Friends who didn't save . . .

[Retire2013]

My older brother who receives a pension from Fortune 500 after over 25 years there, full SS, and he also works parttime presently in clinical counseling. Has no kids, no expensive house repairs, no health issues, etc. just called me yesterday to borrow $2000 from me so his wife can go overseas to see her family (some kind of emergency). I am sending him $1000 instead of the full $2000 that he asked for because I don't want to set precedent that I would send whatever amount he happens to ask for. What are everybody's thoughts on this, please share candidly. I am a little disappointed at my older brother's inability to manage his own money. Back in 2001 he already had a nest egg of over $2 Mils. Now he is completely broke. Should I lend him money when my older brother asks for it? Or should I lie? Tell him that I have financial problems of my own (saving for FIRE!)? Any thoughts/advice would be greatly appreciated.

 

[travelover]

.......... Should I lend him money when my older brother asks for it?.........

If you want to help him, give him the money. If you make it a loan you will second guess every purchase he makes until it is paid back ...............which may well be forever.

 

[Retire2013]

He asked for a loan, but in my handwritten letter to him, I explained to him that it's a gift, that he does not need to pay me back. I consider the money gone. Thanks, Travelover. We think alike.

 

[MasterBlaster]

We need to take an emergency cruise in the Caribbean.

Can you send me $2000.

 

[Texas Proud]

My older brother who receives a pension from Fortune 500 after over 25 years there, full SS, and he also works parttime presently in clinical counseling. Has no kids, no expensive house repairs, no health issues, etc. just called me yesterday to borrow $2000 from me so his wife can go overseas to see her family (some kind of emergency). I am sending him $1000 instead of the full $2000 that he asked for because I don't want to set precedent that I would send whatever amount he happens to ask for. What are everybody's thoughts on this, please share candidly. I am a little disappointed at my older brother's inability to manage his own money. Back in 2001 he already had a nest egg of over $2 Mils. Now he is completely broke. Should I lend him money when my older brother asks for it? Or should I lie? Tell him that I have financial problems of my own (saving for FIRE!)? Any thoughts/advice would be greatly appreciated.

To me lending money to family is OK... as long as they pay it back...

Now, if I did lend to any of them I would not worry if I got it back or not... and I would not second guess their purchases..

Fortunately for me, all of my siblings are good with money... even the one who never made much...

 

[BigNick]

Do you know how he burned through $2M at more than $200K/year?

 

[Alan]

My older brother who receives a pension from Fortune 500 after over 25 years there, full SS, and he also works parttime presently in clinical counseling. Has no kids, no expensive house repairs, no health issues, etc. just called me yesterday to borrow $2000 from me so his wife can go overseas to see her family (some kind of emergency). I am sending him $1000 instead of the full $2000 that he asked for because I don't want to set precedent that I would send whatever amount he happens to ask for. What are everybody's thoughts on this, please share candidly. I am a little disappointed at my older brother's inability to manage his own money. Back in 2001 he already had a nest egg of over $2 Mils. Now he is completely broke. Should I lend him money when my older brother asks for it? Or should I lie? Tell him that I have financial problems of my own (saving for FIRE!)? Any thoughts/advice would be greatly appreciated.

I have loaned money to all 3 of my siblings when they have had a real need, and all have paid me back except 1 of them. That was over 10 years ago and that sibling knows that it will never happen again. The other 2 have borrowed money twice and paid back each time as soon as they were able.

My advice would be to keep the loans well within what you can afford to give away, and as soon as he fails to pay you back, shut off the supply, whether you tell him the truth or lie.

 

[Sarah in SC]

It might actually make it easier if he doesn't pay it back, because you could then say (like Alan) that you can't loan him any more until he pays that back.
I would loan money for actual present needs (food, shelter) to my family but not for "emergency" plane tickets. I would hope that my sibs would be extremely desperate and have exhausted other potential income sources prior to contacting me. My brother once asked for a short-term loan and I just told him I didn't have that in cash and that I couldn't liquidate investments to loan it to him.

 

[Texas Proud]

It might actually make it easier if he doesn't pay it back, because you could then say (like Alan) that you can't loan him any more until he pays that back.
I would loan money for actual present needs (food, shelter) to my family but not for "emergency" plane tickets. I would hope that my sibs would be extremely desperate and have exhausted other potential income sources prior to contacting me. My brother once asked for a short-term loan and I just told him I didn't have that in cash and that I couldn't liquidate investments to loan it to him.

Yes, didn't think about this..... I would hope that they look at other sources first... and one of those is credit cards... now, if they are maxed out on their credit cards and still need money... then you are not going to be getting it back...

 

[Alan]

Yes, didn't think about this..... I would hope that they look at other sources first... and one of those is credit cards... now, if they are maxed out on their credit cards and still need money... then you are not going to be getting it back...

This happened to my brother, almost 30 years ago now. He was working while going to university and there was a strike that ended up going on for over 12 months. In those days we didn't have the cash to help but we took out a low interest bank loan to pay off their credit card debt. (he was married with 3 kids under age 6).

Once he was back on his feet he paid us back including all the loan interest - and he got his engineering degree and a valuable lesson about credit card debt.

If he hadn't paid us back then it wouldn't have soured our relationship, but I wouldn't have loaned him money again.

 

[Mulligan]

I just dont get how people can borrow money from friends or family and not pay it off. I have never asked to borrow from anyone ever (except if I forgot my wallet and pay you back the $10 for dinner, tommorrow thing). While I have loaned money out they rarely stick to the deadline they promise and I'm the one asking for it back. I wish they would just say they need the money and wont pay it back. I would feel alot better about it for some reason. Got a friend who needed $400 and would pay it back in 3 days. A month has passed and he still owes me $280 but has not brought it up in over 3 weeks. But I'm going to jump him on the 15th, because I know when he gets paid again. I dont understand why they cant just be honest and upfront on the ability to repay!

 

[travelover]

..........I don't understand why they can't just be honest and upfront on the ability to repay!

It is a personality defect. All you can do is change the way you deal with it.

 

[bruce1]

My cousin's lease is up on his pick up and he called me yesterday wanting me to co sign a loan on a $40,000+ 4WD pickup. He and I have a long history of helping each other and get along very well so this made it really hard to say no. He is in the middle of a divorce, still paying on his wife's 2006 Grand Am, is upside down on a mortgage and is half supporting a girlfriend and her mother. He also owns a car that could be very serviceable for 7 to 8 hundred dollars. I see a bankruptcy or heart attack in the future. I would not finance a $40,000 pick up for myself.
I expect I am in for some **** as the bad guy as I am helping another (much younger) cousin who has run into some really bad luck and had a car accident so could not work for a long while. He is back at work and things are working out slowly. I hate stuff like this.

 

[chinaco]

I have loaned money to all 3 of my siblings when they have had a real need, and all have paid me back except 1 of them. That was over 10 years ago and that sibling knows that it will never happen again. The other 2 have borrowed money twice and paid back each time as soon as they were able.

...

I had a couple of siblings call over the years wanting money because of their lack of care with their finances.

I didn't bother loaning.... I just gifted it (rather than frustrate myself waiting and never collecting). But I took that opportunity to provide some advice. It included a subtle message: Don't ask again.

 

[Walt34]

I have refused to loan/give money to one relative, but she had a long history of borrowing from family and never paying it back so it was relatively easy to say "no". The loan was to be for a bankruptcy attorney's retainer.

As I explained to her daughter (my niece) "I am not going to subtract from the resources that DW and I have worked for, and saved, to merely forestall the inevitable".

That said, if the situation was one in which I could see that the relative was not in need because of poor judgment/management, and they had a prayer of paying it back, and I was in a position to write it off if they couldn't/didn't, then I would do so. But if they didn't pay it back that would be the last time I made them a loan.

Somehow I find it hard to find sympathy for someone who spends their last nickel on a cruise and then whines because they can't make their car payment.

 

[Mulligan]

My cousin's lease is up on his pick up and he called me yesterday wanting me to co sign a loan on a $40,000+ 4WD pickup. He and I have a long history of helping each other and get along very well so this made it really hard to say no. He is in the middle of a divorce, still paying on his wife's 2006 Grand Am, is upside down on a mortgage and is half supporting a girlfriend and her mother. He also owns a car that could be very serviceable for 7 to 8 hundred dollars. I see a bankruptcy or heart attack in the future. I would not finance a $40,000 pick up for myself.
I expect I am in for some **** as the bad guy as I am helping another (much younger) cousin who has run into some really bad luck and had a car accident so could not work for a long while. He is back at work and things are working out slowly. I hate stuff like this.

It wouldnt surprise me after he works through his problems, that he doesnt eventually thank you from choking off his opportuntity to borrow that much. Assuming he doesnt get the loan through other avenues.

 

[growing_older]

How could a guy with 2M saved, plus a full 25-year service pension, plus SS run out of money in only 10 years? Are you sure this was not a stranger posing as him? What kind of emergency trip requires cash payment and not put on credit card? This doesn't seem to add up.

 

[East Texas]

I need a moment for my co-signing rant. We don't co-sign for anyone. Period. That means anyone. Double period. Anyone who needs a co-signer or a family / friend to loan them money probably has bad credit. That's a strong message they are not able to manage their finances. I sure don't want to take on someone else's debt when they default. That's the risk one takes with co-signing.

I realize bad things happen to good people and, as Alan so eloquently discussed, loans are loans and gifts are gifts. When we both were working it was easy to loan the kiddos money because they paid it back. Now that we're retired they know we're not their bank. They need to have enough of an emergency fund to cover.... emergencies (my definition, not theirs).

I also agree with how Walt handled the situation with his niece. It's basic economics - you have a finite amount of money. How do you want to spend it? Basic necessities or "other".

 

[bruce1]

It wouldnt surprise me after he works through his problems, that he doesnt eventually thank you from choking off his opportuntity to borrow that much. Assuming he doesnt get the loan through other avenues.

That is my hope. Re the cousin that was in the accident that was an outright gift and my idea.

 

[caninelover]

This thread was really interesting. I'm fortunate that my immediate family and my cousins are all financially responsible and live modestly. If any of them did ever approach me for a loan, I would probably try and help, partly because I know they work hard & don't squander their money, so it would have to be some really dire circumstance anyway...

Most friends though, I would not loan money to, or maybe only a small amount that I didn't care if it was paid back or not. My friends are all over the spectrum in terms of their finances, with some quite responsible & together, and others that are more hopeless...for those friends it is hard, as time goes on, because although I don't care much about their means (I'm happy to do many frugal/inexpensive things, have them over for dinner, etc), I also like to do things that cost money (e.g. travel), and I find that it cause a lot of resentment because they can't do some of those things. I have one friend in particular who seems to be hung up on vacations/trips I take, to the point where it makes me a little uncomfortable. I try to just avoid the conversation of the costs and move onto something else, but it is to the point where I keep this friendship at arm's length now for this specific reason.

 

[John Galt III]

Old friend, was my college roommate, went on to a bohemian bare-bones life, recently asked for $1,500. Very awkward. He seemed stunned when I said no. I suspected drugs. I gave him $100. He said he would pay me back. I don't expect it.

 

[jazz4cash]

My older brother who receives a pension from Fortune 500 after over 25 years there, full SS, and he also works parttime presently in clinical counseling. Has no kids, no expensive house repairs, no health issues, etc. just called me yesterday to borrow $2000 from me so his wife can go overseas to see her family (some kind of emergency). I am sending him $1000 instead of the full $2000 that he asked for because I don't want to set precedent that I would send whatever amount he happens to ask for. What are everybody's thoughts on this, please share candidly. I am a little disappointed at my older brother's inability to manage his own money. Back in 2001 he already had a nest egg of over $2 Mils. Now he is completely broke. Should I lend him money when my older brother asks for it? Or should I lie? Tell him that I have financial problems of my own (saving for FIRE!)? Any thoughts/advice would be greatly appreciated.

He'll probably just request double the amount he actually needs, anyway.

 

[kyounge1956]

I just dont get how people can borrow money from friends or family and not pay it off. (snip) I dont understand why they cant just be honest and upfront on the ability to repay!

My guess is it's embarrassment, fear, denial or a combination. They're ashamed to admit how bad their finances really are, they fear they will get nothing if they ask to be given the money rather than borrowing it, and/or they are deceiving themselves and think they will be able to pay it back when they actually have little or no ability to do so.

 

[Nords]

This thread was really interesting. I'm fortunate that my immediate family and my cousins are all financially responsible and live modestly. If any of them did ever approach me for a loan, I would probably try and help, partly because I know they work hard & don't squander their money, so it would have to be some really dire circumstance anyway...

I'll say it again, people who see how spouse & I are dressed and how we're enjoying our beach-bum lifestyle are probably concerned that we're going to ask them for a loan...

 

[Redbugdave]

I find that it causes a lot of resentment because they can't do some of those things. I have one friend in particular who seems to be hung up on vacations/trips I take, to the point where it makes me a little uncomfortable. I try to just avoid the conversation of the costs and move onto something else, but it is to the point where I keep this friendship at arm's length now for this specific reason.

Canine...I have a couple "friends" just like that. And have learned to do just as you. I get the feeling that those people seem to be competing with me in their own minds. I am not a competitive type of person and do my own thing. I don't think they "get it". With our society today...sports, work, etc...some are blinded by that competitiveness and just cannot be free enough inside to let go and be themselves.