Lending money to family

[InLuv101]

So I'm looking for opinions on whether or not DH & I should lend money to a family member (his not mine).

Background: Lending money has been somewhat common during DH's adulthood. It's usually the same sibling who does the asking. Sometimes it was paid back and sometimes it wasn't. He usually gets a little annoyed but he usually does lend it.

This is a foreign concept to me. My family isn't this way. As young adults, if my siblings and I budgeted improperly and we asked our parents for money they wanted to know what it was for and there was no guarantee they would agree to lend it. They thought they weren't helping us by bailing us out. I'm thankful for that because I have never once borrowed money in my life, I learned to budget properly. My siblings & I never borrow money from each other either.

I just think that borrowing/lending money can put a strain on the realtionship. Since we've gotten married (6 months ago) there has been no asking to borrow. This is the first occurance. Granted it is not a large sum of money and it would not hurt us at all to lend it, but we are trying to plan for a future & are looking to purchase a home soon, and I guess I don't want this to continue for the rest of our lives. Maybe I wouldn't be so adamant about it if I hadn't heard DH complain that this sibling makes more than he does and it's just poor budgeting. I think that lending the sib money is enabling.

What do you guys think? Should I agree since it's not a large amount or should I say no and try to break this cycle? I am 26 & DH is 30 and the borrowing sib is 34 if that makes a difference. Thanks in advance for your input!

 

[Lorelei]

Date: 1/26/2009 2:49:01 PM
Author:InLuv101
So I'm looking for opinions on whether or not DH & I should lend money to a family member (his not mine).

Background: Lending money has been somewhat common during DH's adulthood. It's usually the same sibling who does the asking. Sometimes it was paid back and sometimes it wasn't. He usually gets a little annoyed but he usually does lend it.

This is a foreign concept to me. My family isn't this way. As young adults, if my siblings and I budgeted improperly and we asked our parents for money they wanted to know what it was for and there was no guarantee they would agree to lend it. They thought they weren't helping us by bailing us out. I'm thankful for that because I have never once borrowed money in my life, I learned to budget properly. My siblings & I never borrow money from each other either.

I just think that borrowing/lending money can put a strain on the realtionship. Since we've gotten married (6 months ago) there has been no asking to borrow. This is the first occurance. Granted it is not a large sum of money and it would not hurt us at all to lend it, but we are trying to plan for a future & are looking to purchase a home soon, and I guess I don't want this to continue for the rest of our lives. Maybe I wouldn't be so adamant about it if I hadn't heard DH complain that this sibling makes more than he does and it's just poor budgeting. I think that lending the sib money is enabling.

What do you guys think? Should I agree since it's not a large amount or should I say no and try to break this cycle? I am 26 & DH is 30 and the borrowing sib is 34 if that makes a difference. Thanks in advance for your input!

I wouldn't lend him another penny, especially as it sounds he is asking due to poor budgeting. Its a slippery slope in my opinion, start lending him cash and he will start viewing you as his own personal bank and trotting out every sob story he can think of to try to guilt you into lending him more. It is enabling if you lend it to him and really does him no good in the long run.

 

[Porridge]

Hmmm. I agree that it is enabling. So I would either:
1) Not lend the money, and explain why.
2) Lend it, but do as your parents did, but be much more harsh, like ask what it''s for and why he needs to borrow etc. I imagine any 34 year old would be so embarrassed by that that he would never ask again!

 

[Bia]

I have a friend who has asked me for money over the years. She and I went to HS together and although we remained close (though we hardly ever see one another--she''s in TN, I''m in NY) our lives turned out completely different. She''s been married twice and has 4 children with three different men. Before she got married the first time, she would ask me for money because she was raising her little girl alone. I lent her the money but did so not expecting to be paid back. After she got divorced, she started asking me again. For me, I saw it as being able to help my friend who was having a hard time. Now that she''s married again, she doesn''t ask. If she did, I would help her, if I could afford to do so.

I would handle my family the same way. If I have it, and can afford to give it, I will. If I can''t, then I don''t.


That being said, I understand that you don''t want him to think he can come to you whenever. So, if that''s how you feel, and you don''t want to lend it to him, you shouldn''t. If he''s a slacker, why enable him?

To me, its more about family needing help. That''s all.

 

[InLuv101]

Date: 1/26/2009 2:54:19 PM
Author: Lorelei

Date: 1/26/2009 2:49:01 PM
Author:InLuv101
So I''m looking for opinions on whether or not DH & I should lend money to a family member (his not mine).

Background: Lending money has been somewhat common during DH''s adulthood. It''s usually the same sibling who does the asking. Sometimes it was paid back and sometimes it wasn''t. He usually gets a little annoyed but he usually does lend it.

This is a foreign concept to me. My family isn''t this way. As young adults, if my siblings and I budgeted improperly and we asked our parents for money they wanted to know what it was for and there was no guarantee they would agree to lend it. They thought they weren''t helping us by bailing us out. I''m thankful for that because I have never once borrowed money in my life, I learned to budget properly. My siblings & I never borrow money from each other either.

I just think that borrowing/lending money can put a strain on the realtionship. Since we''ve gotten married (6 months ago) there has been no asking to borrow. This is the first occurance. Granted it is not a large sum of money and it would not hurt us at all to lend it, but we are trying to plan for a future & are looking to purchase a home soon, and I guess I don''t want this to continue for the rest of our lives. Maybe I wouldn''t be so adamant about it if I hadn''t heard DH complain that this sibling makes more than he does and it''s just poor budgeting. I think that lending the sib money is enabling.

What do you guys think? Should I agree since it''s not a large amount or should I say no and try to break this cycle? I am 26 & DH is 30 and the borrowing sib is 34 if that makes a difference. Thanks in advance for your input!

I wouldn''t lend him another penny, especially as it sounds he is asking due to poor budgeting. Its a slippery slope in my opinion, start lending him cash and he will start viewing you as his own personal bank and trotting out every sob story he can think of to try to guilt you into lending him more. It is enabling if you lend it to him and really does him no good in the long run.

Thanks Lorelei! The sib is actually his sister and I agree that it does her no good in the long run. I just wanted to make sure that I wasn''t being to harsh.

 

[InLuv101]

Date: 1/26/2009 2:57:23 PM
Author: Porridge
Hmmm. I agree that it is enabling. So I would either:
1) Not lend the money, and explain why.
2) Lend it, but do as your parents did, but be much more harsh, like ask what it''s for and why he needs to borrow etc. I imagine any 34 year old would be so embarrassed by that that he would never ask again!

Hahaha! Thanks Porridge!

 

[monarch64]

I don''t borrow money from family members, nor do I lend it. I refuse to be an enabler and I don''t want anyone bailing me out. If my family bailed me out I think I would take it for granted that I could keep getting myself into situations where I needed to ask them for money. Not to mention the fact that I wouldn''t want them to have an excuse to get involved in my financial business in the first place.

I just read a book by Larry Winget (from A&E''s Big Spender show) called You''re Broke Because You Want to Be. It was a good eye-opener, just like his show. You might recommend it to family members who are in financial crises right now, he offers some great advice.

 

[geckodani]

Unless she''s in danger of starving, losing her house or something else equally dire - I wouldn''t lend it. She needs to figure out how to budget, and how to pay off debt she has incurred - by herself, not by borrowing from you!

 

[InLuv101]

Date: 1/26/2009 3:03:15 PM
Author: Bia
I have a friend who has asked me for money over the years. She and I went to HS together and although we remained close (though we hardly ever see one another--she''s in TN, I''m in NY) our lives turned out completely different. She''s been married twice and has 4 children with three different men. Before she got married the first time, she would ask me for money because she was raising her little girl alone. I lent her the money but did so not expecting to be paid back. After she got divorced, she started asking me again. For me, I saw it as being able to help my friend who was having a hard time. Now that she''s married again, she doesn''t ask. If she did, I would help her, if I could afford to do so.

I would handle my family the same way. If I have it, and can afford to give it, I will. If I can''t, then I don''t.


That being said, I understand that you don''t want him to think he can come to you whenever. So, if that''s how you feel, and you don''t want to lend it to him, you shouldn''t. If he''s a slacker, why enable him?

To me, its more about family needing help. That''s all.

Thanks Bia. It''s good to hear the other perspective as well. I appreciate it and you sound like a very good friend!

 

[Italiahaircolor]

When you lend money, a good rule of thumb is to never expect to see it again. Are you comfortable with that? Or, will you always nag him and remind him you're waiting to be paid back?

I think that this is a tricky question--and harder than usual to answer.

Normally, I'd think if a 34 year old who is gainfully employeed couldn't cover his bills one month then he merely made poor spending choices and that there is a lesson to be learned from this...but, due to the economic climate of the world, the need for cash could be for any number of reasons.

First of all, like with anything, pay yourself. After that then ask yourself, can you literally afford to lend money? Do you have that type of disposable income right now? Some people (most people) are pushing cash into rainy day accounts like never before.

If it were me--I'd be curious to know why. My BIL is gainfully employeed but has a hobby which costs a great deal of money...so if he asked me, I'd probably suggest other ways he could make ends meet before opening my personal check book. Now, if it were my sister who is in college and broke, I'd probably take her shopping for her groceries that month instead of writing over money...still allowing her bills to be cover and needs met...but rather than "pay her bills" I'd put the same money towards the other stuff.

Good luck

ETA: I have a dear friend to whom I offer money all the time whenever I see her hurting for income. It's because I know she is responsible and trying her best, but just cannot seem to make it. To me, if someone is doing everything right and needs a gentle hand every now and again and I am fortunate enough to be in the position to help, why not? There are many things more important than money.

 

[tlh]

I wouldn't lend her any money because it is not just HIS (DH) money anymore. It is YOUR money as a married COUPLE. I would have a nice talk w/ your hubby to talk about finances and your views.
I know it is a rough time in the economy, and if she has hit a hardship, through no fault of her own, know it is probably a gift.... and will not be re-paid. However, if certain lifestyle choices have ended her on the short end of the stick, I would say no.
I asked my parents to cosign on a car for me when I graduated college. They said NO. "If you cannot get it on your own, you don't need it." So I went, and bought a car, without a co-signer... all on my own. I was hurt and surprized that they wouldn't sign- and I never asked them for anything again. But I realized that if I wanted anything I had better get it myself- I wont get any handouts... or even a helping hand.
Now my DH's family is more like your DHs side. Only the parents just GIVE $$$ to their children in times of need. They paid the rent for my BIL for almost a year, when he chose to move several states away to experience life. When those life expierences failed to take hold, he is now back, with his hand out... and yes, he too is in his 30's. I think when people get used to being given money, they dont think twice about asking.
Saying no now will set a precident in the future, that you wont give him money. You'll take her to dinner, pick up the tab, or you'll let her crash on your couch for a week... but there will be no free ride.
Good luck, money is always a sensitive subject, and it can take a lot to ask...so best wishes to you, this is a difficult decision and one you and your husband should make w/ 100% agreement.

 

[Alexiszoe]

I don''t think you should lend the money. To me, the person has to have a proven track record of responsibility i.e making sure to pay you back on time without you having to chase after him/her.

Given what you said, the sibling is obviously not poor but has poor budgeting skills, and doesn''t take responsibility for returning money in the past. Lending her money is just feeding this bad habit. She needs to learn to grow up and be responsible for her own actions.

 

[somethingshiny]

I've lent money to family before and sometimes it's been repaid, other times it hasn't. BUT, my parents told me when I was very young "don't lend money that you can't afford to lose."

I have two basic principles on lending:

1. It is not my job to teach another adult how to be responsible with their money and it is not my responsibility to critique their money matters.

2. If I have the money and feel like it's a reasonable request (not like "can you give me $10000), I'll lend it. If I don't have it to lose then I won't lend it.


eta~ maybe for a gift you could get her some sort of budgeting software, class, etc.

 

[NovemberBride]

Like many others have stated, I would not lend money to a family member expecting to be paid back. However, there are certain circumstances and certain family members to whom I would be happy to give money, and others whom I would not. For example, DH''s mother was a single mom who made countless sacrifices for my DH growing up and raised him to be the amazing husband he is today. I would give her any sum of money I had, at any time and no questions asked. However, I also know she would never ask unless she really needed the money. DH''s father on the other hand, I would not give money to unless it was a life or death situation and we were sure the money was going where it was supposed to (i.e. wrote the check directly to cover a bill). DH''s father has a gambling problem and cannot manage his money at all. Lucky for me I have been spared this problem because DH''s dad asked DH once to borrow money before we were married and DH said no way (not the best relationship).

Without knowing more details, I have to say that no way would I give money to someone who made more than I did and was asking simply because they could not live within their means. That said, if there were extenuating circumstances (illness, job loss), I would consider it.

 

[InLuv101]

Date: 1/26/2009 3:05:43 PM
Author: monarch64
I don''t borrow money from family members, nor do I lend it. I refuse to be an enabler and I don''t want anyone bailing me out. If my family bailed me out I think I would take it for granted that I could keep getting myself into situations where I needed to ask them for money. Not to mention the fact that I wouldn''t want them to have an excuse to get involved in my financial business in the first place.

I just read a book by Larry Winget (from A&E''s Big Spender show) called You''re Broke Because You Want to Be. It was a good eye-opener, just like his show. You might recommend it to family members who are in financial crises right now, he offers some great advice.

Thanks Monarch! This is how I think as well. Oh and thank you for the book recommendation!

 

[InLuv101]

Date: 1/26/2009 3:06:00 PM
Author: geckodani
Unless she''s in danger of starving, losing her house or something else equally dire - I wouldn''t lend it. She needs to figure out how to budget, and how to pay off debt she has incurred - by herself, not by borrowing from you!

Thanks gecko! I agree!

 

[neatfreak]

I never think it''s a good idea to lend money to family or friends. If you have and want to GIVE the money, that''s another story. But lending is so sticky...it can really tear families apart.

So if you have it to give and want to, go for it. But it sounds like the sibling doesn''t really NEED it, she just isn''t doing a good job with her own money. So that makes me less inclined to give it to her...

 

[InLuv101]

Date: 1/26/2009 3:08:18 PM
Author: Italiahaircolor
When you lend money, a good rule of thumb is to never expect to see it again. Are you comfortable with that? Or, will you always nag him and remind him you''re waiting to be paid back?

I think that this is a tricky question--and harder than usual to answer.

Normally, I''d think if a 34 year old who is gainfully employeed couldn''t cover his bills one month then he merely made poor spending choices and that there is a lesson to be learned from this...but, due to the economic climate of the world, the need for cash could be for any number of reasons.

First of all, like with anything, pay yourself. After that then ask yourself, can you literally afford to lend money? Do you have that type of disposable income right now? Some people (most people) are pushing cash into rainy day accounts like never before.

If it were me--I''d be curious to know why. My BIL is gainfully employeed but has a hobby which costs a great deal of money...so if he asked me, I''d probably suggest other ways he could make ends meet before opening my personal check book. Now, if it were my sister who is in college and broke, I''d probably take her shopping for her groceries that month instead of writing over money...still allowing her bills to be cover and needs met...but rather than ''pay her bills'' I''d put the same money towards the other stuff.

Good luck

ETA: I have a dear friend to whom I offer money all the time whenever I see her hurting for income. It''s because I know she is responsible and trying her best, but just cannot seem to make it. To me, if someone is doing everything right and needs a gentle hand every now and again and I am fortunate enough to be in the position to help, why not? There are many things more important than money.

Thanks Italia! Her asking to borrow money isn''t as a result of the economy but you make a good point that there are more important things in life than money.

 

[InLuv101]

Date: 1/26/2009 3:11:30 PM
Author: tlh
I wouldn''t lend her any money because it is not just HIS (DH) money anymore. It is YOUR money as a married COUPLE. I would have a nice talk w/ your hubby to talk about finances and your views.
I know it is a rough time in the economy, and if she has hit a hardship, through no fault of her own, know it is probably a gift.... and will not be re-paid. However, if certain lifestyle choices have ended her on the short end of the stick, I would say no.
I asked my parents to cosign on a car for me when I graduated college. They said NO. ''If you cannot get it on your own, you don''t need it.'' So I went, and bought a car, without a co-signer... all on my own. I was hurt and surprized that they wouldn''t sign- and I never asked them for anything again. But I realized that if I wanted anything I had better get it myself- I wont get any handouts... or even a helping hand.
Now my DH''s family is more like your DHs side. Only the parents just GIVE $$$ to their children in times of need. They paid the rent for my BIL for almost a year, when he chose to move several states away to experience life. When those life expierences failed to take hold, he is now back, with his hand out... and yes, he too is in his 30''s. I think when people get used to being given money, they dont think twice about asking.
Saying no now will set a precident in the future, that you wont give him money. You''ll take her to dinner, pick up the tab, or you''ll let her crash on your couch for a week... but there will be no free ride.
Good luck, money is always a sensitive subject, and it can take a lot to ask...so best wishes to you, this is a difficult decision and one you and your husband should make w/ 100% agreement.

Thanks Tlh. I agree with the highlighted portion and have told DH that this is what his sis has to realize. Unfortunately, her needing money isn''t as a result of the bad economy but her poor lifestyle choices.

You are right, we should be in 100% agreement about the decision and we are going to make one this evening. Thanks for your input!

 

[InLuv101]

Date: 1/26/2009 3:11:51 PM
Author: Alexiszoe
I don''t think you should lend the money. To me, the person has to have a proven track record of responsibility i.e making sure to pay you back on time without you having to chase after him/her.

Given what you said, the sibling is obviously not poor but has poor budgeting skills, and doesn''t take responsibility for returning money in the past. Lending her money is just feeding this bad habit. She needs to learn to grow up and be responsible for her own actions.

This is how I feel as well. I was just trying to be sensitive to my DH as it is his sister and I was curious if I was being too harsh. Thanks for your input Alexiszoe!

 

[InLuv101]

Date: 1/26/2009 3:16:40 PM
Author: somethingshiny
I''ve lent money to family before and sometimes it''s been repaid, other times it hasn''t. BUT, my parents told me when I was very young ''don''t lend money that you can''t afford to lose.''

I have two basic principles on lending:

1. It is not my job to teach another adult how to be responsible with their money and it is not my responsibility to critique their money matters.

2. If I have the money and feel like it''s a reasonable request (not like ''can you give me $10000), I''ll lend it. If I don''t have it to lose then I won''t lend it.


eta~ maybe for a gift you could get her some sort of budgeting software, class, etc.

Good point Somethingshiney. Thanks so much!

 

[Efe]

I would just give her the money, since it is a small amount, and tell her that it is a one time gift and to not ask again. Since it is a small amount of money, you can help her out right now and make your case clear for the future. When she comes to you again, for a small or larger amount, you can remind her of your mutual decision. I just don''t think it is worth you being blamed, which will probably happen since your husband has helped her in the past before you were married.

 

[AmberGretchen]

Date: 1/26/2009 3:23:59 PM
Author: neatfreak
I never think it''s a good idea to lend money to family or friends. If you have and want to GIVE the money, that''s another story. But lending is so sticky...it can really tear families apart.


So if you have it to give and want to, go for it. But it sounds like the sibling doesn''t really NEED it, she just isn''t doing a good job with her own money. So that makes me less inclined to give it to her...

I think NF says it really well - it should never really be a loan unless you are in business together and there are legal documents involved (and even then I don''t think its such a hot idea). I''m generally against it, unless there is a dire need or some exceptional circumstance (i.e. a medical emergency, unexpected layoff, etc...).

 

[InLuv101]

Date: 1/26/2009 3:22:02 PM
Author: NovemberBride
Like many others have stated, I would not lend money to a family member expecting to be paid back. However, there are certain circumstances and certain family members to whom I would be happy to give money, and others whom I would not. For example, DH''s mother was a single mom who made countless sacrifices for my DH growing up and raised him to be the amazing husband he is today. I would give her any sum of money I had, at any time and no questions asked. However, I also know she would never ask unless she really needed the money. DH''s father on the other hand, I would not give money to unless it was a life or death situation and we were sure the money was going where it was supposed to (i.e. wrote the check directly to cover a bill). DH''s father has a gambling problem and cannot manage his money at all. Lucky for me I have been spared this problem because DH''s dad asked DH once to borrow money before we were married and DH said no way (not the best relationship).

Without knowing more details, I have to say that no way would I give money to someone who made more than I did and was asking simply because they could not live within their means. That said, if there were extenuating circumstances (illness, job loss), I would consider it.

Thanks Nov. Bride! I truly have no issue giving money to family members in need. I guess it the continual borrowing and the fact that she won''t learn to live within her means that bothers me. She is married but they have no children and there are no extenuating circumstances in her case. Thanks for your input!

 

[brooklyngirl]

The issue that jumps out at me is that this is a pattern in you dh''s family. My mom''s sister was the the same way -- throughout my parents'' marriage she always borrowed money from everyone, and never returned it. It really strained my parents'' marriage, especially since they''ve been scraping by to try and save money the whole time they''ve lived in the U.S. I can''t even imagine how much money went to my aunt that could have been used to benefit my family, such as paying for college for my sister and I so that we wouldn''t have to take loans to name one.

In my family my grandmother was a big enabled of my aunt, and would even ask my parents for money to give to my aunt, or straight guilt them into it. Are your DH''s parents the same way?

If this is a habit, eventually it will interfere with your marriage, and take resources away from your family.

I would nip this in the bud now by saying no.

 

[InLuv101]

Date: 1/26/2009 3:23:59 PM
Author: neatfreak
I never think it''s a good idea to lend money to family or friends. If you have and want to GIVE the money, that''s another story. But lending is so sticky...it can really tear families apart.

So if you have it to give and want to, go for it. But it sounds like the sibling doesn''t really NEED it, she just isn''t doing a good job with her own money. So that makes me less inclined to give it to her...

Me too...thanks NF!

 

[InLuv101]

Date: 1/26/2009 3:37:29 PM
Author: BizouMom
I would just give her the money, since it is a small amount, and tell her that it is a one time gift and to not ask again. Since it is a small amount of money, you can help her out right now and make your case clear for the future. When she comes to you again, for a small or larger amount, you can remind her of your mutual decision. I just don''t think it is worth you being blamed, which will probably happen since your husband has helped her in the past before you were married.

This is exactly what I''m afraid of. Thanks for your suggestion, it''s a really good one!

 

[InLuv101]

Date: 1/26/2009 3:38:43 PM
Author: AmberGretchen

Date: 1/26/2009 3:23:59 PM
Author: neatfreak
I never think it''s a good idea to lend money to family or friends. If you have and want to GIVE the money, that''s another story. But lending is so sticky...it can really tear families apart.


So if you have it to give and want to, go for it. But it sounds like the sibling doesn''t really NEED it, she just isn''t doing a good job with her own money. So that makes me less inclined to give it to her...

I think NF says it really well - it should never really be a loan unless you are in business together and there are legal documents involved (and even then I don''t think its such a hot idea). I''m generally against it, unless there is a dire need or some exceptional circumstance (i.e. a medical emergency, unexpected layoff, etc...).

Thanks AmberGretchen! NF usually says alot of things really well

 

[DiamanteBlu]

I guess it depends - on a number of things like:
- How much do they want? [$100 or $100,000]
- Can I "lend" it [I only lend what I can part with permanently]
- For what [pay bills, downpayment for a replacement car, buy something "frivolous", donate to charity, to take advantage of an unusual opportunity like an IPO, buying undervalued real estate or other assets, etc.]
- Why do they "need it" [loss of an income source, bad budgeting, insufficient assets to complete deal, etc.]
to name a few.

Since I don''t have specifics, all I can suggest is to come at it as a business decision if you want to maintain control and avoid getting taken advantage of going forward. You need to know all the details and then you will consider it. You might also want to set up a payment plan [and if the plan is not complied with then you have a "reason" to say no next time] - especially if this is chronic behavior.

If you find that it is to pay a particular bill [to avoid shutoff or something] you may want to pay it directly instead of lending the money which could end up who knows where. If it is to buy something in particular you may want to buy it for the person as a gift [again, to avoid dissipation]. If it is to take advantage of an IPO or undervalued asset type of opportunity you may want to form a partnership if it is interesting to you.

I''m not sure how much this helped - hopefully it helped some!

 

[Haven]

We don''t lend money to anyone, but if we feel compelled to pass out some cash, we will gift it a dear friend or family member. Personally, I just feel like it makes things much easier than lending because there is no issue of when and how will we get it back. And if someone needs money badly enough to ask us for it, the likelihood that they will be able to repay us is pretty slim.