Author Topic: Family wants to borrow $8,000 for 'payday loans'  (Read 4386 times)

TheAnonOne

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Family wants to borrow $8,000 for 'payday loans'
« on: April 05, 2019, 02:08:30 PM »
Ok, this morning I got a message from DW that her sister asked for some money.

Her side of the family is pretty 'financially challenged' as it is so this isn't really uncommon. We have borrowed very small amounts before but it has been years now.

Anyway, she asks to borrow a whopping $8,000! To top it off, its to stop the bleeding from payday loans.

Reasons I want to help: we can afford it, 500k stache, high HHI

But that seems besides the point honestly...

Reasons I don't want to help:
1. She got a degree in social services and never used it, I have sent her job openings for YEARS
2. She refuses to move for work (basically see #1) and I am talking about 30min to 1hr by car, not cross state.
3. She wants to work with her drinking buddies basically.
4. She makes $12/h vs the 20+ she could make with her degree
5. She has photos from the bar LITERALLY 4 times a week and brags about how 'little she is home' to make herself appear to be independent or something!?
6. She's already claimed bankruptcy 2-4 years ago!

Am I being an ASS for not bailing her out? She asked to borrow the money but I doubt her ability to even repay that, it would have to be basically free and clear. Let alone the family stress of having to put that burden on the relationship. However, either way, I lose as the one who 'didn't help'.

I truly think borrowing her money would only prolong her clearly unsustainable lifestyle, keep in mind she is mid 30s. Not some college grad. I offered to help her with financial coaching and maybe minor assistance with cash.

Her response "Nah, that's OK"

iluvzbeach

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #1 on: April 05, 2019, 02:12:38 PM »
No, you would not be an ass by not helping her out. The best thing you can do for her is to say “No.”

ETA: Why is it that those of us who are responsible worry about being perceived as being an ass if we say “no?” Actually, shouldn’t they feel like asses for even putting us in this position?
« Last Edit: April 05, 2019, 02:15:54 PM by iluvzbeach »

radram

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #2 on: April 05, 2019, 02:20:35 PM »
No chance this would be a loan. It is a gift full stop. Only you can decide if that is right for you.

Everyone that thinks you are being an ass can simply chip in equally to give her the money, or pound sand.

In my world, ASKING someone for money is the destruction of the relationship. You might not know it yet, but if you give the money or not, the relationship your wife and you HAD with her sister is forever changed. 

Midwest

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #3 on: April 05, 2019, 02:46:58 PM »
We had a similar situation.  Had my spouse make the decision not to give the money to their sibling.  I didn't want to be the bad guy with my spouse and their sibling.  If your spouse makes the loan, I'd write up a note payable and make them sign it.  That might make it a little more real for them.

$8k is a huge ask for a healthy person who needs the money due to their own failings and/or laziness. 

TheAnonOne

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #4 on: April 05, 2019, 02:56:36 PM »
We had a similar situation.  Had my spouse make the decision not to give the money to their sibling.  I didn't want to be the bad guy with my spouse and their sibling.  If your spouse makes the loan, I'd write up a note payable and make them sign it.  That might make it a little more real for them.

$8k is a huge ask for a healthy person who needs the money due to their own failings and/or laziness.

Yeah, DW is against it as well, so it's agreed, but it's still shocking and difficult now.

We get to spend all weekend at a family gathering together too!

Midwest

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #5 on: April 05, 2019, 03:00:02 PM »
We had a similar situation.  Had my spouse make the decision not to give the money to their sibling.  I didn't want to be the bad guy with my spouse and their sibling.  If your spouse makes the loan, I'd write up a note payable and make them sign it.  That might make it a little more real for them.

$8k is a huge ask for a healthy person who needs the money due to their own failings and/or laziness.

Yeah, DW is against it as well, so it's agreed, but it's still shocking and difficult now.

We get to spend all weekend at a family gathering together too!

There's helping and then there is being taking advantage of.  I wouldn't say the come to Jesus meeting my spouse had with their sibling helped the relationship.  Hopefully long term it helps the other persons life.  You can't expect people to bail you out forever.

PS - If it was real emergency or a health issue, we would have likely done it. 
« Last Edit: April 05, 2019, 03:01:53 PM by Midwest »

v8rx7guy

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #6 on: April 05, 2019, 04:06:58 PM »
I wouldn't do it.  This sounds like the perfect case for someone to go to Dave Ramsey's Financial Peace University.  I would pay for that for your sister-in-law in lieu of loaning money.  Dave also strongly recommends never borrowing or lending money to family and your sister-in-law will hear it too during the course multiple times.

socaso

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #7 on: April 05, 2019, 04:14:18 PM »
I'm surprised she could get in that deep with payday loan places. YEARS ago I used one once and you could only borrow less than your paycheck. Had to show them my last paystub and they told me what I could borrow based on that.

lollylegs

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #8 on: April 05, 2019, 04:23:15 PM »
I wouldn't do it,  the history shows shes not responsible or motivated. You are not a bank or a charity.

Villanelle

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #9 on: April 05, 2019, 04:28:26 PM »
How much does she know about you financial situation?  Assuming she doesn't know detials, "I'm so sorry, but we don't have extra money to give," works quite well.  And it mostly true.  You don't have extra money to just give away.  I'd follow that up with. "... but you you need help job searching, or looking to move, or setting up a budget, we are more than happy to do that."  It makes it harder for someone to complain that you won't help, because you just said you would, but just not in the exact way the want.

I'm surprised she could get in that deep with payday loan places. YEARS ago I used one once and you could only borrow less than your paycheck. Had to show them my last paystub and they told me what I could borrow based on that.

It's very possible she borrowed less than that, but the obscene interest has added up.

mm1970

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #10 on: April 05, 2019, 05:30:58 PM »
Never work harder for someone else than they are willing to work for themselves.

GizmoTX

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #11 on: April 05, 2019, 05:55:27 PM »
NO. She will learn only that you are an easy source, she won't be grateful, and you will never see the money again.

IF the amount were less, and IF she had presented it as a cash flow problem where it would be paid back soon, even then I'd only do it by demanding significant collateral, something she really wants back (and you wouldn't mind keeping). But $8,000 is a huge amount for someone who is that irresponsible to pay back in a reasonable time.

Financial Peace University is a good idea for teaching someone how to fish rather than giving a handout.

aceyou

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #12 on: April 05, 2019, 08:14:02 PM »
I can't stand Dave Ramsey....that said...she might be a good candidate for Ramsey.

Do not give her the money.  It won't help her, or your relationship.   

Good luck, I'm sorry you are being put into this situation. 

six-car-habit

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #13 on: April 06, 2019, 02:24:48 AM »
 { "   I offered to help her with financial coaching and maybe minor assistance with cash.
Her response "Nah, that's OK"  " }

  There is your answer , you already offered minor cash assistance, she doesn't want it.  Small amounts $$ of cash are beneath her dignity to accept ! - she'll  only accept Large donations...haha.  You offered money, experience, sympathetic ear, hope + a plan ---she declined. End Story.

 "5. She has photos from the bar LITERALLY 4 times a week and brags about how 'little she is home' to make herself appear to be independent or something!?"

 Does she live with Mommy ? who does she need to be independent from @ 30+ yrs old ?

SwordGuy

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #14 on: April 06, 2019, 09:55:15 AM »
You've gotten some good financial advice.

So I'll add some good English language advice.  :)

You are not "borrowing money" if you do this.   You would be loaning or lending money.  Your SIL would be borrowing money.

SunnyDays

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #15 on: April 06, 2019, 10:19:07 AM »
If you "loaned" her the money, she would be asking again in time, because the lifestyle that led to the need for payday lenders has not changed.  So unless you're willing to give repeat "loans," don't do it.

ender

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #16 on: April 06, 2019, 11:10:21 AM »
I wouldn't do it.  This sounds like the perfect case for someone to go to Dave Ramsey's Financial Peace University.  I would pay for that for your sister-in-law in lieu of loaning money.  Dave also strongly recommends never borrowing or lending money to family and your sister-in-law will hear it too during the course multiple times.

TBH I wouldn't pay for it in its entirety. Maybe offer to match 50% of the cost.

If the sister isn't interested enough to change their life, paying for them to go through FPU won't help them at all.

Finances_With_Purpose

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #17 on: April 06, 2019, 11:32:15 AM »
Normally, I would point out that, at best, this is complicated.  But then she declined your more minimal offer.  So this is a hard no.

Only EVER give money to family if it's a gift.  Because if you think they owe you, it poisons that relationship for a long time.  Even over small amounts.

Plus, when you give someone money, you make that the new relationship.  You're her relative, but more importantly, you're her *banker*.  She knows it and may act weird about it even if you don't. 

So there's a lot of reason to stay away from ever entangling family relationships with money in that way, even a smaller loan, and to only EVER do it if you are sure you're giving a gift, and you're fine later telling the person that you did it as a gift. 

I would be wary doing a loan even if it's super-responsible (just as I was wary taking one once - and did not - when I was super-responsible buy paying off student loans), because it can affect the relationships. 

The fact that she turned down more minor assistance and even coaching tells you what you really need to know: you'd just be subsidizing a sinking ship.  Like giving a bottle of liquor to an alcoholic.  Somehow, we, as a society, think that's a bad idea, but, give money to someone who's destroying value?: sure! 

Best to let this ship sink, then, perhaps, she'll get to that point of humility where one realizes one must have help.  Hopefully.  Your wife can even offer to help/coach as things move along.

Sis may well not understand as it's likely/possible from what you said that she still conceives of help only as things that help her meet her immediate impulses - i.e., money - and everything else as not worth her time.  There's still some growing up to do if that's the case, and that's not a financial issue, so money can't solve it... 

Finances_With_Purpose

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #18 on: April 06, 2019, 11:38:14 AM »
And since you asked - and others pointed this out: NO, YOU ARE a responsible human being who loves others.  Which is precisely why you don't throw cash at her. 

Westerners are really bad about this...we think money solves all kinds of problems when, in fact, it often makes them worse.  (E.g., in this case, if you gave the cash: She feels humiliated/lacks dignity, etc., or, she sees no harm to her behavior and gets worse.)

Feelings don't drive everything, and you're not a bad human being because you don't enable someone else to go whichever way their current feelings want to go.  (In this case, she feels like she needs $8,000 immediately...even if that won't really solve the root issues here.) 

Here are two books that helped me immensely with these types of things.  This one, about how to handle relationships and when/how to look out for others.  And this one, about how to give effectively, and how giving - especially the western way - can often be harmful.  Hopefully you can find both at your local library. 

You're being a good person here, even though you may well be told that you're not, or have it held against you, simply because you didn't indulge someone's immediate feelings.  Feelings are helpful signals: they're real, but they're not reality.  Even if someone acts like they are. 

Kudos to you for being mature.  And you are welcome to feel great about that, even as you take no pleasure in watching a relative suffer through something. 

ChickenStash

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #19 on: April 06, 2019, 12:22:30 PM »
I'll echo the others thoughts that loaning money to family or friends is a no-go. I'd gift the money if I could or felt it was actually going to help rather than encouraging poor choices.

I'm in a similar situation with a family member right now. A combination of bad luck and some not-so-great decisions led them to financial issues and I'm helping keep them float. They've learned from the mistakes and are actively trying to get things squared away. If they weren't honestly trying to fix things, I never would have offered financial help.

v8rx7guy

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #20 on: April 06, 2019, 04:25:24 PM »
I wouldn't do it.  This sounds like the perfect case for someone to go to Dave Ramsey's Financial Peace University.  I would pay for that for your sister-in-law in lieu of loaning money.  Dave also strongly recommends never borrowing or lending money to family and your sister-in-law will hear it too during the course multiple times.

TBH I wouldn't pay for it in its entirety. Maybe offer to match 50% of the cost.

If the sister isn't interested enough to change their life, paying for them to go through FPU won't help them at all.

I could get on board with 50%

cincystache

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #21 on: April 06, 2019, 06:27:39 PM »
No, I like the Dave Ramsey suggestion, she's a perfect candidate for that type of program. You'd be doing more harm than good by bailing her out. Don't feel guilty.

FIRE 20/20

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #22 on: April 07, 2019, 08:06:21 AM »
Our rule is to help people who have a realistic plan to help get themselves into a better situation.  We paid for a sibling's schooling so he could get a valuable certificate in a field he had shown an interest in.  We talked about his business plan, ensured that the degree was actually valuable, and made it a gift rather than a loan.  We helped another person by supplementing their housing costs and worked with them to change their spending habits so they could shift to being able to pay for their own housing expenses.  That was also just a gift.  But if the person doesn't have a realistic plan that we think will improve the situation long-term then we don't help. 

Malcat

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #23 on: April 07, 2019, 12:06:04 PM »
In what fucking world will this person ever be able to pay back an $8000 loan???

I'm just going to go ahead and assume that you posted this thread for sympathy about a family member putting you in the awkward position of having to say "no", because no same person would "lend" money to this person because they obviously would never actually get it back.
Worse, if they did, the person in question would probably treat it like such a burden that the relationship would die anyway.

So yeah, it sucks to have people ask you for money.
I've been there more than a few times.

But I'm going to go ahead and assume that you aren't actually considering giving her $8000, because that would be insane.

Right?
....RIGHT?!!

TheWryLady

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #24 on: April 07, 2019, 02:01:49 PM »
You should offer to help, but pretend you can only help in ways other than money.
Suggest the bar host a benefit for her, and you will attend and post on Facebook.
Offer to create a gofundme for her.
Organize a protest of the offending payday loan outfit.
Call the local news and see if they might want to do a story...the dangers of payday loans.
Offer to help her pack/move if she is evicted.
Offer to help her sell some of her stuff for cash.
Offer to add her to your cell phone plan.
Allow her to use your Netflix acct, if she has to cut off cable for extra money.

And my favorite...Offer to help her create a budget so she is able to pay the loans.  If there isn't enough money coming in to pay the necessary expenses, (after eliminating unnecessary expenses), she will see that she needs another job, and you can use this as evidence she wouldn't have been able to pay you back.  You can expect lying on the budget exercise, if she will even provide the info.  The thing is, if she doesn't tell you about some ridiculous expenses, it will look like she can afford to pay the loan company.  If she makes up extra expenses, it will look like she's already underwater and couldn't pay you back.

A person who really needs temporary help will not balk at handing over all the finances (to a trusted relative), and a person who is taking advantage will not agree to this...and they probably won't ask for loans again.

GizmoTX

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #25 on: April 07, 2019, 03:14:50 PM »
WryLady, you were probably being sarcastic, but no way would I put a person like this on any of my accounts or do a gofundme. Otherwise, your suggestions are spot on. The aforementioned Dave Ramsey has an app called Every Dollar Counts -- the free version would be perfect for SIL to create her budget. Envelope budgeting works too.

TheAnonOne

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #26 on: April 07, 2019, 09:04:15 PM »
Update:
1. Yes "Loan" not "Borrow" - Thanks :)

2. We were never going to give her $8000, and to a degree this post was just to feel out the community and add some entertainment value to the boards.

3. She has been out to the bars 2 times minimum already since asking me. Insane.

4. She won't show me any finances, I am sure she is embarrassed but really, she needs it.

The frustrating part is just watching this. She will not do anything to fix this, for years we have sent her new jobs to apply to, she never even applies(I have since stopped) Literally, $2/h more over these years would have made up that $8,000, though, she might just have spent that on other crap anyway.

*sigh*

partgypsy

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #27 on: April 08, 2019, 11:57:59 AM »
NO. She will learn only that you are an easy source, she won't be grateful, and you will never see the money again.

IF the amount were less, and IF she had presented it as a cash flow problem where it would be paid back soon, even then I'd only do it by demanding significant collateral, something she really wants back (and you wouldn't mind keeping). But $8,000 is a huge amount for someone who is that irresponsible to pay back in a reasonable time.

Financial Peace University is a good idea for teaching someone how to fish rather than giving a handout.

I would have a different answer if it was a close family member and there were events beyond their control (aka one time thing).
In this case If you do give her the money it will just start you down the road of them seeing you as people who can bail them out for their own bad behavior. Sorry you and your wife have to deal with this dynamic, but nipping it in the bud is the best thing you can do.

GizmoTX

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #28 on: April 08, 2019, 02:25:50 PM »
NO. She will learn only that you are an easy source, she won't be grateful, and you will never see the money again.

IF the amount were less, and IF she had presented it as a cash flow problem where it would be paid back soon, even then I'd only do it by demanding significant collateral, something she really wants back (and you wouldn't mind keeping). But $8,000 is a huge amount for someone who is that irresponsible to pay back in a reasonable time.

Financial Peace University is a good idea for teaching someone how to fish rather than giving a handout.

I would have a different answer if it was a close family member and there were events beyond their control (aka one time thing).
In this case If you do give her the money it will just start you down the road of them seeing you as people who can bail them out for their own bad behavior. Sorry you and your wife have to deal with this dynamic, but nipping it in the bud is the best thing you can do.

About 6 years ago, one of my brothers needed major heart surgery to replace a heart valve and repair an adjacent aortic aneurysm. He planned to go back to work after surgery, but he barely survived & was left totally disabled. At that point he had no savings and his spouse had not worked for years (no kids); while he had medical & disability insurance (yes!), he had immediate cash flow problems after being in the hospital over a month. We then advanced him $1,000 weekly, and insisted that he disclose his expenses, which turned out to be ridiculous -- they had been spending as if both were still working. By the time our 'loan' had become $9,000, they were back for the next infusion. His spouse in particular was livid when I closed the bank because "families are supposed to do this!". Not anymore. They applied for SNAP assistance but otherwise didn't change their ways, filed for bankruptcy a year later, & lost their house after refusing to sell it. By that point, they couldn't afford needed repairs & their credit was ruined. Thankfully my brother is more fiscally responsible these days because I think he finally saw that he had to be. He wouldn't have if we had continued to enable him. We're on good terms but I don't expect to ever see the $9K.

frugaldrummer

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #29 on: April 08, 2019, 02:57:52 PM »
At $12 an hour I imagine she doesn't own a home or any significant property, right? So she should file for bankruptcy.  You might offer to gift her the money for that.

It's true that payday loans are evil and she may have only borrowed $500 or $1,000 initially, but she should have spoken up long before it got to $8,000. To repay you that much she would have to work a side job paying $400 a month for a couple of years and it doesn't sound like she would do that so she might as well file for bankruptcy. Then if she would accept your gift of Financial Peace university I would send her there - might save a lot of future problems.

Btw, you mention her "drinking buddies" - if she's an alcoholic, has her family considered an intervention?

cloudsail

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #30 on: April 08, 2019, 07:12:04 PM »
Didn't she already declare bankruptcy once already?

frugaldrummer

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #31 on: April 08, 2019, 10:19:43 PM »
Oh dang I missed that part!
She needs a second job asap and to attend debtors anonymous meetings.

soccerluvof4

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #32 on: April 09, 2019, 07:07:48 AM »
The best way to help is by not helping. Some people need to learn things the hard way. The outcome might not be the best or maybe a lesson will be learned but there is to much history there and its time they hit bottom.

Fishindude

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #33 on: April 09, 2019, 07:41:13 AM »
If they can't pay back their payday loan, they can't pay back you either.
If you do decide to help, consider it a "gift" because it is very unlikely you will ever be repaid.

BTDretire

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #34 on: April 09, 2019, 04:21:39 PM »
Print out this thread. Tell her you have put the loan before the financial committee,
give her the print out and say the committee has answered negatively.

 On another note it would be really fun to ask her,
 "how are you going to payback this $8,000?"
GGHOV^%UIptryp dfiwheiw
"Oh really, well what have you changed that would allow you to have extra funds?"
aafljija apoijqoij eogoe
"Oh you haven't changed them yet, but you will after you pay the $8,000?"
lkavf oiajgjsodfg dfhafv
 "How about making those changes now, and applying the extra money to the loan?"
ahsifhjoia ropijorjq isepoifjweori
 "No, it's hard, but it's not too hard, people serious about getting out of debt do it all the time!"
sajdgo Never mind ejgosjo

Cassie

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #35 on: April 09, 2019, 04:44:10 PM »
Once too many years go by without using a degree it’s really hard to get a job in your field. She is irresponsible and it’s not your problem.

NowClear

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Re: Family wants to borrow $8,000 for 'payday loans'
« Reply #36 on: April 10, 2019, 01:18:43 PM »
I'm surprised she could get in that deep with payday loan places. YEARS ago I used one once and you could only borrow less than your paycheck. Had to show them my last paystub and they told me what I could borrow based on that.

It's the interest, as Villanelle states, but also possible the person has taken out a few loans. I had a relative who racked up a similar amount across three loans.

In that case I did end up paying off the loans for the relative. In general, I agree with all the comments here that you are under no obligation to do so, and that there is a risk of not actually helping the person in the long run. I'm glad you and your spouse seem to be in agreement in deciding not to support. But I'll share a bit about why I'm pleased with my decision in case its useful for other people:
  • I *gave* the money free and clear. As others have said, a loan just wouldn't work in these situation. My relative asked for a loan, and I refused--I wanted the person to focus on getting in financial order, not on paying me back. I also didn't want to be in the position of having to harangue a person I love very much for payments, or feeling growing resentment if payments didn't come.
  • While I was shocked at the debt, I believed the situation to be due to specific, job-related circumstances. I would not have given money if the debt was due to something like addiction issues or chronic disregard for money management. It seemed like a one-time investment could help solve the problem.
  • For a variety of reasons, including the close nature of my relationship with the relative, I felt personally invested in her financial situation. If the situation was not sorted in the near-term, it might have financial consequences for me in the long-term).
  • I cleared out the debilitating payday loans, but didn't clear out the more reasonable (ha!) credit card debt. That left some accountability on my relative's end.
  • I got full transparency into my relative's finances and worked with her to set up a budget, including a debt pay off plan. We had budget meetings every month for the first six months, and then more infrequently after that. This helped me feel better about my "investment"--I could track progress to help ensure my relative was working toward surer financial footing.

My relative now has paid off her debt and has an emergency fund--honestly, something I think neither she nor I could have envisioned a few years ago. It did change the nature of our relationship, especially in the two years or so immediately after the gift. Since things worked out well for us, and since she has really turned her situation around, we are mostly back to normal.

I don't think this is the typical way these things play out, so don't necessarily recommend it! But if you can give money without resentment, if your relative can commit to hard work (addiction and other issues might preclude it) and if you have a specific plan in place, I don't know that you need to dismiss gifts out of hand.