Author Topic: Family borrowing money from Family....Ughhh  (Read 4874 times)

Sultan58

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Family borrowing money from Family....Ughhh
« on: May 13, 2019, 07:11:47 PM »
Several of my family members have borrowed money from me and other family members over the past few years. Mosty  from my Mom, myself and a BIL. We are pretty much the only ones with a plan and assets that allow the possibiility. Money to pay back bad business investments, to fund a divorce that hasnt happened yet and likely will not happen, and some for plain old over spending.

Guess what?  None of this money has been paid back yet. Its like they think...well its from family and they can afford it and its probably forgiven automatically. lol We all still get along well, but still..........

I told my Mom this weekend.....I am no longer loaning any money to family members--no matter what and encouraged her to stop giving in as well......it just changes the family dynamics and I can feel myself getting a bit resentful in spite of myself.

Anyone else been "burned" by family?

Buffaloski Boris

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Re: Family borrowing money from Family....Ughhh
« Reply #1 on: May 13, 2019, 07:40:48 PM »
There’s an old saying: “if you loan your BIL $500 and never hear from him again, was it worth it?”

Dave Ramsey has some good words about this. His advice boils down to DON’T. Give gifts instead where appropriate with no expectation of repayment.  I would make an exception if you’re in a rare situation where it’s part of a wealth preservation or tax strategy.

CheapScholar

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Re: Family borrowing money from Family....Ughhh
« Reply #2 on: May 13, 2019, 07:45:07 PM »
Trick is to make your family believe you make/have a lot less than you do.  My wife and I max out all of our retirement accounts and so I can honestly say to my family, “our net pay is just enough to cover our mortgage and utilities.” : )

SotI

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Re: Family borrowing money from Family....Ughhh
« Reply #3 on: May 13, 2019, 10:30:50 PM »
Done this a few times.
I consider it "credit karma": Someone in the family lend me a sizeable amount (5-digit) when I was a student. I paid her back ofc, with interest.

Since then, I have replicated what I considered a kindness by lending family members some money.
Still, this is capped. I.e. when someone doesn't repay the loan, the next one will not be able to get one from me. Still, so far it has not been necessary to "name & shame" a family member for non-payment (yet).

Family obligations are honour debts imo. I can afford writing off the small stuff. However, for higher amounts I typically get it contractually covered and asset-secured. Ofc, it's always a question of whether or not I would enforce it.

Bloop Bloop

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Re: Family borrowing money from Family....Ughhh
« Reply #4 on: May 13, 2019, 11:06:31 PM »
Threads like this remind me how lucky I am not to have a family full of deadbeats/spongers.

soccerluvof4

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Re: Family borrowing money from Family....Ughhh
« Reply #5 on: May 14, 2019, 03:39:47 AM »
Don't borrow money to family period. Donate money to their cause if you believe in it. I have in the passed Borrowed money to my Mother and my Brother knowing I would never see it again and the term " Can you lend me some money" was nothing more than giving. So if its not money you can just give away then I would stop it because odds are you wont get it back. But I only if at all will do it ONE TIME and if they ask again I simply say when you pay me back what you owe me I will consider loaning you again. Otherwise your not teaching or helping them but just hurting them from getting their shit together as well as causing your own angst. I also do what @CheapScholar suggested as much as I can.

DadJokes

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Re: Family borrowing money from Family....Ughhh
« Reply #6 on: May 14, 2019, 06:22:13 AM »
You should read the book Boundaries. It helps with learning how to say "no."

I let my father borrow money once. He owned a convenience store/deli, which burned down. He lost his income but still had to pay bills. I lent him some money (can't remember how much). A week or two later, my checking account was frozen. Oh, did I mention that I added him as a joint account holder so that he could handle my bills while I was deployed in Afghanistan and never removed him? His account had no money in it to make payments, so the bank froze all of his accounts, which included mine.

No good deed goes unpunished.

Livingthedream55

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Re: Family borrowing money from Family....Ughhh
« Reply #7 on: May 14, 2019, 06:35:15 AM »
Just once. I sold my car to my BIL for $5,000 and he stopped making payments to me after a few months. His justification was that the car was "no good" (no details, it was a very nice 4 year old car with no issues) and "I could afford to give it to him as I had plenty of money" (told to me via my sister).

So, yeah, once and only once.


saguaro

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Re: Family borrowing money from Family....Ughhh
« Reply #8 on: May 15, 2019, 12:31:43 PM »
Trick is to make your family believe you make/have a lot less than you do.

Yep this has worked for us.   Because of our more frugal ways, DH and I are seen as the "poor" side of the family so no one even asks for money.  This has kept some family members who are notorious for always needing money at bay. 

Arbitrage

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Re: Family borrowing money from Family....Ughhh
« Reply #9 on: May 15, 2019, 12:44:46 PM »
Our main approach has been to live far away from most of the family, so they don't hit us up for money.  Truthfully, I wouldn't mind living closer, but circumstances are what they are.  I do have one brother who has mooched off of nearly everyone (sometimes multiple times, for large amounts) and never paid anyone back despite various attempts to try to reach certain criteria or agreements before lending said money.  I haven't ever loaned him anything.  I did get burned once, as my wife once loaned her brother about $500, which he promptly forgot about.  The loan was made while we were engaged, I think, but since we were married shortly afterward and joined up our finances (my savings, her debt), we ended up eating the loss together.  She was able to find it in her heart to forgive him, so thankfully no relationships were harmed.  Can't say the same for various monetary issues in other parts of my family. 

Will definitely have to be careful on how I craft the FIRE story, though I'm pretty confident that I could resist most overtures. 

ketchup

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Re: Family borrowing money from Family....Ughhh
« Reply #10 on: May 15, 2019, 01:11:07 PM »
Never borrow money from family.  Never lend money to family.  That's my rule, but I used to be less smart about it. 

I borrowed a few thousand bucks from my dad once.  He didn't seem to mind but it weighed on me.  He didn't ask for interest but I paid him back indexed to VTSAX.  He promptly dumped the check into VTSAX, so I think we're on the same page.

Girlfriend's brother often asks to borrow odd small amounts of money, and then pays back within 24 hours.  I'm pretty sure he just fairly routinely overdraws his bank account the day before payday.  Mostly it's amusing, and he's always good for it, so we indulge him.  We probably shouldn't.

MaybeBabyMustache

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Re: Family borrowing money from Family....Ughhh
« Reply #11 on: May 15, 2019, 01:18:44 PM »
We've had a few situations where we've considered this.

1) we had a family emergency, and my disabled aunt works at a minimum wage job with no time off. She lives paycheck to paycheck, and not being able to take time off made a very difficult situation worse. We've given her the gift of allowing her to take time off for a week & spend time with her spouse while he was in hospice. (We gave her cash, definitely not a loan.)
2) I take my family members & trips & cover expenses, knowing they don't have a lot of flex money. It's a gift, and a thank you for being awesome & someone we like to travel with. Again, no expectation of being paid back.
3) My parents had an issue with a trust check that fell through at the last minute. They had already arranged for a house project to start, and would have had to liquidate some of their investments. This was a gap of several days only. My parents & I have an incredibly strong relationship. We loaned them the money with no questions. They repaid it back in a week or so. They also included interest, which was absolutely not necessary. We took them to brunch with the money. :-)

partgypsy

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Re: Family borrowing money from Family....Ughhh
« Reply #12 on: May 15, 2019, 01:51:53 PM »
 I think it depends on the person. Some people in my family would be good for it, others not.
In grad school, money was so tight that I borrowed $300 from my little brother so I could buy a washer/dryer set a friend was selling when moving (I lived in a rental house that had hookup for washer and dryer, but no washer and dryer).
I think it took me around 4 months to pay him back. I'm glad he didn't have a one size fits all rule about it.

My mother in the past has borrowed money (from lil brother and father) and not paid them back.
Recently lil brother borrowed money from my mother. It doesn't bother me as she kept too much in cash after selling her house, and he gives he a slightly better interest. He is trustworthy and they have it written out so even if she dies there is a record.
Basically for everyone in my family, I'm ok gifting small amounts of money, but not loaning. I have gifted my mother small amounts of money as well as purchased items she needs. This way I know it fits in my budget and there are no hard feelings either way. 
When I visit my family i stay at my lil brother's house and of course eat his food, etc. So if we take a trip I don't mind paying for a meal, extra gas or a little more of lodging as a thank you. Besides he is very frugal and would pick to stay at say super 8 or tent camping while I'm more day's inn or better motor lodge : )
« Last Edit: May 15, 2019, 01:55:05 PM by partgypsy »

Malcat

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Re: Family borrowing money from Family....Ughhh
« Reply #13 on: May 16, 2019, 03:30:42 AM »
Don't lend money you aren't okay with never getting back, period.

Don't lend money to anyone you are afraid of having serious conflict with.

Following those rules, I've lent money to family several times, but only an amount I'm willing to never have returned and only to family members who have the wisdom to be very afraid of pissing me off.

Solid boundaries and common sense are all you need when it comes to lending money.

Adam Zapple

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Re: Family borrowing money from Family....Ughhh
« Reply #14 on: May 17, 2019, 08:29:08 AM »
Threads like this remind me how lucky I am not to have a family full of deadbeats/spongers.

Seriously.  My wife and I really have our financial sh** together and our entire extended family is all better off than us.

Fishindude

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Re: Family borrowing money from Family....Ughhh
« Reply #15 on: May 17, 2019, 11:38:38 AM »
I don't loan to family anymore, I gift it.   No point in getting yourself worked up and mad thinking it was a loan, and then realizing you'll never get it back.
We are fortunate to have more than we need.   On many occasions we've sent a family member or a friend a check when we knew they were in a pinch.

OrangeSnapDragon

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Re: Family borrowing money from Family....Ughhh
« Reply #16 on: May 22, 2019, 10:19:56 AM »
Yes and No

#1 - Loaned my mother 20k, she is paying it back but at much slower rate that originally discussed.  My SO and I had the conversation before though that if she never paid us back it would be okay, she had done a tremendous amount for us and she has truly had some atrocious luck in her life. 

#2 - Brother for a plane ticket that was supposed to be paid back within 1 week, got about 1/2 of it back and then it seemed to fall of his radar for the next year.  I've chalked that up to never again with him.

We have been on the receiving end of a family loan though.  Before my SO and I were married his father used his line of credit at the bank to help us buy a 'fixer upper' for 22k and then more of the LOC to start repairs which we did all ourselves (LOC went up to about 38k I think max).  We never missed a payment, paid twice a month to lower interest and paid it off within I think 2 years.  When this all happened I only made 9.25/hr and he made about 10.75/hr.  Been in our fixer upper for 6 years now, it has been a labor of love that would have never been possible without my father in law.

I agree with all previous sentiments though, if you choose to do it never expect it back and be okay with that or just don't do it.


Villanelle

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Re: Family borrowing money from Family....Ughhh
« Reply #17 on: May 22, 2019, 10:58:53 AM »
I've borrowed money from family several times.  However, it was always for a mortgage, with set repayment terms and near-market interest rates.  My dad actually viewed it as a win/win.  I got a slightly (about .2) lower interest rate than we probably could have found, and he had a near guaranteed return on that money.  And instead of my interest going to Bank Of America (or whomever), it stayed in the family.  We were never lent more than we'd have qualified for, so it wasn't like we were getting money from family because it was or only option.  Each time (subsequent home purchase), the loan was secured with a formal lien.  Also, my parents know our financial situation and the fact that we are very responsible.

I share that to say that I'm not against family loans.  But to just hand someone cash to afford something they otherwise can not?  Nope.  If they have no money before the loan, then they don't have the habits necessary to save any money after the loan.  I suppose there are a few exceptions I *might* consider (e.g. major medical expenses, although in that case I'd likely encourage bankruptcy).  But in general, giving someone money because they have spent all their own is foolish, particularly when there have been no major changes that indicate their financial picture in the future will be better.  So not only are you taking on a probably loss of some or all the money, but you aren't really helping them anyway.  You enable them to stave off a financial crisis a bit longer, which just gives them more time and money to waste. 

Nangirl17

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Re: Family borrowing money from Family....Ughhh
« Reply #18 on: May 22, 2019, 11:21:30 AM »
Don't lend money you aren't okay with never getting back, period.

Don't lend money to anyone you are afraid of having serious conflict with.

This wins the thread.

I NEVER expect my loans to be paid back (though I don't tell that to the borrower!). I only loan what I'm willing to lose.

moof

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Re: Family borrowing money from Family....Ughhh
« Reply #19 on: May 22, 2019, 11:22:30 AM »
I made it a policy to never lend money to family.  It rarely ends well.

My sister is a hard luck case who was dealt a far worse hand in life than me, and I do occasionally give her money outright.  I do not want any of it back.  I do not want her thinking she needs to pay me back.  I just want her to be my sister, and having debt in the middle changes that.  I do not give money I cannot spare either.

Piglet

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Re: Family borrowing money from Family....Ughhh
« Reply #20 on: June 06, 2019, 02:01:43 PM »
Just once. I sold my car to my BIL for $5,000 and he stopped making payments to me after a few months. His justification was that the car was "no good" (no details, it was a very nice 4 year old car with no issues) and "I could afford to give it to him as I had plenty of money" (told to me via my sister).

So, yeah, once and only once.

I struggle to understand how this is not theft.... Clearly you did not give him the car, yet he kept the vehicle, ceased payments, and still drives it around?

Wrenchturner

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Re: Family borrowing money from Family....Ughhh
« Reply #21 on: June 07, 2019, 07:13:02 AM »
Just once. I sold my car to my BIL for $5,000 and he stopped making payments to me after a few months. His justification was that the car was "no good" (no details, it was a very nice 4 year old car with no issues) and "I could afford to give it to him as I had plenty of money" (told to me via my sister).

So, yeah, once and only once.

I struggle to understand how this is not theft.... Clearly you did not give him the car, yet he kept the vehicle, ceased payments, and still drives it around?

Oh the tangled web we weave...  of course, people that are bad with money mostly deceive themselves, but it doesn't necessarily stop there.