Co-signing similar to Russian roulette

By Dave Ramsey | Published: March 24, 2008 Comment on this article

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Patty

DEAR PATTY

No, this doesn’t make your mom the owner of the car unless she signed as an owner. But the first thing you do is call your son and tell him to bring you the car. Just make sure he hands it over voluntarily, otherwise you’re looking at another problem called grand theft auto! When you co-sign a loan for a friend or a family member, it’s like playing Russian roulette. There’s a chance the gun’s going to go off, and you’ll end up blowing your financial brains out. Debt is the most aggressively marketed product in our culture today. And if some banker wants a co-signer on a loan, it means he doesn’t think the person asking for the loan will pay it back.

Before all this started, I’m pretty sure Grandma didn’t have a space on her to-do list marked “go thousands of dollars into debt.”

Co-signing is bad idea. If you insist on doing it, you’d better make sure you have the ability to write a check and hand over the money. Chances are — one way or another — that’s exactly what you’re going to end up doing.

DEAR DAVE

We’ve managed to become debt-free, thanks in part to the fact that the little house we’ve been renting is just $500 a month.

We’ve also been able to save up a few thousand dollars to buy a new home.

We’d like to move into a better place of our own soon — especially since a skunk just moved in under the floor — but that will mean doubling what we now pay for a better way of life in a nicer neighborhood.

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