Dave Ramsey says: Borrowing large sum of money from parents is risky business

Dear Dave,

I’m 32 and a teacher. My house is my only debt, and there’s $55,000 left on my mortgage.

My parents always taught my brother and I about saving and being smart with money. The other day, mom and dad offered to pay off the rest of my mortgage by loaning me the money with a very small interest rate.

I know you don’t like the idea of mixing money and family, but considering I have a great relationship with my parents, what do you think about this offer?

— Lacy

Dear Lacy,

I’m going to make a suggestion before saying don’t do this. See what I did there?

But seriously, I’d recommend they just make the money a gift and reduce your portion of any later inheritance by that amount. By doing this, you could help reduce the possibility of your brother feeling slighted in any way.

I would never loan my kids money. And here’s why: 100% of the time, the Bible says the borrower is slave to the lender.

That doesn’t exempt parents and their kids. No matter how nice your masters are, you’re still a slave in this kind of situation — and you’ll feel it. Family dinners and get-togethers are different when you’re sitting down to eat with your masters — your creditors — instead of just good ol’ Mom and Dad.

Don’t get me wrong, I’m not suggesting you should act ungrateful that they offered a loan instead of a gift. It’s a generous thing either way. But if they don’t want to go the gift route, that’s fine. You have a good job, a nice home, and you’ll be OK.

The thing is, I just wouldn’t want to take a chance on straining a great relationship, or even ruining it, because of money.

Lacy, you’re 32, a teacher and a homeowner. In my mind that says a lot about you, your maturity and your work ethic. That being the case, I get how this could be a weird thing for you to do. So, I’m going to give you an out: Blame me. Just tell them you talked to me, and I said don’t do the loan idea. Tell them I gave you the make-it-a-gift-tied-to-the-inheritance idea.

If your mom or dad wants to talk to me about things, that’s fine. I’ll be kind to them. But I’ll tell the truth like I always do.

— Dave

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