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Family Handouts
Old 05-17-2015, 06:59 PM   #1
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Family Handouts

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.
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Old 05-17-2015, 07:05 PM   #2
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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.
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Old 05-17-2015, 07:15 PM   #3
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They can ask but the answer is, "it is all invested".
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Old 05-17-2015, 07:15 PM   #4
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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?
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Old 05-17-2015, 07:18 PM   #5
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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.
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Old 05-17-2015, 07:29 PM   #6
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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.
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Old 05-17-2015, 07:42 PM   #7
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"Sorry, I'm on a fixed income now"...

Or as they say in Downton Abbey, "Sorry, my capital is tied up"...
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Old 05-17-2015, 07:43 PM   #8
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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!
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Old 05-18-2015, 06:54 AM   #9
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Quote:
Originally Posted by FIREd View Post
"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."
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Old 05-18-2015, 07:02 AM   #10
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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.
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Old 05-18-2015, 07:25 AM   #11
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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.
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Old 05-18-2015, 07:37 AM   #12
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Old 05-18-2015, 08:46 AM   #13
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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.
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Old 05-18-2015, 09:01 AM   #14
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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.
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Old 05-18-2015, 09:23 AM   #15
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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.

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Old 05-18-2015, 10:01 AM   #16
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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.
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Old 05-18-2015, 02:09 PM   #17
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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.
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Old 05-18-2015, 02:29 PM   #18
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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.
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Old 05-18-2015, 02:51 PM   #19
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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.

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Old 05-18-2015, 02:52 PM   #20
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Quote:
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...........
Lesson learned, never lend to family, period.
No such thing as a loan to family, it is a gift that occasionally gets paid back.
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