My mom took out a Parent PLUS loan in 2009 to help pay for my college education. I also took out $70,000 in student loans myself. My mom never made a payment on the loan she took out for me, and now the amount due on the Parent PLUS loan has ballooned to $100,000. She recently told me in her mind it was my loan in her name, and I should be the one to make the payments after I became financially stable. Thankfully I just got a new job making $140,000 a year. With this I can finally make a dent in my own loans, but she asks me every week if I’m going to pay the Parent PLUS loan. My mom is a nurse practitioner, so she makes good money, but she recently financed two new luxury cars within 24 hours of each other—one for work and one for church. She also has loans out from borrowing on her 401(k) and credit card debt. Should I take over the Parent PLUS loan under my name?
Tommy
Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good MorningAmerica, CBS This Morning, Today Show, Fox News,CNN,FoxBusiness,andmany more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.
Dear Tommy,
Wait, are you serious? Your mom has a church car? I’ve never heard of such a thing. But hey, I’m going to talk to my wife about this. I knew I needed another car, I just didn’t know I needed a church car. Oh, my goodness!
Ok, here’s the deal. If you had an agreement with your mom, or promised at any time to pay back the Parent PLUS Loan when you were able, you should cover it. But that’s not what you told me. It sounds like your mom has a good heart and was just trying to help, but she did it in a dumb way. From what you told me, she’s done a lot of dumb things with money.
Under no circumstances do you take the loan back under your name. In fact, I’m not certain you can even do that with a Parent PLUS Loan. You need to get your debt cleaned up first before trying to help her. If you choose to be a bigger help after that, you need to start things by having a serious conversation with your mom. She needs to hear that she’s being absolutely silly with her money. Let her know you’re willing to help because the loan was for your benefit. But make sure she understands you won’t pay it all, and you won’t do it while she’s making two luxury car payments—including one on a church car. That’s ridiculous.
Offer to be her biggest cheerleader, and help her find a good financial coach— someone with the heart of a teacher. You might want to let her know you’ll match whatevershepaystowardthe loan, so it’ll feel like a team effort. But also make sure she understands if she pays nothing in any given month, you’ll match that, too.
Good luck, Tommy!
— Dave Dear Dave,
After hearing you talk about financial infidelity, I have to admit that I hide money from my husband. I have been setting aside money for emergencies without his knowledge. He is not terrible with money, but he always seems to find something to spend it on. Before I started doing this, we never managed to save much money at all. But now I feel like I have been doing something wrong. What should I do?
Lana Dear Lana,
I believe in saving up for emergencies. I mean, I’m the guy who tells people to have three to six months of expenses saved in an
SAYS
emergency fund, right? But deception is never a positive thing in a relationship— especially a marriage. You need to talk to your husband about this.
I know it won’t be easy for you, so you have to make sure you tell him in the right way.Playingtheblamegame won’t help. Basically, you’ve been deceiving him about this. Sure, it sounds like he has been immature when it comes to your household finances, but you made the decision to hide things. You chose to do this instead of talking to him about your concerns.
Let’s start here. Tell your husband you need to talk to him about something important, and sit down together with no distractions. Explainwhat’sbeengoingon, and that you’re sorry for not being honest about things, but you also need to speak up and tell him why you were doing this secretly. If you were afraid to disagree with him, tell him that. Tell him why, too, and let him know you just want the two of you to have a successful financial future, and that you’re committed to never hiding things again.
Managing money in a marriage isn’t a “his” or “hers” thing. It’s a “we” thing. You can fix this, but it’s going to take some honesty, understanding and making an effort to work together toward the same goals—like saving or living on a written, monthly budget.
You each have a vote, but it also means you have to stand up and vote no, Lana, if he wants to blow money on sillystuffwhenyouguysdon’t have your finances in order.
— Dave Dear Dave,
I need help. I am way behind on my basic utilities and my taxes. I have tried to start the Baby Steps, but everythingissooverwhelming right now that it is easy to get discouraged. I am 33, I live in Los Angeles, and I average around $30,000 a year doing behind-the-scenes work in the entertainment industry. My total debt is about $10,000. Can you give me some advice?
Cameron
Dear Cameron,
I know you’re in a scary place right now, brother. But I’m glad you’re getting on board and that you want to move in the right direction with your finances.
Before you start the Baby Steps, you should get current on all your bills. Make a list of all the bills you’re late on and how much it will take to get current on each one. Then, create a written, monthly budget. Once that’s done, and all your expenses and income are accounted for, you’re going to squeeze every penny you can from there and work your late list from smallest to largest until everything’s current. You’re going to feel a sense of relief— and accomplishment—every time you flip one of these bills. And believe it or not, the act of simply making a list will help reduce the stress you’re feel, because just by doing that you’ve established the size of thedragon.Thisdragonmust die, and you are the knight who’s going to kill it.
But listen, there are two sides to this equation— income and outgo. No offense, but $30,000 a year as an income in Los Angeles stinks. You’ve got to do something to make more money. Hey, $10,000 would literally change your life. Not everyone can say that. The bad news is, you’ve got $10,000 worth of debt. The good news is, you’ve got only $10,000 worth of debt. I’m not talking about some little minimum wage deal, either. I want you making some real money. Don’t do anything illegal, or something that would compromise your morals, but get after making some good money.
And long term? Dude, you might want to think about taking a step up in your industry or even a full-blown career change. I mean, you don’t want to be making $30,000 a year and still working a side job when you’re 50, right?
You could be debt-free, and have a much better life, in a year or less, Cameron. Go do this.
I want you to win!
— Dave