Loan money to family?

[baptizo]

The lesson I've learned is it is better to gift a certain amount vs. loaning money to a family member (or a good friend) because in most cases, they won't pay you back.  

[redkow97]

Family is a funny thing. My other brother makes ~$80k/year. The other two mooch from him like leeches. He knows he's enabling them, but insists "I can afford it, so why not?"

 

...because if his circumstances change, and he can't afford it, the people who have come to depend on him are screwed.

 

 

My wife's grandmother (god rest her soul) gambled away over $400,000 in a couple of years.  In hindsight, she was depressed that her husband died, and a few grand on some counseling could have saved her a few hundred grand in coping - but my point was that my father-in-law supported her financially for the last decade of her life.  That was fine until the economy shit the bed.   He was still financially stable enough that they weren't losing their house or anything, but he couldn't afford to pay HER mortgage on top of his own expenses.  Grandma had to get a job as a toll booth worker for a few months.  That put things in perspective for grandma, who stopped gambling and got a roommate to help with expenses.

 

It also put a huge strain on their relationship.  My father-in-law was as much relieved as sad when his mother died.  That's not how anyone should be remembered.

[Tpoppa]

I can't, in good conscience, enable the irresponsibility of others.  In my group of friends and my extended family there is plenty of irresponsibility to go around.

 

In many cases lending/giving money only delays the inevitable.  The only real help is changing the habits that got you in trouble in the first place. 

[smashweights]

I can't, in good conscience, enable the irresponsibility of others.  In my group of friends and my extended family there is plenty of irresponsibility to go around.

 

In many cases lending/giving money only delays the inevitable.  The only real help is changing the habits that got you in trouble in the first place. 

 

Truth.  If someone's in the red because of reckless spending, then you're not doing them any favors by bailing them out.

[Connie14]

I sold a car to my uncle when I was 19 years old. He gave me $750 down, and he promised to pay the other $250 over the next couple of months. I was working nearly full time to pay for college. He skipped town without paying. My Dad was right. When I told him, he told me that I just payed for an excuse to never give him money ever again. Apparently my parents had also given him money over the years. My uncle was classy enough to ask for some money while my wife was pregnant. Once I told him things were tight, he immediately got off the phone with me. I have never talked to him since. My dad was right, it was a good investment. I will teach my kids fiscal responsibility and following through with promises (as my parents have taught me).

Edited November 5, 2013 by Connie14

[bowdog]

Unfortunately I have been burnt more times then I care to talk about from friends and that is why I do not loan anymore. I will PAWN an item of yours that I believe is worth at least the loan amount, but will not straight out loan money anymore. Family is another story, if my brother comes to me then I know he really needs it and as others have said I just consider it a gift at that point...If he doesn't have it now then chances are pretty good he or she will not have it next month either. And that is why I have never understood credit cards either. If I don't have the money and have to put on a credit card this month what will make the difference next month when that bill comes?!?!?!

[magley64]

 If I don't have the money and have to put on a credit card this month what will make the difference next month when that bill comes?!?!?!

 

Maybe you don't have a job this month.

Maybe you don't have the full amount this month.

Maybe you do have the money, but just want to build up credit, or get rewards points.

 

These are situations in which credit cards sure come in handy.

When I bought my TV, i got a best buy card, I didn't really have 1,000 in the bank, but they gave me 3 years at no interest (free money for 3 years) so I pay $50 a month and i'll have it knocked out before they start the interest.

When i used to use my sears card, i had the money in the bank, and when the bill came due, I paid it in full. (free loan for 1 month, plus built up my credit to buy a house, and gave me rewards points to spend on what usually ended up being gift cards to outback)

When I became unemployed, My credit cards bought fuel oil to heat the house, groceries when needed, and anything else that came up that we couldn't cover during that time.

 

I just used my credit card to buy wheels and snow tires for my car. I don't really have the money right now, but I have a year with no interest (free money for a year) and I'll have most (if not all) paid up before they start charging interest. 

Edited November 5, 2013 by magley64

[r1crusher]

I have a sister that's horrible with money.  She even has 3 kids to support on top of it all.  She's a very hard worker and does well wherever she is at but she tends to think about money one day at a time.  She can't budget for anything which kills me.  I caught her doing payday loans and went total ape shit wring her fucking neck crazy on her.  I had helped her out before and she usually paid me back most of the time.  But I told her that I would not help her ever again if I found out she was paydaying it.  And how I did that was I took over all of her finances.  It sucks having to do your own budget let alone someone else's.  But I've helped her get her car paid off, starting paying back a defaulted school loan and save up some money to help do some legal custody stuff.  She has x amount for each week after she gets paid and once that's gone too bad.

 

I usually just give my family members any financial assistance they need within reason.  I have a couple "just in case" funds, one for me and one for my family if they need it.

[smashweights]

And that is why I have never understood credit cards either. If I don't have the money and have to put on a credit card this month what will make the difference next month when that bill comes?!?!?!

 

Maybe you do have the money, but just want to build up credit, or get rewards points.

 

This. I put anything and everything on my credit cards every month, from $1 drinks at the gas station to $3000 car down payments. If I could put my rent on my AMEX, I would.  As long as you have the cash in hand to pay at the end of the month, why NOT put it on a cashback card?  Live below my means + autopay monthly = 2% back + 0% interest.  Seems menial, but at the rate we're going, it adds up to a "free" exhaust for the Monster with a years worth of expenses.  Plus when we apply for a mortgage in the next few months, we have an incredibly robust credit history and hopefully get a great rate.

Edited November 5, 2013 by smashweights

[Tpoppa]

Last time I used a credit card was almost 10 years ago.

[turnone]

Same here. I don't give to those who don't help themselves. I have given money to a friend, $1200, and basically said you don't have to pay me back. I don't want to lose someone I care about over money. If you loan it then you have all sorts of expectations and it usually goes badly. Never got any $ back and don't expect to unless they hit it big.

If you must loan someone money, because you expect it back, all advice I have read is to write up a formal agreement and stick with it. Collateral would be a must.

Edited November 5, 2013 by turnone

[baptizo]

I have only one CC and it is from my employer - work related expenses only.  

 

If I don't have the cash I don't buy it.   

[smashweights]

If I don't have the cash I don't buy it.   

 

Same here.  I just use a different mechanism to get that money to people.

[magley64]

If I don't have the cash I don't buy it.

This is my normal operating procedure, but when I have things I'm going to need or want anyway, and I'm not going to be charged interest, why not borrow free money?

And in the case of rewards cards, why not get those perks?

Credit cards do make it easy for people with no discipline to get themselves into trouble in a hurry, but using them correctly, they are a great tool.

[Revelstoker]

Personally, Immediate family only...

 

They wouldn't be asking me if they didn't really need it.

 

I also make sure it's not anything I'll be missing if I don't see it for quite a while...

Agree. You only have the money to loan if you never expect to have it return.

 

After that, evaluate the situation and individual you are loaning it to and why. Set up a payment schedule if the amount is large.

 

I have been loaned money and I have lent money. Families should help if they can and the need is legit.

[Revelstoker]

This is my normal operating procedure, but when I have things I'm going to need or want anyway, and I'm not going to be charged interest, why not borrow free money?

And in the case of rewards cards, why not get those perks?

Credit cards do make it easy for people with no discipline to get themselves into trouble in a hurry, but using them correctly, they are a great tool.

Every adult should have and use credit cards on a regular basis to establish/maintain a credit history.

 

Using reward cards, when managed correctly, are great tools. We will buy gas, groceries, dinners out and a whole host of normal monthly expenditures on the card but we pay off the balance every month. However, we still operate on the principal of only buying something we have money for and never carry a balance over.

[JackFlash]

 

What are your thoughts on loaning $$ to family?  

 

 

I'm not a loan company.  There are loan companies out

there that you can go to.  I have my own expenses to

deal with.  I have no problem looking people dead in the

eye and telling them, "No".

 

And, the owners of the following, are spot on.  It you feel

compelled to give it.  Give it as a gift.  If you get it back,

then good.  If you don't, you didn't expect to.

 

...if you decide to loan it, basically write it off right away from the get go.  

 

Never "loan" money to family. If you cannot afford to gift it to them, you can't afford to loan it to them.

 

 If I'm in the position to just give out money it's going to be a gift

 

...if I can live with never getting it back, then I'm fine with it.

 

Loaning money to family never ends well... Unless you go into it with the expectation of never getting it back.

If you can afford to never see it again, then go for it.

 

The lesson I've learned is it is better to gift a certain amount vs. loaning money to a family member (or a good friend) because in most cases, they won't pay you back.  

 

And this is the one I like the best.  Pay a little now

to not be bothered by them asking for money again.

And if they ask again after not having paid you from

the first time, get mad.  Get real mad.  Go ballistic

on their asses so that you insure they will not ask

again, and they will know exactly how you feel about

it.

 

He skipped town without paying. My Dad was right. When I told him, he told me that I just payed for an excuse to never give him money ever again.

[tyler524]

I took out a personal loan for my mom since she has horrible credit due to multiple things in the past few years including losing their house they had.They had some issues pop up and took a couple of payday loans and it turned into a vicious cycle and those places are absolutely insane with their terms. I took the loan to get her out of all of those and some medical bills hanging out there. I took a loan out and for a term that I was okay with and know that it wouldn't affect me much if she couldn't make the payment. I set it up to auto pay from my account and she gives me a check each month. She has missed one payment so far because she was giving me the checks later and later but what am I supposed to do. It put me in a situation that I didn't really want to be in but what do you do when it is your parents? I'm not even worried about the missed payments, just that they get back on track which is slowly happening. I have loaned her a few hundred here or there in the past hoping to get it back but not really know when I would see it and for the most part have always got it back from her.

[redkow97]

This is my normal operating procedure, but when I have things I'm going to need or want anyway, and I'm not going to be charged interest, why not borrow free money?

And in the case of rewards cards, why not get those perks?

Credit cards do make it easy for people with no discipline to get themselves into trouble in a hurry, but using them correctly, they are a great tool.

 

Agreed. I HAVE 3 cards, but we only really use one of them, and that's for the sake of convenience (i.e. not carrying large amounts of cash for bigger purchases).  I haven't paid interest on a card in 7 years, and that was an accident where I simply forgot to make a payment.  That's the only time I've ever given the credit card company a dime.

 

As far as I'm concerned, MasterCard and Visa are providing me with completely free services - why wouldn't I use them? 

 

with the points, I put a $10,000 down-payment on our last car by using my Visa.  That was a lot of points, and we were going to pay the same amount to the dealership in cash anyway.  I see the harm in abusing credit cards, but there's no reason not to use them responsibly.

[jbot]

boooooo, no dealer i ever dealt with would let me use my credit card for more than $3K.  laaaaaaaame

[smashweights]

boooooo, no dealer i ever dealt with would let me use my credit card for more than $3K.  laaaaaaaame

 

Same...

[Scruit]

I had a dealer refuse an entire bike purchase on CC but was ok with the deposit on CC.  I guess they have to put a % on the transaction so at $7k that couple of % makes a big difference.  Just gave them a cashier check instead.

 

I put my new central A/C and new windows on my CC the same month - that came to $15k.  Surprised the bank didn't call me to verify.  pPaid it off when the bill came in and got an ipod touch using the reward points from that one month.