Borrowing money from a friend or relative

[marko]

Never had to.

But even if I did we all knew never to even consider asking. Even if your house had burned down, we knew the answer and it would just make it awkward for everyone concerned.

Grandpa used to joke that when it came to making loans to people in need, he was the first to put his hand in his pocket....and keep it there.

 

[splitwdw]

You guys never thought about it? Was that due to lack of imagination or fantasy life, or was there nobody around that you could ask or even thinking about asking?

Probably just smart!!!

 

[copyright1997reloaded]

My dad cosigned on my first (used) car loan when I was graduating from college (the loan was from his very small credit union). Yes, I paid it off and fairly quickly. I had less than $500 to my name when I graduated and moved to another state away from my family at 20 years old. BUT, I had no college loans due to winning a half scholarship and working part time every summer (and also during the school terms), as well as going to school during the summers to be able to graduate in three years (with a double major).

When I retired I realized that the longest single vacation I had had from the time I entered college to my retirement was 10 days.

 

[NYEXPAT]

Borrowed 86k from a friend 6 years ago for a RE investment. It got paid off about a year ago with along with a 9.5%/year return.

 

[Milton]

No, never. The thought never crossed my mind. I was not brought up in a family where we borrowed nor loaned money.

+1

Nope. I heard my grandmother bring up time after time ( ad nauseum) how she had lent my parents money. They paid her back but were required to be beholden forever...not a road I wished to tread

Straight out of The Millionaire Next Door.

You guys never thought about it? Was that due to lack of imagination or fantasy life, or was there nobody around that you could ask or even thinking about asking?

I've never thought about cheating on my taxes, either. Apparently that makes me a person of limited imagination or fantasy life; or perhaps I just don't know any 'creative' accountants.

 

[foxfirev5]

Granted we have a small family but the subject would never come up. Now if the kids were in trouble we would help them out, and have. However, not as a loan.
As far as friends go - not a chance. By the time they ask the friendship is probably over. Like the kids, if we feel the need to help, maybe.

 

[redduck]

Guess I'm in a pretty different place. I've met a whole lot of wealthy, free-spending people and sometimes it crosses my mind, "Hmnn, wonder what would happen if I asked this guy for $50,000? Maybe he would just reach in his pocket and just hand it to me." But, of course, I'd ask in my own unique and interesting way, so it wouldn't be offensive. Nobody here has ever had a thought like that?

 

[Milton]

She lives on SS income only and wanted to borrow $5k for a bankruptcy attorney. What she needed was $180k to pay off all her loans so there was no way I was going to throw $5k down that hole.

Wow.

 

[Walt34]

No, I hate being in debt. Feels like a sword hanging by a thread overhead because my future options and opportunities are limited by the amount of the debt.

 

[Milton]

Guess I'm in a pretty different place. I've met a whole lot of wealthy, free-spending people and sometimes it crosses my mind, "Hmnn, wonder what would happen if I asked this guy for $50,000? Maybe he would just reach in his pocket and just hand it to me." But, of course, I'd ask in my own unique and interesting way, so it wouldn't be offensive. Nobody here has ever had a thought like that?

Not even close.

 

[Milton]

[D]ebt feels like a sword hanging by a thread overhead because my future options and opportunities are limited by the amount of the debt.

 

[candrew]

Decades ago, DW & I were in very rough spot finance wise. Two young children with health issues & numerous OOP medical costs that insurance did not cover.

Yes, we thought about asking to borrow from a friend or relative and didn't. That was mostly driven out of pride and feeling too ashamed to ask. We did, however, have the fortune of being on the receiving end of a few charitable acts. Someone stepped up anonymously and contributed a few hundred $$ on a hospital bill we were paying on. A friend of ours brought us groceries once. A laborer gave me a ride to work for a week when our car was broken down and there was no money to buy parts until pay day.

Thinking back, we could have no doubt qualified for public assistance like SNAP. Rolled pennies several times to cover groceries and had the embarrassing experience of returning a few items when our grocery bill went over the amount of cash we had at check-out.

On the flip side, as we became more FI, we've been able to help out family when they've needed it. It's never a case of us "loaning" them money, but rather gifting what we can afford.

 

[omni550]

Guess I'm in a pretty different place. I've met a whole lot of wealthy, free-spending people and sometimes it crosses my mind, "Hmnn, wonder what would happen if I asked this guy for $50,000? Maybe he would just reach in his pocket and just hand it to me." But, of course, I'd ask in my own unique and interesting way, so it wouldn't be offensive. Nobody here has ever had a thought like that?

So, if you've thought about it and are meeting folks who might be prone to give you the money, and have a unique and interesting approach, why haven't you done it already?

omni

 

[IMATERP]

I ended up borrowing 20k from my parents back in the mid/late 90's. The purpose was to pay off my house. They charged me 6% interest and I ended up paying them back within a year and a half.

No more loans... I just don't do it.

 

[Music Lover]

I once lent a friend $500 cash (all I had) back in the early 80's when he missed getting to the bank before closing on a Friday and couldn't cash his pay cheque. Normally he would have waited until Monday but he was going out of town for 2 weeks. He paid me back the next time I saw him.

Other than that no one has asked me and I haven't asked anyone.

 

[candrew]

"Hmnn, wonder what would happen if I asked this guy for $50,000? Maybe he would just reach in his pocket and just hand it to me."

I have a younger brother who would hand me that kind of dough if I asked (the proverbial shirt off his back). The same with a former w*rk colleague whom I've known for 35 years and consider a close friend. Both of these individuals have the scratch to do it, BTW.

 

[redduck]

So, if you've thought about it and are meeting folks who might be prone to give you the money, and have a unique and interesting approach, why haven't you done it already?

omni

It's more of a funny/amusing thought to me. But for sure, I don't follow up on most of my thoughts. Does anybody? I don't know, maybe many of the people here do.

 

[harley]

DW and I bought our first home from her parents back in the early '80s. It was a rental they'd owned for awhile. Since it was the 80s and rates were fairly high, they let us borrow at the same rate they'd have been able to get in a CD. That was a tad lower than the existing mortgage rates. It was a 30 year loan, but we paid it off in about 9 and 1/2 years. We could do that because salaries were also zooming up at the time, and we applied pretty much all of my increases (DW was a SAHM then) directly to the mortgage. We'd have had a mortgage either way, but it was a great way for us to get started as home owners.

We made a similar offer to DD and her husband last year, to buy the townhouse they were renting from us at our purchase price. But they decided to buy a different place, and used his VA loan capability. That's fine, but it would have been nice to help them out too the way we were helped getting started. I've always appreciated the in-law's kindness and was pleased we were so responsible with their generosity.

 

[Milton]

It's more of a funny/amusing thought to me.

It would seem to be more than that. Presumably you're seriously considering it, given that you took the initiative to start this thread and seek community input.

 

[redduck]

Nope. Not considering it. Just a thought. I wasn't asking for advice, I was just asking.

 

[Meadbh]

I don’t like being “beholden” to anyone, but my parents offered, and I accepted, the car loan of £1000. We saw it as a cash flow management issue. I needed a reliable car, they needed their car, I had been working for a year and saving like a demon, so they knew I would be good for the money.

There followed a decade during which time I had no debt at all. Then, at age 34, I bought a house. By this time, I had saved about 70% of the cost of the house, so I took out a small mortgage and paid it off completely in 18 months. Again, I was using debt as a cash flow management tool to buy something I needed and wanted, which was modest compared to my borrowing potential.

After the house mortgage was paid off, I had another debt free period, this time for 15 years. My NW was now in 7 figures. By this time I had had some business education. I was in a career path with no pension in sight and wanted to diversify my future sources of income. I was concerned about the market, and decided to begin investing in income producing real estate. I borrowed modest amounts, never more than 5% of my NW. I now own several income producing properties and own ~75% equity in them overall. Some I own free and clear. I have a slightly positive cash flow and in a few years will have a steady income from them when the remaining mortgages have been paid using OPM (other people’s money). The ROI on them is higher with some leverage, so I am not throwing money at these mortgages. During the crash of 2008-2009, my real estate income continued uninterrupted and was very reassuring.

OTOH, I keep only two credit cards, and one is for emergency use. I pay them off completely every month.

My attitude to debt is that it is a helpful wealth building tool when used judiciously, and always with the intent to pay it off completely. Taking on debt to buy consumables or experiences is not wise. Using debt to buy a right-sized home that meets your need for shelter and comfort, and which will appreciate at least at the rate of inflation, makes sense, provided you can ensure you will not default on the debt. Using debt to buy an asset that will produce a reliable income stream is good financial management in my opinion.

 

[UnrealizedPotential]

No. However I have loaned money to friends before and it turned into a gift both times. What's that quote-"Neither a lender nor borrower be". Something like that.

Looks like Car guy beat me to the quote.

 

[GalaxyBoy]

No way. My late DB used to ask for money all the time and was a very good salesman. In my younger, more naive days I fell for his line a couple of times. Once he swore he was down to his last nickel so I loaned him a grand or so. One month later he and his wife bought a new Ethan Allen bedroom set and a car, but somehow didn't have the money to pay me back. No more money for DB after that!

 

[Jerry1]

Yes. Out of convenience and not actual need, we borrowed $100K from MIL to buy the house we're currently in while we sold the other one. We didn't make any payments or anything like that, we just gave the money back when we sold our house. I allowed us to pay cash for this house and not have to liquidate any stocks or take out a mortgage. MIL now is getting worse with Alzheimer's and she'll likely need to live with us for a number of years (the years between not being able to live alone and needing to be in a full term care situation), so I'm comfortable in calling it even. We've been a family that helped each other out from time to time, but everyone in that circle has there financial stuff together and they have been more of a float than a loan. No one in the family likes paying interest.

 

[aja8888]

You guys never thought about it? Was that due to lack of imagination or fantasy life, or was there nobody around that you could ask or even thinking about asking?

Door No. 2 for me.....