Woman Concerned After In-Laws Ask For $10K Back That They Loaned The Couple A Decade Ago
She's proven that family loans often spark more drama than they’re worth.
breeze393, fizkes / CanvaPro We’ve all fallen down the rabbit hole of accumulating debts. Whether they be credit cards or student loans, many of us have no choice but to rack up debt to simply survive. Especially in the midst of big life changes or when you're first starting a career, debt is the crutch that allows us to start our lives and head closer to our goals.
In an effort to avoid inescapable contracts, high interest rates, and fixed payment schedules, some people are lucky enough to turn to family for loans, but even that can have repercussions.
That was the case for one woman and her husband. Their lack of communication when borrowing money from their in-laws only made for a much larger ordeal almost a decade later.
After her in-laws loaned her $10K almost a decade ago, this woman is concerned that now they’re demanding repayment.
This woman called into financial expert Dave Ramsey’s show “The Ramsey Show,” searching for advice on how to handle a situation with her in-laws. After loaning her and her husband $10K almost a decade ago, they were now asking for the money back.
The in-laws initially said to “pay it back whenever,” but amidst debt, mortgages, and their full-time careers the couple hadn’t found a great time to write that large of a check. Unfortunately, the woman said that things had become “uncomfortable” with her in-laws and they were now demanding the payment back.
When they first loaned the $10K, the in-laws had casual terms with almost no communication on a repayment timeline, hard date, or interest rate.
Initially, when they were loaned the money to get started with their first home and careers, the in-laws did not specify any details about paying back the money. They simply wrote them a check and said they should “pay it back whenever.”
However, time passed and the woman and her husband make over $150K annually, but they've racked up over $136K in additional debt outside of their family’s loan.
Despite the couple having more debt now, their income makes it entirely possible to start paying back this loan, but as Ramsey noted, it wasn't about their ability to pay back their in-laws, but rather when and on whose terms.
The woman admitted her relationship with the in-laws was strained after she set some ‘uncomfortable boundaries’ when they asked to move into town.
The woman revealed to Ramsey that they recently had a confrontation with the couple completely outside of the loan, which affected their relationship.
After asking the couple about moving into a home closer to their town, the couple politely declined knowing that their relationship was healthier when they had more distance. Shortly after this confrontation, the in-laws brought the loan back up and asked them to pay it back sooner rather than later.
Clearly, this wasn’t a coincidence, which Ramsey acknowledged, but he also said the strained relationship was not an excuse to prioritize the debt. “Technically, you’re not legally bound to pay anything,” Ramsey explained, “but, that doesn’t mean you’re not morally responsible.”
Photo: Creatas / Canva Pro
He suggested when they do pay their in-laws back, which should be completely on the couple’s terms and based on their financial situation, she should write the check in full. Not only that, she should write “paid in full” on the check to alleviate any back and forth from the in-laws down the road.
“I’m not having you pay them back because their feelings are hurt,” Ramsey said. “I’m having you pay them back because you are obligated to do that morally anyway.”
Ramsey suggested that she prioritize paying back the money in full after tackling her smallest amount of debt.
Ramsey suggested this woman focused on paying her debts from “smallest to largest regardless of interest rate” — a method he referred to as “The Debt Snowball.” Doing this, she would focus on her smallest debt first which was a credit card with a balance of $6K. Once that was paid off, she would move on to the $10K loan from her in-laws.
The methodology behind “The Debt Snowball,” according to Ramsey, was to give “motivation” to the payer to continue paying more and more debt, but many people believe this method is only effective for people who are “undisciplined.”
Other financial experts explained that paying off debt shouldn't revolve around shame.
Other financial experts suggested alternative routes for paying off debt, ones that didn't place unnecessary negative connotations or shame on people using debt to their advantage.
These alternate routes included paying off debts that most impact your credit score, have high-interest rates, or ones that help to lower your tax bills. Depending on your unique situation, you might find one of these avenues to be more appropriate to your financial circumstances.
Regardless, many financial experts agreed on one thing: family plus money often equals drama. “Owing family money, compared to owing a bank money, is much worse in my opinion,” Ramsey’s co-star said. “It just creates so much more drama.”
So, if you can help it, don’t take loans from loved ones. If you have to, or it’s the most responsible thing to do in the grand scheme of things, make sure you have an honest and open discussion about the terms and conditions.
Zayda Slabbekoorn is a news and entertainment writer at YourTango focusing on pop culture analysis and human interest stories.