Overview of "Don't Act Like This Is Helping" (Ramsey Network)
This episode answers a listener question from Jessica in Illinois about whether to include a co-signed car loan for her 22-year-old daughter in her debt snowball. Jessica has $20,000 in credit card debt and her daughter owes $12,000 on a car that Jessica co-signed. Dave Ramsey advises how to prioritize repayment, warns about the dangers of co-signing, and gives practical next steps for getting fully out of debt and moving to Baby Step 3.
Main takeaways
- Prioritize paying off your own credit card debt first, then tackle the co-signed car loan afterward.
- A co-signed loan is a contingent liability — if the primary borrower defaults, creditors will come after the co-signer (often first).
- Co-signing is risky and commonly leads to the co-signer being on the hook for someone else’s inability to pay.
- Even if the primary borrower is currently making payments, the co-signer should treat the loan as something to eliminate as soon as reasonably possible.
- Keep your starter emergency fund intact while finishing debt repayment; then move to fully funded emergency savings (Baby Step 3).
Why co-signing is risky
- A co-signed loan makes you legally responsible for the debt if the borrower fails to pay.
- Lenders aggressively market debt and will pursue the co-signer when problems arise — they often assumed the co-signer would pay if needed.
- If a lender wouldn’t loan to the primary borrower alone, that’s a red flag that the borrower can’t realistically afford repayment.
- Personal anecdote and biblical reference: Dave calls co-signing “stupid” and cites Proverbs 17:18 to emphasize the practical danger; he also describes paying another person’s debt in his past and calls it a “stupid tax.”
Recommended action steps (practical)
- Keep your starter emergency fund intact (Ramsey’s Baby Step 1).
- Continue the debt snowball:
- Finish paying your personal credit card balances first (they are higher risk and not currently in crisis).
- After credit cards are gone, pay off the co-signed car loan.
- After paying off debts, move to Baby Step 3 — fully funded emergency fund.
- Address repayment with your daughter once you clear the car (e.g., have her refinance into her name when she qualifies, set up a repayment plan, or a written promissory agreement).
- Avoid future co-signing. If you feel pressured to help, explore alternatives (coaching on budgeting, buying a cheaper used car, lending money under strict terms, or letting them build credit first).
Notable quotes and lines
- “If you co-sign for someone else, you’re stupid.” (Referenced Proverbs 17:18)
- “Debt is the most aggressively marketed product in the United States.”
- “I wrote on the four-column on the check? Stupid tax.” (On paying another’s debts)
- “If they won’t loan them money, it’s because they can’t pay it.”
Context: Ramsey Baby Steps referenced
- Baby Step 1: Starter emergency fund (small cushion)
- Baby Step 2: Pay off all debt using the debt snowball
- Baby Step 3: Fully funded emergency fund Dave recommends staying within this framework: don’t let a co-signed but currently performing loan derail the priority of paying off unsecured, higher-risk debts first.
Quick summary recommendation
Finish paying your own credit cards first, keep your starter emergency fund, then pay off the co-signed car loan. After that, require the daughter to make you whole (refinance or repay) and avoid co-signing in the future. Co-signing transfers risk to you — treat it as something to eliminate, not a favor that helps the borrower long-term.