Relative Needs Money - What Would You Do?

[Bryan Barnfellow]

Wow, reading all of these (and reflecting on my own stories, which I'll spare you from), I couldn't help thinking about a Seinfeld episode with this snippet of conversation:

Elaine: People!
Jerry: They're the worst...

 

[Independent]

I feel queasy writing about this because it feels like it should be kept private, but I need to vent and that FIRE thing we all have in common is really an important part of this.

[Heavy sigh] Thanks for letting me vent.

I hear you. We have a similar problem.

DW brother and sister-in-law just skating by on low income. The brother had been a real help with DW's mother before she died. The wife was going to community college so she could get an LPN and increase her income a little. Could they borrow some money for a few months until she got the certificate?

Sure, hundreds of dollars per month for a few months while she's in school, we can do that. Well, she got seriously ill (hospitalized) and dropped out of school. Back into the job market in 2009, can't find a job. BIL is working for a long time friend, who drops dead of a heart attack. No job and no unemployment insurance. BIL is a hard working guy who gets back to work, part time at first, eventually full time. SIL, not so much. She decides to apply for SS disability. Long wait for decision, and then no ....

We're finally starting to do the traveling I had been looking forward to. Trip to Hawaii one year, cruise the next. We look rich to them.

Eight years later. BIL has had a full hip replacement (ins covered medical costs, but we replaced his income), and had surgery for prostate cancer (same story). And, somehow they never were able to make it on just his income while he was working. And, my wife can't say no to her baby brother, who really is a nice, hard-working guy who has been unlucky in life (except that the wife was, IMO, poor judgement, not bad luck).

We're into this for six figures. Fortunately, we never paid for really big medical bills. But, that money was my retirement travel budget! If I had a time machine, we would have said "We want to see your actual spending every month" I finally pushed for that, they got into more arguments about money, and she has filed for divorce. I'm breathing a little easier, but I don't think we're done with this.

As you can see, I've got no good advice. Just taking my chance to vent.

 

[Ready]

I hear you. We have a similar problem.

Fascinating story...all of them actually. I feel bad for you for having to deal with all of this. I guess we all have at least one family member or friend with a hard luck story. And yes, we all feel guilty about taking our vacations while they are struggling. I don't know what the answer is. But it's not an easy thing to deal with.

 

[growing_older]

I loaned some money to a friend. Not a life changing amount, but thousands. We tried to be official with a written agreement of the terms and schedule to repay. I braced myself to consider this a gift, if needed, and I never asked or reminded him about the debt. He repaid exactly on time with no problems at all. Except it somehow changed the dynamic of the friendship and he never wanted to do things together anymore. We drifted apart.

I have an in-law who secretly quit her job, ran through her life savings while letting the family think she was still employed, and is now destitute. Her story is out in the open now, and perhaps there is some mental illness as well. If we help her, we know this will be a gift. She has no professional prospects anymore and no chance of more than basic employment, if she can even get herself to do that. There will be no loaning of money here, although there might be some group financial support offered, especially if we can convince her to try to get some treatment.

 

[Sunset]

Fascinating story...all of them actually. I feel bad for you for having to deal with all of this. I guess we all have at least one family member or friend with a hard luck story. And yes, we all feel guilty about taking our vacations while they are struggling. I don't know what the answer is. But it's not an easy thing to deal with.

I don't feel guilty about vacations as I worked hard and saved hard. Besides my relative that needs money has gone on many more cruises than we have, even if she had zero savings.

Her philosophy is if you have $$$, it's spending time because you can't take it with you..

 

[luckydude]

The following story happened to my mom’s friend and her husband years ago.

The husband had been friends with a guy since childhood; they grew up and went to school together and were best buds for 20+ years. One day this guy wanted to start a business and asked the husband to co-sign a business loan, so the husband put up his house as collateral for the loan. After the guy got the loan, he skipped town with the money and was never heard from again. Then the bank came knocking and repossessed the house.

The husband just couldn’t get over the fact that his best friend of 20+ years scammed him. One day his wife (my mom’s friend) came home and found him dead from an apparent suicide. She gamely carried on with life after her husband’s death for the sake of their two young sons but was never the same.

I heard this story when I was a kid and the lesson stayed with me all these years: never, ever trust anyone with my money, no matter who it is. Don’t borrow money from anyone and don’t lend money to anyone.

My best wishes to OP, but if I were in her shoes, I would not lend a dime.

Lucky Dude

 

[traineeinvestor]

Reading the experiences shared on this thread makes me appreciative that my siblings are both financially responsible people with financially responsible spouses.

It also serves as a reminder to lay the groundwork for managing future requests (if any) by suggesting to people now that we are not as well off as early retirement suggests. Time to bore people by talking about our mortgage and the school fees.

 

[splitwdw]

We have a new strategy for dealing with requests for money from family or friends that ask for a loan and aren't responsible, we lie. We tell them that "We're already helping someone else and can't afford to help them right now, maybe another time". We've lent in the past, some times repaid and sometimes not.

 

[HadEnuff]

We have a new strategy for dealing with requests for money from family or friends that ask for a loan and aren't responsible, we lie. We tell them that "We're already helping someone else and can't afford to help them right now, maybe another time". We've lent in the past, some times repaid and sometimes not.

I think this is a great strategy. Another variation is "we had some large unexpected expenses, and we just aren't in any position to help you right now with money"....which gets away from "why can you help someone else but not me"... but I would have no qualms about just fabricating some "alternative facts".

We just say "no". We just aren't in a position to "lend" money without sacrificing stuff we aren't willing to sacrifice.

 

[ivinsfan]

We have a new strategy for dealing with requests for money from family or friends that ask for a loan and aren't responsible, we lie. We tell them that "We're already helping someone else and can't afford to help them right now, maybe another time". We've lent in the past, some times repaid and sometimes not.

So why would you lie instead of just saying No? This tells the person you do lend money and someday you might lend them some, when you have no intention of doing so. Why do you try to justify your No?

 

[DustyMom]

One more update (probably last) from the OP:


We met with them last night. Asked if they had a plan. BIL said they were going to file bankruptcy, it was their only option, then put the house on the market when he has recovered from his surgery a bit (still has an open wound in his stomach). They are working on filing for Medicaid. He said all the right things, but seemed a bit breezy about the whole thing (although that could have been a defense mechanism to avoid showing how stressed they are). SIL was more quiet, more skeptical that it was all going to just work out. They were both emphatic that they needed to get rid of the house, said they've known that for a while. So, we're relieved that they appear to have a plan, but we shall see. They need to follow through. We also know they are still hiding the full extent of the problem (embarrassment?). They are not tech-savvy, so I'm sure they don't realize what can be discovered by a simple search of public records online. We left them with an envelope of $'s to help out for the next couple of months while he heals and they get the ball rolling. We had already decided to gift them with this amount prior to all the medical drama as a "bonus" for all the help working on our house over the last 15 years. Granted, it was his trade and we paid him, but he showed up whenever we needed him, weekends, holidays, while we were on vacation, etc. We're selling the house, so his help will no longer be needed (which is another gut punch for them since we were a bit of a safety net in terms of work/income over the years - something we figured was win/win for both of us.)


In any case, if we see they are taking the appropriate steps in the coming months, we could be prepared to offer more aid for specific situations (pay a lawyer, need security deposit for apartment, need help getting house ready for sale, etc.) If they don't follow through with the plan, no more help, but we will let them know why. Fingers crossed.


Thanks to all for listening.

 

[brett]

It is a good first step.

I have a SIL and BIL who will be there very shortly only they either don't know it yet or are in denial. No mother around any more to bail them out and the last of the inheritance was spent on a new car.

If they approach us, I have already decided that my take will be to not offer any assistance until they have met with a non profit credit counselling in their community. Theirs is a long term issue that a quick fix to gain them a few months will not solve. Not about to throw good money after bad that at the end of the day does not solve their real issue.

 

[Shanky]

If the situation was reversed. They had money, you needed help, would they help? If your honest answer is yes, then find a way to help. If you think they would be selfish and would ignore your plight, you can justify not helping, or you can rise above it and help anyway. Help does not have to mean money. It might be a place to live, food, your time, or even a kidney.

 

[travelover]

So why would you lie instead of just saying No? This tells the person you do lend money and someday you might lend them some, when you have no intention of doing so. Why do you try to justify your No?

One reason might be to cushion the blow to the ones hoping for a handout. While I have little sympathy for leaches, the rejection they feel is real, even if deserved. I'd be tempted to use this white lie if it helped diffuse the immediate situation.

 

[Texas Proud]

The following story happened to my mom’s friend and her husband years ago.

The husband had been friends with a guy since childhood; they grew up and went to school together and were best buds for 20+ years. One day this guy wanted to start a business and asked the husband to co-sign a business loan, so the husband put up his house as collateral for the loan. After the guy got the loan, he skipped town with the money and was never heard from again. Then the bank came knocking and repossessed the house.

The husband just couldn’t get over the fact that his best friend of 20+ years scammed him. One day his wife (my mom’s friend) came home and found him dead from an apparent suicide. She gamely carried on with life after her husband’s death for the sake of their two young sons but was never the same.

I heard this story when I was a kid and the lesson stayed with me all these years: never, ever trust anyone with my money, no matter who it is. Don’t borrow money from anyone and don’t lend money to anyone.

My best wishes to OP, but if I were in her shoes, I would not lend a dime.

Lucky Dude

This story just reinforces one of the main rules in lending.... never lend more money than you lose and still be OK....


Even my friends of 40+ years would not get me to put up my house for him...

 

[Sunset]

One more update (probably last) from the OP:


We met with them last night. Asked if they had a plan. BIL said they were going to file bankruptcy, it was their only option, then put the house on the market when he has recovered from his surgery a bit (still has an open wound in his stomach). They are working on filing for Medicaid. He said all the right things, but seemed a bit breezy about the whole thing (although that could have been a defense mechanism to avoid showing how stressed they are). SIL was more quiet, more skeptical that it was all going to just work out. They were both emphatic that they needed to get rid of the house, said they've known that for a while. So, we're relieved that they appear to have a plan, but we shall see. They need to follow through. We also know they are still hiding the full extent of the problem (embarrassment?). They are not tech-savvy, so I'm sure they don't realize what can be discovered by a simple search of public records online. We left them with an envelope of $'s to help out for the next couple of months while he heals and they get the ball rolling. We had already decided to gift them with this amount prior to all the medical drama as a "bonus" for all the help working on our house over the last 15 years. Granted, it was his trade and we paid him, but he showed up whenever we needed him, weekends, holidays, while we were on vacation, etc. We're selling the house, so his help will no longer be needed (which is another gut punch for them since we were a bit of a safety net in terms of work/income over the years - something we figured was win/win for both of us.)

In any case, if we see they are taking the appropriate steps in the coming months, we could be prepared to offer more aid for specific situations (pay a lawyer, need security deposit for apartment, need help getting house ready for sale, etc.) If they don't follow through with the plan, no more help, but we will let them know why. Fingers crossed.

Thanks to all for listening.

Frankly, I think it was a mistake to give a couple of months worth of cash. It will all be blown in the next few weeks on "needed" things like restaurant meals, movies, etc.

They really don't sound like they have much of a plan, (sell the toys, preserve IRA/401K via bankruptcy, name of bankruptcy lawyer, total list of debts, etc)

Yeah call me cynical

I'll bet they are back to the money trough (that's you) within weeks.
I could go on, but it's not a happy story, I really hope I'm wrong but throwing $$$ into a bankruptcy is just a waste.

 

[fancy free]

Timely article:

“You might think—or at least hope—that a polite, openly religious person who gives his word would be among the most likely to pay back a loan. But in fact this is not the case. This type of person, the data shows, is less likely than average to make good on their debt.”

“Generally, if someone tells you he will pay you back, he will not pay you back. The more assertive the promise, the more likely he will break it. If someone writes ‘I promise I will pay back, so help me God,’ he is among the least likely to pay you back. Appealing to your mercy—explaining that he needs the money because he has a relative in the ‘hospital’—also means he is unlikely to pay you back. In fact, mentioning any family member—a husband, wife, son, daughter, mother or father—is a sign someone will not be paying back. Another word that indicates default is ‘explain,’ meaning if people are trying to explain why they are going to be able to pay back a loan, they likely won’t.”

How to Predict If a Borrower Will Pay You Back

 

[daylatedollarshort]

Dustymom, I'm glad you found a middle road on helping out. I hope your BIL and SIL do follow through with their plan and things work out for them.

 

[Music Lover]

Both of my siblings are financially responsible, as well as my parents so I have no worries there about being asked for money. I do have a couple deadbeat cousins, but if they asked for money the answer would be an immediate NO. I'm not willing to lend money to someone that a bank doesn't trust enough to float a loan. And, not surprisingly...these 2 deadbeats are the same 2 people who are always "busy" when family gets together to build a deck or do some other home reno project.

 

[Aerides]

OP having read from page one, I would have done the same on your shoes.

A "gift" that equals reasonable time, and then that's it. Hoping that before it runs out, you have sold your house, got your RV, and ridden off somewhere more fun. They know what to do. I do not know that selling their house will help, bet you anything it's underwater.

The best part of your story (silver lining, if there is one) is that you and your DH appear in lock-step on your approach. If you differed, this would be far trickier to navigate.

You should feel zero guilt or responsibility going forward from here. You also must know you are not the only person hearing their story and helping them out. They likely have a few revolving doors setup (yours just might be the shiniest one).

 

[MBAustin]

Dustymom, I'm glad you found a middle road on helping out. I hope your BIL and SIL do follow through with their plan and things work out for them.

+1

And thanks for starting this very interesting thread that I think has been helpful to many folks here.

 

[prudent_one]

I have lent to siblings who have never repaid or even mentioned repayment. One sibling's family has twice our income and needed an emergency $5K years ago to fix a roof that was about to fall in. I lent hundreds to a friend who was so broke he was eating next to nothing, then he got a $36K disability backpay settlement and still repaid nothing. I know responsible people can't understand how people who were in a fix can so cavalierly blow off repaying loans, but I have come to understand their way of thinking.


It's this:
You had money when they didn't. Obviously you don't need money, and you'd have to be a jerk to hound them to repay the loan because you don't need the money. Why, if THEY had money and YOU needed some, they'd be right there for you! And they wouldn't be so petty as to be upset about not getting paid back until it was convenient for you.


That's how they think. In their minds, they imagine that the tables could be turned and to justify their non-repayment, they convince themselves that they would never hound you for repayment until you were ready. Because they are never going to be "ready" to repay.

 

[Texas Proud]

I have lent to siblings who have never repaid or even mentioned repayment. One sibling's family has twice our income and needed an emergency $5K years ago to fix a roof that was about to fall in. I lent hundreds to a friend who was so broke he was eating next to nothing, then he got a $36K disability backpay settlement and still repaid nothing. I know responsible people can't understand how people who were in a fix can so cavalierly blow off repaying loans, but I have come to understand their way of thinking.


It's this:
You had money when they didn't. Obviously you don't need money, and you'd have to be a jerk to hound them to repay the loan because you don't need the money. Why, if THEY had money and YOU needed some, they'd be right there for you! And they wouldn't be so petty as to be upset about not getting paid back until it was convenient for you.


That's how they think. In their minds, they imagine that the tables could be turned and to justify their non-repayment, they convince themselves that they would never hound you for repayment until you were ready. Because they are never going to be "ready" to repay.

LOL... probably correct....

I watched a judge show and one guy had told the person who lent them money that the lender would never be out of money as long as he owed him.... kinda lines up with what you say...

 

[Hermit]

Timely article:

“You might think—or at least hope—that a polite, openly religious person who gives his word would be among the most likely to pay back a loan. But in fact this is not the case. This type of person, the data shows, is less likely than average to make good on their debt.”

“Generally, if someone tells you he will pay you back, he will not pay you back. The more assertive the promise, the more likely he will break it. If someone writes ‘I promise I will pay back, so help me God,’ he is among the least likely to pay you back. Appealing to your mercy—explaining that he needs the money because he has a relative in the ‘hospital’—also means he is unlikely to pay you back. In fact, mentioning any family member—a husband, wife, son, daughter, mother or father—is a sign someone will not be paying back. Another word that indicates default is ‘explain,’ meaning if people are trying to explain why they are going to be able to pay back a loan, they likely won’t.”

How to Predict If a Borrower Will Pay You Back

If you have to rely on an article to determine who to lend to, especially one with that kind of a quote, I would say it is best to stay out of the lending business.

 

[JG in Hangzhou]

No good deed goes unpunished. Especially when it comes to lending money to family.
I agree with some earlier advice. If you feel you have extra, just give it. If a family member really can, they will give it back, just don't expect it.

You might find another more deserving family member and give them some money. Like a niece getting ready to go to college. They will appreciate it more and are more likely to pass on the favor when they get old.

Better to pass on good behavior, rather than bad.
That being said, you can still have them over for dinner when they are short money or help him find some work that doesn't require being mobile.
You can't beat yourself up for other people's poor planning.
Don't pick them up (give money), but you can lend a hand (advice,support).