The Ramsey Show

I Cosigned 2 Cars For My Mom And Now They're Repossessed

February 16, 2026

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  • Co-signing debt, even under parental pressure, creates significant personal financial liability that must be cleaned up by the co-signer, regardless of the original borrower's actions. 
  • Marital finances should be fully combined to tackle significant shared or individual debt burdens, as one spouse cannot effectively clean up a major mess alone. 
  • When facing overwhelming debt, drastic lifestyle changes, such as significantly reducing housing costs, are necessary to create the margin needed to aggressively pay off debt and avoid bankruptcy. 
  • Living rent-free with parents, while seemingly helpful for debt payoff, often leads to comfort and reduced urgency, potentially slowing down progress compared to living independently with a strict budget. 
  • Using 0% introductory APR credit cards is discouraged because variables like job loss or unexpected events can lead to high-interest debt when the promotional period ends, making one's own income the best '0% interest line of credit.' 
  • When deciding whether to repair an old car, the repair cost should be weighed against the car's current market value, and the decision should also consider the mental energy and stress associated with constant repairs versus the short-term hardship of paying off debt aggressively. 
  • Building wealth requires embracing boredom, patience, and sacrifice, contrasting with the instant gratification culture of modern society. 
  • When purchasing vehicles, the total value of all cars should not exceed half of the gross annual household income. 
  • Achieving lifestyle goals like having a stay-at-home parent often requires aggressively reducing the largest monthly expense, which is typically the mortgage payment. 

Segments

Cosigned Car Debt Resolution
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(00:00:37)
  • Key Takeaway: Deficit balances from repossessed vehicles can often be settled for 40% to 50% of the owed amount.
  • Summary: The caller, Arlie, owes $18,000 in deficits from two repossessed cars ($10k and $8k) plus a $2,000 personal loan, totaling $20,000 in debt. The hosts advise settling these debts for 40% to 50% of the amount owed because the repossession occurred long ago. Arlie must freeze her credit immediately and gather all settlement stipulations in writing to prevent future issues.
Marital Finances and Debt Burden
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(00:05:01)
  • Key Takeaway: Spouses must combine finances to tackle significant debt, as attempting to clean up major financial messes alone is often unsustainable.
  • Summary: Arlie expressed reluctance for her new husband to take on the burden of her mother’s debt, but the hosts stressed that marriage requires unity in financial challenges. If one spouse would not ask the other to handle a burden they wouldn’t take on themselves, it is acceptable to receive help. The hosts emphasized that this debt cleanup requires teamwork.
Co-signing and Financial Lessons
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(00:07:09)
  • Key Takeaway: Co-signing and borrowing money in general must cease immediately as a critical learning experience to avoid future heartache.
  • Summary: The hosts strongly urged Arlie to make a promise to never co-sign or take on new debt again, highlighting the pain caused by her mother’s actions. They advised pulling all three credit reports and freezing credit immediately to gain a full picture of her financial standing and prevent further unauthorized debt. Combining finances is presented as the key to cleaning up this mess as a team.
Convincing Husband to Combine Finances
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(00:10:32)
  • Key Takeaway: A marriage built on separate finances where one spouse controls assets like the house lacks trust and respect, functioning as a roommate situation.
  • Summary: Barbara has been married 12 years with finances split based on income percentages, leading her to feel like a ‘houseboarder’ because her husband bought the house before marriage. The hosts identified this structure as unhealthy, stemming from a need for control or past baggage on the husband’s part. Barbara needs to use ‘I statements’ to communicate how this dynamic is destroying the marriage, emphasizing her need for unity and a vote, rather than blaming him.
High Rent Hindering Debt Freedom
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(00:22:33)
  • Key Takeaway: A $3,500 rent payment on a $105,000 income is unsustainable and must be reduced to free up cash flow to attack $130,000 in debt.
  • Summary: Lisa, 58, earns $7,500 monthly but is drowning under $130,000 in debt due to past overspending driven by parental guilt. Her $3,500 rent is the primary obstacle preventing her from aggressively paying down debt. She must move to a cheaper location, even if it means a longer commute, to free up $2,000 monthly to attack her debt aggressively, aiming for debt freedom by age 60.
Handling Parental and Adult Child Debt
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(00:26:50)
  • Key Takeaway: Debt obligations tied to family members, like a child’s car lease, must be addressed directly by communicating the necessity of selling the asset or having the child assume full responsibility.
  • Summary: Lisa is also paying her recent graduate son’s car lease, which is in her name, compounding her financial stress. She must have a difficult conversation with her son, explaining that she cannot afford the lease and he must either take it over completely or the car must be sold. This situation underscores the principle that financial self-preservation prevents becoming a greater burden to children later.
Investing for Children’s Future
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(00:33:03)
  • Key Takeaway: Taxable brokerage accounts offer more parental control over gifting large sums to children than 529 plans or 529-like accounts that grant control at age 18.
  • Summary: When setting up investments for a child, the hosts recommend 529 plans for education and a taxable brokerage account held in the parents’ name for other major gifts like weddings or down payments. They caution against giving hundreds of thousands of dollars to an 18-year-old because their prefrontal cortex is not fully developed. Parents should utilize the annual gift exclusion limit ($18,000 per parent per child) for direct gifting if desired.
Living at Home vs. Independence
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(00:58:59)
  • Key Takeaway: Achieving debt freedom faster often requires moving out of a parent’s home, even if it means incurring rent, because independence creates necessary financial pressure.
  • Summary: The goal of clearing $2,000 in debt monthly is achievable within two years if serious action is taken, even while renting. Living rent-free can lead to complacency, causing individuals to fail to apply maximum effort toward debt repayment. True progress and confidence in life often stem from taking full responsibility for one’s own expenses and living situation.
Mental Energy of Debt Payoff
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(00:59:56)
  • Key Takeaway: Aggressive debt payoff requires significant mental fortitude, turning budgeting and spending control into a near full-time job.
  • Summary: Sticking to a debt payoff plan demands substantial mental energy, involving daily tracking of budgets and transactions, and making conscious choices like packing lunches. Listeners must reframe their thinking to determine which is more stressful: the temporary intensity of debt payoff or the long-term stress of financial insecurity at age 41. The caller admitted to not going ‘full force’ while living rent-free, highlighting the need to feel the ‘boiling water’ to stay motivated.
0% APR Credit Card Utility
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(01:02:56)
  • Key Takeaway: Zero percent interest credit cards are risky financial tools because unforeseen circumstances or poor discipline can lead to high APR debt accumulation.
  • Summary: Many people intend to pay off 0% APR balances before the promo period ends but fail to do so, resulting in the full APR applying retroactively to the start date. Losing a job or facing hard times are variables that can derail the payoff plan, adding unnecessary stress. It is better to use the income you actually earn as your own 0% interest line of credit, making more intentional spending decisions with existing funds.
Car Repair vs. Replacement Rule
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(01:06:38)
  • Key Takeaway: The decision to repair a car versus replacing it hinges on comparing the repair cost to the car’s value and assessing if the repairs address crucial safety items.
  • Summary: If a repair costs more than the car is worth (e.g., $4,000 repair on a $3,000 car), fixing it is a bad idea. If the vehicle is constantly in the shop more than it is being driven, replacement is likely necessary. Personal budget constraints also dictate the choice, as one might not have the financial flexibility to choose replacement.
Handling Post-Retirement Spending Fear
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(01:09:40)
  • Key Takeaway: Financially successful retirees who are debt-free must actively flex their ‘spending muscle’ by budgeting for enjoyment to overcome the fear of scarcity developed during wealth accumulation.
  • Summary: A couple retired early at 55 with $2.8 million, withdrawing only 2.8% annually, were still afraid to spend more, indicating an atrophied spending muscle. By calculating the actual math (a 17% return yielded $476,000 in one year), the fear of running out of money was proven false. The advice was to increase personal spending funds in the budget to force enjoyment of the wealth they worked hard to build, moving from a mindset of scarcity to abundance.
Gifting Assets to Adult Children
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(01:16:18)
  • Key Takeaway: Parents should prioritize funding their adult child’s career dream over covering their basic living expenses, especially if the child is not in immediate financial desperation.
  • Summary: Gifting a paid-for rental home to a 28-year-old musician pursuing a ministry career could remove necessary motivation for him to provide for his family independently. Parents should separate support by helping fund the specific ‘dream’ (like album production costs) rather than artificially propping up their monthly bills. Furthermore, parents should focus on completing their own Baby Step 6 (paying off the mortgage) before making large gifts to ensure their own financial security.
Buying vs. Building a Home
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(01:26:24)
  • Key Takeaway: When housing prices are inflated, it is often wiser to secure a reasonably sized home with a manageable mortgage than to delay purchasing or attempt building to avoid all debt.
  • Summary: The caller’s desire to avoid debt led them to consider building, but this introduced complexities like land financing and utility installation costs. If the local market requires a mortgage payment that is 25% or less of take-home pay on a 15-year fixed rate, taking on a mortgage is acceptable and preferable to waiting while housing prices continue to rise. Selling existing stocks to maximize the down payment allows for a smaller mortgage, which can then be aggressively paid off quickly.
Debt-Free Scream Celebration (Unknown)
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  • Key Takeaway: None
  • Summary: None
Embracing Patience and Sacrifice
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(01:55:25)
  • Key Takeaway: Financial success requires being a ‘crock pot’ by embracing boredom, patience, and sacrifice in a microwave world.
  • Summary: The world villainizes sacrifice, but achieving financial goals requires patience and sustained effort over time. Those who embrace the slow process, like a crock pot, will build significant wealth while others attribute their success to luck. Consistency in small steps leads to large, visible results over the long term.
Ask Ramsey Promotion and Scripture
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(01:56:30)
  • Key Takeaway: Ramsey Solutions offers a free, fast tool called Ask Ramsey for principle-based financial answers.
  • Summary: Listeners can get help with money questions anytime using the Ask Ramsey tool available on ramseysolutions.com. The scripture of the day, Joshua 1:9, encourages listeners to be strong and courageous. A quote from Ayn Rand emphasizes taking ownership of one’s path: “The question isn’t who is going to let me, it’s who is going to stop me.”
Vehicle Spending Limit Guidance (Unknown)
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  • Key Takeaway: None
  • Summary: None
Planning for Stay-at-Home Parent (Unknown)
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  • Key Takeaway: None
  • Summary: None