Jul 9, 2025
After paying off a staggering $350,000 in debt in just 2.5 years, Dustin and his wife are within striking distance of financial freedom. They have a plan to quickly eliminate their last remaining loan, but there’s one major hurdle.
The Palm Springs, California-based couple wants to sell their primary home and use the proceeds to pay off their vacation home, which would then become their main residence. However, the vacation home was financed with a $500,000 seller-financing note from Dustin’s friend, who refuses to accept early repayment.
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“What we want to do is sell our primary home and move into the vacation home, which we like better anyways,” Dustin explained on a recent episode of The Ramsey Show. “The net proceeds from selling our main house will pay off our vacation home, which will become our primary residence.”
This move would make them debt-free, but their friend’s unwillingness to accept early repayment complicates the situation.
The unusual situation highlights how borrowing money from friends and family can make even the most straightforward financial decisions unexpectedly tricky.
It’s tricky, tricky, tricky
Dustin’s financial arrangement is unusual but not uncommon. According to Pew Research, as of 2021, at least 36 million homeowners relied on alternative financing structures to purchase their homes. Many of these borrowers struggled to secure conventional mortgages and turned to friends and family for financial support.
While borrowing from loved ones can offer benefits — such as lower interest rates or more flexible terms — it also come with risks, including strained relationships.
“Borrowing from friends can be a fraught endeavor due to a mismatch in expectations,” notes a study published in the Journal of Consumer Psychology.
Dustin and his friend have recently encountered such a mismatch. Based on their loan agreement, Dustin believes he has the right to repay early. However, his friend insists on maintaining the original 10-year term they agreed to so that he can spread out the payments and minimize his capital gains taxes.
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“He just didn't seem jazzed about it,” Dustin said. “And it put me in a weird situation where I'm like, ‘Man, I don't want to burn a friendship with a guy that I've had a long friendship with.’”
Despite the risk to their relationship, co-hosts Rachel Cruze and George Kamel said they believe there’s only one way to logically move forward.
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Prioritize family
Although friendships are valuable, Cruze and Kamel emphasize that financial security and freedom are far more important.
“The writing’s on the wall, you have to do what’s best for you and your family,” Cruze insisted. “It's not like you're putting a friend into debt. Boohoo, he gets $500,000 and he's going to have to pay some taxes on it.
“He can wipe his tears with $100 bills,” Kamel interrupted, with a laugh.
The financial and psychological benefits of becoming debt-free may outweigh the discomfort of pressuring his friend. In fact, Empower discovered that 65% of Americans financial happiness as being debt-free.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
