adults, there's not going to be any inheritance. I don't know that there's much you can do to stop that. Yeah, that's true. I also, I feel like the lights might come off. Summer gets busy fast between vacations, camps and travel plans. The last thing you need is another thing to manage. That is why I love Delete.me. Delete.me removes your personal information from hundreds of data broker sites that can leave you vulnerable to spammers and scammers. And they keep monitoring it all year long. And honestly, it feels good knowing that someone is handling it for me. And you can get 20% off an annual plan at joindeleteme.com slash Ramsey. That's joindeleteme.com slash Ramsey. I feel like the lights might come off because my parents, they don't work. They're both retired and they don't have any cash at all. You're there. Are you there without, are you there staying rent free or what's your deal being there? No, I give them a thousand dollars every month. So why don't you, let me say this, instead of you giving them a thousand dollars in cash, why don't you say, I will pay the utilities. If I'm going to be there, I'm going to pay the water so that you know that those things stay on. And you know, maybe the other bits, you pay groceries or whatever it is that you're doing. But in this case, I would be hard pressed to be handing somebody my money in cash, hoping that they're doing the right thing with it, which is keeping the utilities in the place that I'm living. If your family's livelihood is at stake, you need to get involved. And that does not mean you need to loan the money. It means you need to be involved with the budget and paying the bills. And you might need to take responsibility because these grown adults have chosen not to. Why are you living there? Well, I still have like one more class left for college. So I was going to take that class and then in December I was thinking about moving. I have about $60,000 saved. You want to know what? You want to know what I think? I think that dysfunction is magnetic and it has a way of pulling us in and pulling us in, not just physically, but even mental. When you're around dysfunction, before you know it, you're starting to act in dysfunctional ways and you're starting to consider doing things that you know are dysfunctional. It's like a vortex you get sucked into. Like the fact that you're even calling us concerned about what do I do here lets me know, man, this dysfunction is really having a pull on you. I think I'd get the heck out of that situation. And it's not to say you don't talk to them or see them or interact with them. I'm not saying cut them off by any means. I'm just saying you've got money. You're 23 years old. You're grown. Go and start your life and start on a healthy path. I agree. So they have a thousand bucks coming in from you. They have rental property money coming in. I assume they have Social Security. Any other sources of income? No. Oh, they also have another rental property as well. Where's all their money going? Bills. They're backed up on everything. So it's all going to bad debts they're trying to keep up with? Yeah. He has about, I think, $100,000 in credit card debt. How old are they? My dad's 70 and my mom's 50. Okay. So older parents. Can she work? I think she's going to start working. She never worked before, but she's going to start. She's going to have to get a job. No time like the present. So how much debt do they have total, do you know, between all the TLOCs and consumer debts? I think about $800,000. Okay. And they have at least $700,000 locked up in this rental property, number one. What's the second property worth and what is owed on it? That's debt-free. They don't owe anything, but it's worth about $400,000. Okay. So they have $1.1 million that they have access to if they chose to sell one of these properties or both of them. They're not in the red. They just have a lot of risk in their life. Yeah. That's true. So you can show them that, hey, mom and dad, I'm not going to co-sign anything, but what I can help you do is come up with a plan to get out of this if you're willing to listen to me. If you don't want my advice, fine, but that's all I'm able to help with at this point in my life. That's true. I'm also afraid that they're not going to pay me back. They're not going to pay you back. Certainly, they're not. What makes you think they would? If they do, I would be shook. Because they said they would? Yeah. I mean, you know, your parents, I would think they would pay you back, but... It's not about that. You can tell by people's patterns of behavior what they're most likely to do. I'm sure they want to pay you back. I'm sure somewhere deep in their heart, they feel for you, going, man, we really need to get her money back. But they've got a thousand things going on, and you might get it back in inheritance one day. But at this point, there's still a lot of life to live for these kids, and for your mom, and for your dad. So in the meantime, we need to clean this mess up. And you might need to show them how bad this really is. And that debt is not the answer, because it got us where we are today. Another HELOC isn't going to solve anything, is it? It's all about the behavior that got us here. And they're not willing to change that, and you can't change them. That's why I don't want you to get involved. Yeah, you can't change them. And I think you need to move out. I go back to my point. If I'm you, this weekend, that's my fun. I'm going out, and I'm apartment hunting. You've got $60,000 saved, which is amazing. Go put it to good use. Parents, please do not put your kid in this position. This is abuse on several levels. Create your free every dollar budget today. The simplest way to budget for your life.