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Old 04-28-2010, 08:40 PM   #21
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When I was a junior in college we were eligible to join a military-affiliation life insurance company for their "midshipman loan". They gave you money (Gumby, was it $6000?) at a ridiculously low interest rate and IIRC you didn't have to start paying off the principal until you graduated. You also had to buy some of their life insurance.

Interest rates were kinda high in 1981. I seem to remember that the insurance company's loan rate was 6%. A veritable handout.

At the time I was keeping up a regular weekly correspondence with my grandparents, and I mentioned this deal as part of the filler material in my next letter. I swear I had no ulterior motive, and at the time I was money-ignorant enough for that claim to be believable. They promptly offered to loan me the money at 1% less than the insurance company, so I took their offer. My father showed me how to do the amortization spreadsheet and I sent Grandma & Grandpa the payment table along with my first check. Then I bought myself a brand-new sportin' 1981 Mazda GLC hatchback. (That was the first and last time I bought a new car from a dealer.) I paid the loan off in "just" three years because I'd started getting submarine pay.

Nearly five years later spouse and I were trying to buy a house in Monterey, CA. Goldilocks Realty, Inc, had shown us "too cheap", "just right", and "too expensive". We, of course, opted for the last option but it was... too expensive. Spouse knew better than to talk to her folks about borrowing down-payment money but I hadn't yet learned that lesson so I called my dad. Bless him, he said "Sorry, Nords, all our money is tied up in our mutual funds and we can't sell them right now." At the time I wasn't money-smart enough to understand what he was really saying, so we gave up our housing fantasies and "settled" for "just right". That cheaper mortgage payment, and saving the "extra" money we would've spent on shelter overkill, made a big difference three years later when we moved to Hawaii.

Never borrowed anything from family or friends since. We've had money gifted to us, but it came with a whole spider's web of attached strings and it was a big relief when the grantors asked for it back. Never going there again.

Now we're trying to figure out how to handle our own gifting concept with our kid. There has to be a fine line between "good kids get a good start" and "affluenza". At this point the best option seems to be helping with her TSP or Roth IRA contributions, where the money is relatively difficult to obtain for frivolous purposes. It seems to be a better idea to start trickling out the inheritance now, where it can compound tax-free for decades and maybe fund another generation of ER, than to make everyone wait another 40-50-60 years. We'll see how her fledgling sense of fiscal responsibility holds up when she's out of the nest...

Oh, and here's a picture. We kept that car going for 12 years and 113K miles before too many things rusted through.
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Old 04-28-2010, 09:01 PM   #22
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We borrowed $3000 from my FIL to help buy our first house. We paid it back. He was surprised and said we could borrow money anytime.
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Old 04-28-2010, 09:39 PM   #23
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Yep, around 1981 our mortgage renewed and the interest rate went from ~11% to 21%. DM offered us the mortgage principle for 1 year interest free as a Xmas present. We accepted and repaid her within the year without having to take a new mortgage. It hurt, but we came up with $20K from a $55K gross. That was a big start to being FI. FWIW, DW was PG, but working, at the time. Made it all the more important.
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Old 04-28-2010, 09:45 PM   #24
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Originally Posted by Nords View Post
When I was a junior in college we were eligible to join a military-affiliation life insurance company for their "midshipman loan". They gave you money (Gumby, was it $6000?) at a ridiculously low interest rate and IIRC you didn't have to start paying off the principal until you graduated. You also had to buy some of their life insurance.

Interest rates were kinda high in 1981. I seem to remember that the insurance company's loan rate was 6%. A veritable handout.
I took the loan from Navy Mutual Aid. $6k at 6% seems about right. It paid for my first car, a 1972 Triumph TR-6.

With respect to the OP's question -- nope, never borrowed money from family or friends. The last money I ever got from my family was the day I (at the tender age of 18) joined the Navy (7/6/77). My dad shook my hand and wished me luck. My mom kissed me goodbye and, being a little more practical, slipped me a twenty.
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Old 04-29-2010, 12:38 AM   #25
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I borrowed my from my parents for my down payment for my first house. They always have lending money to their kids, just as their parent did for them.
My parents loaned me the down payment on my first house, and also co-signed the loan on my first new car. I don't remember whether they charged me interest on the down payment.
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Old 04-29-2010, 06:01 AM   #26
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I borrowed $60k from my parents as a construction loan to build my first house. After I finished the house, we got a mortgage and I paid my parents back
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Old 04-29-2010, 07:31 AM   #27
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We borrowed some money from my parents for a few weeks when we were selling one house and buying another. We paid them back when the old place closed.
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Old 05-01-2010, 07:19 PM   #28
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Just out of college I borrowed money for business clothes, bus ticket, and later car down payment. Paid it all back ~2 years later.
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Old 05-01-2010, 09:10 PM   #29
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Quote:
Originally Posted by Nords View Post
When I was a junior in college we were eligible to join a military-affiliation life insurance company for their "midshipman loan". They gave you money (Gumby, was it $6000?) at a ridiculously low interest rate and IIRC you didn't have to start paying off the principal until you graduated. You also had to buy some of their life insurance...... Never going there again.
.....
Gotta say, Nords - you wear the short shorts much better than Lt. Dangle of Reno 911. Might have been that rather than the GLC or tutelage that won over fair wife.
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Old 05-01-2010, 09:55 PM   #30
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No, never borrowed money from anyone, at least not that I knew of at the time I borrowed it. Talk about a babe-in-the-woods. My mom had an account at her company's credit union. I had been added with an "-a" to her credit union account number. I called the CU and inquired about getting a loan. A couple of days later, the CU sent me a check for the amount I had mentioned. I thought that was odd, but I bought the car then made payments until the loan was paid off. I had filed away the "copy" of the car title when I first bought the car and when I didn't get the "real" title to the car when the loan was paid in full, I called the CU to ask about it. Turns out that when I asked for the loan, they used shares of Mom's company stock (held in safekeeping) as collateral for my loan. I had the original title all along. I asked Mom if she knew...she did, said that she was glad to help. Duh! I called the CU and established my own account number, but I never asked for another loan from them.
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Old 05-01-2010, 11:45 PM   #31
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In-laws held the mortgage on our first house. The interest rate was lower than we could get on our own (16% or so in the early 80s) but more than they were earning on their CDs. It was a 30 year mortgage, but we paid it off within 10 years. That was actually the start of my road to FIRE. When we bought up a year later we arb'ed the new mortgage and invested the rest, just in time for the big run up in the stock market. I wouldn't mind doing the same for DD, if she ever gets to the point of being able to afford it.
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Old 05-02-2010, 09:16 PM   #32
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Gotta say, Nords - you wear the short shorts much better than Lt. Dangle of Reno 911. Might have been that rather than the GLC or tutelage that won over fair wife.
Nah, it was just my very large... submariner paychecks.
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