Do you often lend $$ to friends or family?

[Moscyn]

Amongst our sisters, we do gifts when it involves my parents and the family home. If any of my sisters need money, my parents will lend or give the money - they have done before. If I wish to subsidise the lending or giving, then I give to my parents who will give or lend as they wish. I will not directly get involved with the lending or giving to my sisters or their families. If they approach me directly, I'll likely say no. Be prepared that this will be reciprocal and if you are ok with that, then it is easy to say no. I don't think I need to explain the "no" to them. Just say it is not convenient.

 

[JOHNNIE36]

In so much as we are cosigning on the mortgage for SIL and BIL to buy the house, I'm wondering how secure we are if we are not on the deed. I think we should be, as coowners. We won't be making any payments against the mortgage or the taxes for that matter. What happens if they get killed in a car wreck? What happens in the estate? We're still responsible for the mortgage. Should there be a separate documate pertaining to our interest in the property? Any thoughts on this?

 

[donheff]

+1 on KIVA. My wallet is closed to the family parasites, though they bleed off DW every once in a while (we have separate finances).

+1 I invest in KIVA also. It amazes me what people can achieve with a very small start.

 

[smjsl]

In so much as we are cosigning on the mortgage for SIL and BIL to buy the house, I'm wondering how secure we are if we are not on the deed. I think we should be, as coowners. We won't be making any payments against the mortgage or the taxes for that matter. What happens if they get killed in a car wreck? What happens in the estate? We're still responsible for the mortgage. Should there be a separate documate pertaining to our interest in the property? Any thoughts on this?

Even if they are alive but lose their incomes for some reason or a will to pay for the house, would not you be responsible for the taxes and mortgage as well?

 

[HsiaoChu]

Not on your life...... and especially not in retirement.

 

[Duke of Sands]

I am the "big brother that made it" and we have loans out to 3 siblings and a niece. In each case, the situation was dire from their prospective but probably could have generally been avoided by them having improved savings mentalities. Nevertheless we loaned the money because we felt badly for them and the amounts were tolerable (a few $k). We established upfront that we were ourselves borrowing the money to be loaned from our credit union HELOC and we provided them a monthly payback schedule. We could have drawn from our cash reserves but we hoped that the above approach would help insure regular payback and it seemed relatively painless as long their payments to us matched ours to the CU.

Results: all sent their payments to us for a few months but a sister and a brother stopped sending them when the next crises came along. She had medical issues so we didn't press it. When we asked the brother about the first missing payment, the excuse was forgetfulness and it was sent, but that was it, no more came and no explanation. We let it drop at that point, he was in a jam, his business had tanked, but we would have enjoyed a few words of regret at least. On the positive side, one sister and her daughter each are paying us each month, even though they can't afford it any more than the others.

So how do we feel? Harboring some ill feelings about the first two, that's for sure. It's nice to be in a position to help but still some lessons learned. In the future, we won't be so laid back but still will probably help (in dire situations at least), mainly because we can afford to-- and in some way feel it's what my parents would have expected of us.

 

[donheff]

Results: all sent their payments to us for a few months but a sister and a brother stopped sending them when the next crises came along... In the future, we won't be so laid back but still will probably help (in dire situations at least), mainly because we can afford to-- and in some way feel it's what my parents would have expected of us.

I had a similar experience with my niece - lent her $5K when she was in dire straights. She send one payment and then never followed up or mentioned the debt. I wrote it off but I would never lend her another penny and would be stunned if she asked. I would understand you willingness to continue helping if the siblings had been unable to pay back on time but acknowledged the debt and asserted their intention to eventually repay it. But after they just blow you off? I can't understand why your parents would expect you to reward that behavior.

 

[Duke of Sands]

Good point and I guess we would take each case as it comes. I expect that they see it less of a blowoff but more like an poorly communicated expectation of making repayment some day (way off in bro's case since he has 2 kids approaching college). We're still on good terms, at the surface at least. Certainly we'd deny or be a lot tougher on the debt-dodgers, if they even dared to try for more. One good idea proposed by our niece which we gladly accepted, is having e-payment automatically sent via some 3rd party which debits her checking account each month. Not foolproof but maybe more reliable, works well with her at least. I think she knew that she might fall behind sometimes, this helps avoid it.

 

[kaudrey]

I was asked once by a good friend for a month's rent when she was in process of getting divorced about 4 years ago. I gave it, she repaid it about 2 months later. I lent money to my S.O. for his motorcycle because he couldn't get a great rate; he paid it off as scheduled (not sure that counts, though).

Other than that, no one has ever asked me for money. I have certain friends I would lend to, others I would probably say no. Family, I would lend to without question - there aren't that many of them and I trust them all without question.

 

[45th Birthday]

About five years ago I loaned my youngest sister $5,000 paid directly to a divorce lawyer because her husband was pulling some crap and she needed out. Much drama later, they are still together. Over time, she made small payments fairly regularly, but stopped for almost three years. During that time, they took trips, had Christmas cards printed with a picture of the family in full NFL team regalia (I think they had season tickets. One of her kids, younger than mine, had an unlimited text plan on his phone well before we did the same for ours. The list goes on.

This is the same sister who had notes to my parents when they died. My mom was smart to keep them in writing in a place with important papers and these were deducted from the sister's share. This well before my loan.

Recently, she did send a check for about 1/3 of the loan, leaving 1/3 remaining. Maybe there is hope I will get the rest.

A month or so ago, we almost made my in-laws a $35,000 loan so they could put a deposit on an independent living facility. Supposed to be just until they could decide what stocks to sell (a few weeks). Then they wanted to wait until they sold one of their two houses (months-indeterminate). I pulled the ripcord at that point. Since then, they bought one new car to replace a very late model car purchased a year ago, and also a newer used car to replace one that was wrecked.

The lesson for me: if you loan to people you are close to, and you expect to be repaid, you will end up in the undesirable position of judging everything they spend money on in relation to the debt they owe you. Not fun. Unless you can emotionally write the check as a gift without any strings (and financially as well, of course), don't do it. People will almost always have a different view of the priority of the obligation (usually unsecured) than you might.

 

[easysurfer]

45th,

I hear you about the lesson learned. To add more, if you approach the person to remind them of the part they still owe, somehow they try to turn things around and make you out to be the bad guy for asking.

Not all family loans are that way. But some are. I lent about $4000 to my sister to help her with legal bills during a divorce. She did go through with the divorce and as soon as she had some money back, she quickly paid the loan right back. I respect her greatly for that. On the otherhand, I have a brother who I loaned money to get a used car. He made payments for awhile, then conveniently forgot or would only make a payment of $10 here, $20 in two more weeks, etc. finally I decided forget it, and never again will I lend him a penny.

 

[ItDontMeanAThing]

Brother in law once asked me for enough to buy a motorcycle. My response: "I'm sorry, I don't loan money". He pestered me long enough that I lost count of how many times I said the exact same thing, and said nothing else until I said good bye after he did.

It's an Assertivness Training 101 method called Broken Record.

 

[JOHNNIE36]

Even if they are alive but lose their incomes for some reason or a will to pay for the house, would not you be responsible for the taxes and mortgage as well?

Yes we would be responsible; however, under those circumstances they would probably sell the house. We decided that we will also be on the deed. If SIL and BIL should die, then we would be in control of the house and be able to sell it. Otherwise, it would just pass to their heirs and we would not have the control.

 

[Duke of Sands]

The lesson for me: if you loan to people you are close to, and you expect to be repaid, you will end up in the undesirable position of judging everything they spend money on in relation to the debt they owe you. Not fun. Unless you can emotionally write the check as a gift without any strings (and financially as well, of course), don't do it. People will almost always have a different view of the priority of the obligation (usually unsecured) than you might.

Well said, 45th! Same deal here to some extent but in our case it was their smoking that frustrated us the most. Spent a ton more on cigs than what they should have been sending us as loan payments. Oh yeah, and the car for the teenager!

 

[NW-Bound]

The lesson for me: if you loan to people you are close to, and you expect to be repaid, you will end up in the undesirable position of judging everything they spend money on in relation to the debt they owe you. Not fun. Unless you can emotionally write the check as a gift without any strings (and financially as well, of course), don't do it. People will almost always have a different view of the priority of the obligation (usually unsecured) than you might.

+10.

My wife once loaned a few thousand dollars to her brother for him to pay his kid's college tuition. I did not know what the term was, and since it involved her brother I stayed out of it. He finally repaid it without interest a few years later, once his child graduated and had a job.

During that time, visiting him, I saw new TVs, HiFi, PCs, cars being bought. Perhaps my wife's term was "At graduation", or "Whenever you feel like it", and so my BIL took it literally.

I kept my thinking to myself, and did not raise any question. The funny thing is that we had given him money previously (also a few thousand), when he was not doing as well and there was no prospect of him ever paying back. My wife made the latest a loan only because his financial situation was improving. But it also raised my expectations, and caused me to doubt his character. I had to say that he was a good man in all other aspects.

But if I were him, I would repay my debt ASAP. We have borrowed from a friend once in my life when we were just starting out, as described in another thread. We made every attempt to pay that back ASAP before we even thought of buying anything.

We still give money to relatives from time to time, but will never make loans again. And of course, it is great to be in the position that we do not have to ask family and friends for money.

 

[Katsmeow]

When DH and I married he had 3 daughters in their early to mid 20s. Some of them had borrowed from him before our marriage and a couple borrowed from after the marriage. One didn't pay at all, one paid sporadically, the other paid in full. It is many years since those loans. Guess which one would be the only one we would loan to. Guess which one is extremely unlikely to ever need a loan.

I really don't want to encourage loans with my children. To take the other side of the coin, 30 years ago when I was in my 20s and got into credit card debt I asked my parents for a loan. They made the loan. I paid part of it back but not all of it. They bailed me out a number of times. I paid some of it back but not all of it. In retrospect, it wasn't good for me. It would have been much better for me long term if they had told me no early on and I would have had to solve my own problems.

Because of my past experience my own kids are very unlikely to get loans from me except in very dire situations not of their making. I might give them one loan each and if not repaid it would be the last one.

My oldest son is 18 and got in trouble on his debit card (overdraft fees in the hundreds of dollars). We assisted him to go to the bank and talk to get it worked out but he didn't loan him the money. He worked out a payment plan to the bank.

We have loaned him some money for auto repairs with an agreement that he pay us $X a paycheck. So far, he has paid that timely.

 

[In-control]

If you do help - pay a monthly bill

We pay a relatives electric & cable bill. It keeps costs controlled and tracked.