Would you loan money to a family or friend?

[Rianne]

There are two members of my family, one from my DH side and one from mine that I have a feeling are going to ask us to loan them money.

Both are poor money managers. It's part of their personalities. My family member enjoys vacations and just does not know how to budget. I've offered subtle hints on how I budget and pull the strings when I need to. They seem offended by this subtle advice so I rarely bring it up.

My DH family member is just plain stupid about money. His credit is terrible and he's in debt to his eyeballs.

I rue the day this happens, I just know it will. My gut says "no" we'll never see the money again.

[Walt34]

Under the circumstances you describe, no way would I loan them any money.

[Blue Collar Guy]

Quote:

Originally Posted by Rianne There are two members of my family, one from my DH side and one from mine that I have a feeling are going to ask us to loan them money. Both are poor money managers. It's part of their personalities. My family member enjoys vacations and just does not know how to budget. I've offered subtle hints on how I budget and pull the strings when I need to. They seem offended by this subtle advice so I rarely bring it up. My DH family member is just plain stupid about money. His credit is terrible and he's in debt to his eyeballs. I rue the day this happens, I just know it will. My gut says "no" we'll never see the money again.

We had a thread on this before you joined. Ill look for it. But my brother in law asked me for a "loan". I said no.

[38Chevy454]

Unless you want to gift the money, that is the end result if you "loan" the money. I would tell them no and not support their poor financial habit.

[Rianne]

Quote:

Originally Posted by Blue Collar Guy We had a thread on this before you joined. Ill look for it. But my brother in law asked me for a "loan". I said no.

Thanks Blue. I need counseling on how to say no. Would appreciate the thread.

[aja8888]

Quote:

Originally Posted by Rianne Thanks Blue. I need counseling on how to say no. Would appreciate the thread.

Say ........"I'd be glad to (loan/give) you money, but all our (my) money is invested and I can't take it out of the accounts without paying a stiff penalty".

[marko]

My millionaire grandfather wouldn't loan (or gift) us a dime if our lives depended on it. My family grew up just thinking that way. "Let's not embarrass everyone by even thinking about asking".

DW's family on the otherhand... well, it's been a learning experience for me.

We never loan money to her relatives. Ever! A loan implies that payback is expected and that is so far from their reality it isn't funny. We just give it to them, never expecting it back and they live up to our expectations nicely.

[euro]

Quote:

Originally Posted by 38Chevy454 Unless you want to gift the money, that is the end result if you "loan" the money. I would tell them no and not support their poor financial habit.

This! Happened to me with DW's family. However, since it was a relatively small amount ($1500), I agreed to "lending" the money but basically knew it would never be paid back. Sure enough, after 10+ years, we are still waiting.... For a while, they bothered with providing occasional updates on why they haven't paid back and that repayment was imminent, but over time, they stopped caring (stopped being embarrassed about it, I suppose).
Anyway, like I said, I expected to get chipped, so no big deal. I WILL say though that it has almost certainly kept them from asking for more (they are still as broke as ever, but apparently are tapping others now... )

[Blue Collar Guy]

Quote:

Originally Posted by Blue Collar Guy my brother in law( Wifes brother) asked me for a 80k loan. he continued to talk and told me they would repay me in 15 years when their mortgage was paid off. This request took me totally off guard, i thought they were coming over for coffee and cake. At the time we had about 1.1 million but the article had come out. I told him i was sorry and i hope we can still be friends, but my money was all invested and i cant touch it, and i further said i can not co sign anything i might have to free up my credit for cosigning some thing for our son. These 2 things were not true. As they pulled out of my driveway with their Cadillac, and headed home to their house on long island i thought, gee glad i didnt get a new caddy till i could pay off my house. Or maybe it was the 2nd home in Florida that my mother in law gave them the down payment for. Could it be they want to repay my mother in law for the 10 G's she lent them to fix up their basement? I dont know , but when we lived in a 3 room apt for 17 years i dont remember anyone shelling out the greenbacks for us. LBYM,

This was my answer from another thread. The thread was about something else, but I some how took it on another tangent.

[Badger]

I don't think you would be helping either of them by loaning money. It sounds as if they need to figure this out by themselves. The idea of loaning them money has a good chance of creating a riff and they may stop speaking to you as well as you would never see your loan repaid. Better to just give them the money and grit your teeth when you see them sail away on a cruise.

Cheers!

[Rianne]

I know! I want to tell them to write every dam penny they spend on a piece of paper. Does it equal what you put in the checking account? Does it match your net bring home pay. If there is left over, do you run to the store and spend it? Drives me nuts.

They think we're cheap because we don't spend like there's no tomorrow. And now we're retired and they're not. This is one of the most difficult things to face from family.

[Sojourner]

Well... it depends. Of course I would loan (or just give) money to a member of my immediate family if it was clear they were in desperate need and it wasn't part of a pattern of financial ineptitude. Thankfully, I've never been asked and would be quite surprised if I ever were.

I was, however, asked for loans by a couple different friends many years ago. In one case, it was a good friend who had gone through a rough patch with a divorce and some medical problems, and I decided to loan him some money.
He had a steady job and a good income, so I thought the odds were pretty good I'd get repaid on time. Unfortunately, he died before repaying me the money. Really tragic story. The other case turned out much better, where a good friend asked me for a loan for his small business and that one was repaid in full, including interest. So there are situations where it can work out well.

[youbet]

Quote:

Originally Posted by Rianne two members of my family, one from my DH side and one from mine that I have a feeling are going to ask us to loan them money.

You're making way too much of a deal out of this. Way, way too much. Your "feeling" may never come to pass. And if it does, you just say no. If there are children going without food or medical care involved, that's another issue. But, as you describe it, a simple "no" covers it.

Quote:

I've offered subtle hints on how I budget and pull the strings when I need to. They seem offended by this subtle advice so I rarely bring it up.

Good job! Just improve this from "rarely bring it up" to "never bring it up" and you'll be set.

Quote:

I rue the day this happens, I just know it will. My gut says "no" we'll never see the money again.

Again, stop punishing yourself. Unless children or a life-or-death situation that you haven't mentioned are involved, it's no problem. There are limitless reasons why some relatives can be a pita and this situation is only one of them.

If there are children involved and you see issues of malnutrition or inadequate medical care, that's a completely different story and would call for your involvement in some appropriate way.

[Sojourner]

Quote:

Originally Posted by aja8888 Say ........"I'd be glad to (loan/give) you money, but all our (my) money is invested and I can't take it out of the accounts without paying a stiff penalty".

This is pretty much exactly what I'd say if I had any doubts about loaning someone money. Most people who would ask a friend or family member for a loan are likely to be somewhat financially unsophisticated, so they wouldn't know enough to question this or come up with any reasonable or compelling retort.

[Nemo2]

Quote:

Originally Posted by aja8888 Say ........"I'd be glad to (loan/give) you money, but all our (my) money is invested and I can't take it out of the accounts without paying a stiff penalty".

+1 That'd be our response exactly.

(BTW...how's Mrs aja doing?)

[Tom52]

I have loaned money to friends and family a few times and was always paid back. If a family member asked for a loan and I thought I would never be repaid I would figure an amount that I would be willing to accept would never be repaid and preface the loan as one time only. If I was not repaid as expected they would know to never approach me in the future. My money well will have fun dry. I am talking $500 or less. Beyond that I would not consider a loan if they are a bad risk.

[youbet]

Quote:

Originally Posted by aja8888 Say ........"I'd be glad to (loan/give) you money, but all our (my) money is invested and I can't take it out of the accounts without paying a stiff penalty".

Why not just be truthful and get it out on the table? Just say "no, sorry, I don't lend money because it often creates hard feelings." Then consider whether it is a bonafide emergency (especially involving children) and if it is, consider a gift adequate to take care of the current threat.

Your answer says that you're willing to lend the money but can't because of temporary, technical reasons. You're just asking to be asked again and again. Saying "I'd be glad to loan you money" when actually you'd hate loaning the money has to have a bad ending someplace down the road

Just tell it like it is, honestly and sincerely and I bet you'll have a better long term relationship with the person than beginning with a fib.

Here's an example of when to give........ I've paid for some dental work for my cousin's child. She clearly couldn't afford it, the child was paying the price and once aware of the issue, I wanted to help. I helped her locate some aid from the county and they paid for some basic work based on her financial status. Afterwards, I stepped in and paid for some cosmetic work the country wouldn't cover. All is OK today. I never, ever, not once, not ever, never mention it to my cousin or her daughter.

[aja8888]

Quote:

Originally Posted by youbet Why not just be truthful and get it out on the table? Just say "no, sorry, I don't lend money because it often creates hard feelings." Then consider whether it is a bonafide emergency (especially involving children) and if it is, consider a gift adequate to take care of the current threat. Your answer says that you're willing to lend the money but can't because of temporary, technical reasons. You're just asking to be asked again and again. Just tell it like it is, honestly and sincerely and I bet you'll have a better long term relationship with the person that beginning with a fib. Here's an example of when to give........ I've paid for some dental work for my cousin's child. She clearly couldn't afford it, the child was paying the price and once aware of the issue, I wanted to help. I helped her locate some aid from the county and they paid for some basic work based on her financial status. Afterwards, I stepped in and paid for some cosmetic work the country wouldn't cover. All is OK today.

Of course, the answer depends on the situation, But in the OP's opening post, she indicated it would be for no good reasons. I gave her an answer that may work for her to not create family problems.

We have a family FULL of people that are living on the edge and have gone through this exercise a dozen times in 20 years. We have bought cars after wrecks, paid bail, paid cable bills, paid medical bills, college loans, etc; however, now we just tell the relatives our money is invested, period. And at 74 years old, I'm pretty much worn out waiting for old "loans" to be paid back.

[CaliKid]

Quote:

Originally Posted by 38Chevy454 Unless you want to gift the money, that is the end result if you "loan" the money. I would tell them no and not support their poor financial habit.

+1

Be strong!

[jim584672]

Gift it or don't do it.