Rachel from Sacramento, California, called into “The Ramsey Show” with a financial dilemma that she admitted was of her own making. The 61-year-old explained she bought her daughter a $27,000 car in September with the understanding that her daughter would refinance it into her own name once her credit improved. A year later, the loan and insurance remain in Rachel's name, and the situation has snowballed.
“It’s almost a year she hasn’t done that. She's getting FasTrak tickets, that's like a toll bridge thing. And her insurance is not covered by anyone other than mom. I feel like I'm ready to do something drastic just to pay off the car and just give it to her,” Rachel said.
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When asked about the numbers, she admitted everything, including the loan and registration, was in her name. She described herself as “dummy me,” acknowledging the decision had backfired. Now, she's considering tapping into her Social Security early, using a home equity line of credit, or cashing out a lump sum from her employer to resolve the debt.
Personal finance expert Dave Ramsey told her directly, “Sweet girl, you made a mistake. Undo the mistake. Don't keep doing it.”
Ramsey emphasized that Rachel's gift of the car had not helped her daughter but instead trapped her. “What you did was not a blessing to your daughter. You didn't help your daughter. You hurt your daughter,” he said. “You put her in a situation where she can't afford a car.”
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Rachel argued that her daughter, a single mother with three children, still needed reliable transportation. Ramsey agreed but pushed back on the idea that it had to be a $27,000 vehicle. “She does not need a $27,000 car, and she's irresponsible, and she didn't follow through on what she said. Honey, she can get a $5,000 car. Single parents do it all the time.”
When Rachel mentioned possibly using a HELOC or other funds to pay off the balance, Ramsey asked, “Are you a multimillionaire?” When she replied no, he shut down the idea: “You don't have the money to throw around $27,000, do you?”
