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Old 05-18-2015, 03:06 PM   #21
Thinks s/he gets paid by the post
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No such thing as a loan to family, it is a gift that occasionally gets paid back.
That's one way to look at it. In my case, I only have one such outstanding loan out currently, and if it doesn't get paid on schedule (at the very favorable AFR rate), I'll just sit down with them and see what they can reasonably manage. If necessary, I'll just do it all over again at the then-current rate. It's not some money-making deal to me, I could easily earn more in interest elsewhere with little/no effort.

I do go into it knowing that it may never be paid back in full. I'm not much of a fan of blindingly-white-toothed Suze, but I do like her "people first..." mantra. But you have to be careful about which people.
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Old 05-18-2015, 03:27 PM   #22
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[QUOTE=freebird5825;1594159]Polonius had it right way back when. Hamlet, Act I, Scene 3.

Neither a borrower nor a lender be,

My mother always quoted this; I had always assumed it was Biblical in origin.

I've used it as justification for not lending to family in the past and for avoiding bonds in my AA. I'm not sure if knowing it comes from the Bard and not the Gospels gives it more credence or less. But I cannot argue with the sentiment.
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Old 05-18-2015, 04:11 PM   #23
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I have a long-time friend that I end up loaning modest amounts of money to with some regularity. He has always paid me back, although sometimes it can take him a few months. He generally pays me back 10% more than he borrowed, and since these aren't multi-year loans, that is more interest than I would ask for, even from a stranger.

I've told him several times that I'm not looking for interest on these loans, but he doesn't want to feel like a mooch.

He's a good friend who is just bad at managing money.

The only loan I'm made to family was a very short-term loan to my mother (which she was incredibly embarrassed to ask for).

No one else has ever asked. There are certain members of my family that would get an instant no, and others that would get an instant yes. I do have the advantage that the problematic family members have other targets in the family that look more appealing. One of them is a softer touch, and others look like they have more money available (and probably do). When I get together with that side of the family, my dad and my uncle still make me fight to pay for anything. I will always be the broke college student in their eyes
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Family Handouts
Old 05-18-2015, 04:30 PM   #24
Thinks s/he gets paid by the post
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Family Handouts

Just to be clear, I am not criticizing or judging anyone who isn't comfortable lending money. It's not bad to refuse, it's just not the way you roll.

A loan, in my mind, is not a "handout" - there's a difference, so maybe I answered the wrong thread.
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Old 05-18-2015, 04:44 PM   #25
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FIRE'd almost 8 years, we've never had a friend or relative ask to borrow money. There are only a few of them who aren't well positioned financially. And because we NEVER talk money, retirement strategies, spending, etc., and we live somewhat frugally, the others have probably never thought to ask us.

Hypothetically, if one of the "getting by on a thread" folks did need some help for a critical reason, I'd consider a gift but not a loan.
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Old 05-18-2015, 04:55 PM   #26
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There's a good thing about calling it a gift: you can say it like Don Corleone on the day of his daughter's wedding.
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Old 05-18-2015, 05:24 PM   #27
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Have a family member who borrowed a few thousand some years ago to get current on his mortgage and to do emergency home repairs, however over time his memory has converted it into a gift. His family makes twice what we do and he knows it - and I'd hoped even if he somehow did convince himself it was a gift he would voluntarily repay it. It's not going to happen.

For me it would be easier to say "no" after ER than while working - "I won't have any more income and need to live 30 years just from our savings - so I can't wreck our budget."
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Old 05-18-2015, 06:12 PM   #28
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I feel lucky. Mom and my siblings are all doing well so it has never been an issue for our family.

I have a friend who I loaned $3k once so he could get rid of his low-life, two-timing then wife and make her his ex. While I got paid back within 18 months, even if I hadn't it would have been the best $3k that I have ever spent.

I've also loaned DD money on a couple occasions so she didn't have to liquidate investments to meet an immediate liquidity need, and was promptly paid back in both cases.
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Old 05-18-2015, 06:16 PM   #29
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....When I get together with that side of the family, my dad and my uncle still make me fight to pay for anything. I will always be the broke college student in their eyes
+1 I finally have given in to Mom on things like this. She has plenty, so the way I figure it, incrementally, each time she pays for dinner that my 4 siblings pick up 80% of the tab.
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Old 05-18-2015, 06:24 PM   #30
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...is the sense to some that being retired means we have more free time and that fairness somehow dictates that it should be available for their use.
One SIL is like that. She's never asked us for a loan (she knows better) but has borrowed from the other SIL, who has never been paid back. But she has referred to us as "cold and calculating" I guess because we worked and she didn't.

The daughter of one of DW's friends is like that too. Now matter what, no one can ever do enough for her.
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Old 05-18-2015, 06:25 PM   #31
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No such thing as a loan to family, it is a gift that occasionally gets paid back.




Quote:
Originally Posted by Bamaman View Post
But don't ever expect to see any payback in full. Those requiring help often don't have the capacity and character to fulfill their promises.

I'd rather just give'em the money and have no expectations. If they do pay me back, those are the relatives I'll take care of later in life. Otherwise, I'm of no further assistance.
I "lent" my nephew a couple of grand when he asked recently, to get over a difficult patch/injury. We agreed it was a loan, but my terms were "Pay me when you're able." If I don't see it again, it means he isn't yet able. In my mind, it was a gift, but if he can pay me back when he's on his feet again (literally), that works for me too.
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Old 05-18-2015, 06:33 PM   #32
Thinks s/he gets paid by the post
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People have asked me for the loans and never paid back. I also gifted money to others. Neither is good IMO. Gifting can lead to more "gift" expectation from the recipients. When I RE, I will likely use the line that others posted already: my money is tied up, I am on fixed income, etc..
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Old 05-18-2015, 07:16 PM   #33
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Thanks to all that answered the call. Sounds like if there is a circumstance, someone will figure out how to take. Hate to say it, but we'll be on guard.
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Old 05-19-2015, 07:25 AM   #34
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I have only been asked one time by family for a $1,000 loan. This was many years ago before retirement and we were paid back, no problem. I have also loaned money to a friend and was also paid back.


The bad experience was not me, but my now departed Dad. Over the years he had made loans to members of his large family and to friends, and I always assumed was paid back. That is, until be made a fairly large loan to one of his nieces. I am guessing in the range of $2,500. I am sure the loan was accompanied by words along the line of, "no rush, pay me back when you can". However, my Dad was fully expecting to be repaid and not about to write it off as a gift. After several years without receiving repayment of the loan Dad started to complain about it every time I visited him. My sister and I both suggested to Dad that he just write it off, but he never could.


Lesson learned for both my sister and me, never loan to family, just gift it if you feel it is justified and you can afford it.
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Old 05-19-2015, 07:44 AM   #35
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..............
Lesson learned for both my sister and me, never loan to family, just gift it if you feel it is justified and you can afford it.
It is not just the money lost, but it's the deep rifts that develop in families, starting with the borrower and the loaner, then the rest of the family as they take sides.
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Old 05-19-2015, 01:10 PM   #36
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My DD is about to learn her handouts are over and the only thing she can hope for is a handup with conditions. Despite repeated warnings she failed to get her schooling done in 4 years, and once it was apparent last year she would not graduate in 4, she did not heed my advise to apply a year early for federal loans. Now she has found out they will only loan her half what she needs ( oh and I had to jump her to beat the deadline this year by only a week). She now needs private loans to secure rest of money. Ex and I mutually decided, no cosigning until you get a summer job and secure one for the school year. We told her bank institutions consider you a credit risk thus needing a cosigner. We consider you one also based on your aversion to work menial normal college jobs.
This could get interesting!


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Old 05-19-2015, 01:18 PM   #37
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Years ago, when I was still in college, my sister paid for me to attend a wedding. The cost was not great, but she didn't have much to spare. She never asked for repayment, just what one does for family. Fast forward 20 years, she was in need, and I gave her $10k. She still puts it on her balance sheet as a debt, but I am not planning to be repaid. When she needs things, I try to help her out (sometimes cash, sometimes advice). It is how my parents raised us, take care of family and they will take care of you. She will pay me back some day (when my parents are both dead, I suspect), and I probably will tell her to give it to my sons since they will likely need it more than me.
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Old 05-19-2015, 02:00 PM   #38
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Years ago, when I was still in college, my sister paid for me to attend a wedding. The cost was not great, but she didn't have much to spare. She never asked for repayment, just what one does for family. Fast forward 20 years, she was in need, and I gave her $10k. She still puts it on her balance sheet as a debt, but I am not planning to be repaid. When she needs things, I try to help her out (sometimes cash, sometimes advice). It is how my parents raised us, take care of family and they will take care of you. She will pay me back some day (when my parents are both dead, I suspect), and I probably will tell her to give it to my sons since they will likely need it more than me.

In a give and take scenario I certainly agree. My siblings have never asked for a loan but if they did, I would certainly trust them and hope vice versa as well. As far as my daughter goes.... No more fish, its time you got the pole handed to you instead...... Go catch some yourself now.


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Old 05-19-2015, 02:22 PM   #39
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Was wondering if anyone had an increase of family members, both near or far, approach you after you've early retired looking for a loan cash gift?

I'm 58 and will be ER'ing later this year and I think it's likely this may happen here at least once. If you walk out early and not take SS, some will think your flush with unlimited funds.

Just wondering. Thanks.
How will they know if you don't take SS if you don't tell them, just wondering....
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Old 05-19-2015, 02:37 PM   #40
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My DD is about to learn her handouts are over and the only thing she can hope for is a handup with conditions. Despite repeated warnings she failed to get her schooling done in 4 years, and once it was apparent last year she would not graduate in 4, she did not heed my advise to apply a year early for federal loans. Now she has found out they will only loan her half what she needs ( oh and I had to jump her to beat the deadline this year by only a week). She now needs private loans to secure rest of money. Ex and I mutually decided, no cosigning until you get a summer job and secure one for the school year. We told her bank institutions consider you a credit risk thus needing a cosigner. We consider you one also based on your aversion to work menial normal college jobs.
This could get interesting!

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Sometimes the kids need a gentle or not so gentle push to bring them into reality . I know my daughter did and it has worked out fine .
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