Today's Habits Create Tomorrow's Progress

**SPEAKER_1** (0:06)
Brought to you by the EveryDollar app. Start budgeting for free today.

**George Kamel** (0:16)
Normal is broke, and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the FAIRWINDS Credit Union studio, this is The Ramsey Show. I'm George Kamel, here with Jade Warshaw, taking your calls at 888-825-5225.
We'll try to help you take the right next step to your life and your money. Sarah is up in New York City. What's going on, Sarah?

**SPEAKER_3** (0:41)
Hi, thank you for taking my call. Absolutely.
My question is, my parents, they're pressuring me to find a $250,000 HELOC, and I feel very uncomfortable doing it.

**George Kamel** (0:53)
You should.

**SPEAKER_3** (0:54)
Yeah, they already owe me $20,000.

**Jade Warshaw** (0:57)
Oh, man.

**George Kamel** (0:58)
So they went, hey, Bank of Sarah hooked us up last time. Let's try to 10X our loan.

**Jade Warshaw** (1:02)
Why is this even a conversation? Why is this even gone beyond the point of an immediate no?

**SPEAKER_3** (1:10)
Honestly, they cannot pay their debts, and I'm very worried for my little siblings.

**George Kamel** (1:19)
OK, because the siblings are living with them. You are not.

**SPEAKER_3** (1:22)
Yes. No, I'm also living with them as well. How old are you? Very hectic. I'm 23

**Jade Warshaw** (1:27)
OK, and how old are the siblings?

**SPEAKER_3** (1:29)
They're 14 and eight.

**Jade Warshaw** (1:31)
OK, 14 and eight. 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?

**SPEAKER_3** (1:39)
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.

**Jade Warshaw** (1:48)
Oh boy.

**George Kamel** (1:49)
What's the rental property worth?

**SPEAKER_3** (1:52)
It's worth about $950,000.

**SPEAKER_5** (1:54)
And what do they owe?

**SPEAKER_3** (1:56)
They owe $250,000.

**George Kamel** (1:59)
So they got $700,000 sitting in equity in that thing.

**SPEAKER_3** (2:03)
Yes.

**George Kamel** (2:03)
But they refuse to sell it.

**SPEAKER_3** (2:04)
Why not sell it?
They refuse. I guess they want to keep it in the family, but honestly, yeah.

**George Kamel** (2:09)
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.

**Jade Warshaw** (2:22)
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?

**SPEAKER_3** (2:29)
I'm worried that there's not going to be any money left for them, and their house is going to get foreclosed on. 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.

**Jade Warshaw** (2:43)
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.

**George Kamel** (3:03)
Inheritance is the last thing I'm worried about.

**Jade Warshaw** (3:05)
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, them 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.

**SPEAKER_3** (3:46)
Yeah, that's true. I also 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.

**Jade Warshaw** (3:56)
Well, you're there. Are you there staying rent free or what's your deal being there?

**SPEAKER_3** (4:03)
No, I give them $1,000 every month.

**Jade Warshaw** (4:05)
So why don't you, let me say this, instead of you giving them $1,000 in cash, why don't you say, I will pay the utilities.