Family Handouts

[stlguy57]

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.

 

[steelyman]

I have, not "handouts", but loans. I prepare a promissory note, which is not hard to do, and let the IRS decide the rate: it's published and called the AFR (Applicable Federal Rate). This is only for people I know and trust really, really well.

 

[travelover]

They can ask but the answer is, "it is all invested".

 

[Walt34]

I had one relative ask or a loan, once. She has a long history of not repaying loans to other family members so it was easy to say "no". Besides, what are the odds on repayment on a loan to pay for a bankruptcy attorney?

 

[Bamaman]

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.

 

[rodi]

I haven't. But then again I don't have a lot of relatives on my side of the family. DH's family hasn't really put it all together... A few snide comments like "must be nice to be able to travel like you do"... from an in-law who has been underemployed by choice since I entered the family 16 years ago. I point out he should work full time and he might get paid vacation and enough income to travel.

 

[FIREd]

"Sorry, I'm on a fixed income now"...

Or as they say in Downton Abbey, "Sorry, my capital is tied up"...

 

[Badger]

I don't think I will be approached. I only have a sister and a brother and my wife has a brother. The 2 brothers can pound sand as far as we are concerned. Neither would get even a BOGO coupon from us. My sister and brother-in-law are doing fine and know how to handle finances better than I but if they ever needed help I would not hesitate.

Cheers!

 

[donheff]

"Sorry, I'm on a fixed income now"...

Or as they say in Downton Abbey, "Sorry, my capital is tied up"...

+1 That is what I was thinking. You can now claim that you are stretched thin and can't risk your capital. "What, I should return to work so I can loan you money? Not happening."

 

[MichaelB]

Some relatives have asked for $ help, but I think they were always like that, it didn't start when we ER'd. What did change, and is still happening, 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.

 

[braumeister]

DW's brother has asked for loans many times. We would write up a formal loan contract at the prevailing prime interest rate, but due to the nature of his business he always wanted no regular payments, just a total payoff whenever he could manage it.

Consequently, we mentally wrote them off (but kept track of accumulating interest). However, he eventually paid every loan off in full, except the last two. They went for quite a few years and showed no promise of ever being paid off.

Then he found a way to sell a valuable item and wanted a new loan to cover all his debts (back taxes, etc.) until it could sell. We got a lawyer involved and had multiple agreements signed and notarized, but gave him the money. There was always a good chance of selling the item, and when it sold he paid us off in full, including the old loans. That may have been because all the paperwork went through the lawyer.

So it's possible, but we can't see ever loaning money to him again.

 

[Tadpole]

deleted.

 

[Which Roger]

Hasn't happened to me, but since I had some cash laying around, I did offer a car loan to a close relative who was going to get one elsewhere, and payback has gone smoothly. That being said, if this person fell into dire circumstances and was unable to pay, I would not hesitate to forgive the loan.

 

[athena53]

My side of the family, bless them, are doing well and wouldn't think of asking for loans. DH has a brother and a son who are chronically short of cash.. We've loaned money to both when they needed beater cars and agreed on amount that wouldn't break our hearts if it turned into a gift. Fortunately, both loans were paid back although my stepson was a little slow at it.

 

[omni550]

Not family, but a friend from 5th grade who lives on the other side of the country. We've exchanged birthday cards and Christmas cards (we always include a brief write up of what's been happening in the past year) for years. I haven't seen her in 25 years at least, and I think we've spoken on the phone 5 times in 25 years.

So I was surprised to get a phone call from her last August. We chattered on about this and that for about half an hour. And then she asked if I could send her $2500. as she was running short of funds, as some things she was counting on for funding had fallen thru. (She's an artsy-fartsy type who gets involved in all sorts of community action things, theater, kids programs, etc.)

I just told her that wasn't in the budget. (I felt sort of bad since, among many other things, we'd just been talking about all of my trips here and overseas. But I knew she was looking for a out-and-out gift, not a loan.)

I didn't get a Christmas card last year, so perhaps she's put me on her sh*t list.

omni

 

[W2R]

Never, and nobody ever will ask me for a handout. There are negative things could be said about my family, as for any family, but this is not one of them! I suppose we value independence, self reliance, and initiative to an unusual extent.

BTW, I have never asked any of them for a handout as an adult (and never received one, either). Even paid my own way through college.

 

[H2ODude]

No handouts, but have offered loans to DD and DS. When DD and SIL bought first house in 99 we loaned them the 20% down (80k). I just borrowed the cash on margin account and they paid the interest. The following March they paid it off in full with his bonus...I was impressed.

When DS went for mortgage, he told me his best rate and it was better than I could get on bonds so I'm holding the official mortgage (we split the difference in interest, and I lowered it when rates plumetted). When he became a principal at his firm he had option for a bunch of company stock (and I know the company well) so we loaned him quite a bit.

All of this was officially recorded and reported to IRS, but frankly, I'd trust both DS and DD on a handshake. While DW and I are well off, both kids are way ahead of where we were at their ages.

 

[jim584672]

My brother asked for $1,000 five years ago, was supposed to be "short term" and paid right back. Total paid to date $60.00. He also clipped his cousin for several thousand.

Lesson learned, never lend to family, period.

 

[freebird5825]

Polonius had it right way back when. Hamlet, Act I, Scene 3.

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

 

[travelover]

...........
Lesson learned, never lend to family, period.

No such thing as a loan to family, it is a gift that occasionally gets paid back.

 

[steelyman]

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.

 

[cooch96]

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.

 

[Hamlet]

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

 

[steelyman]

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.

 

[youbet]

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.