Loaning Money Dilemma

[sk!mom]

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[zurgswife]

NOpe....While we don't live debt free I'd never ask anybody to help me pay for my fun stuff....I make a decision and it is my responsiblity to pay for it...

 

[buzzlady]

You shouldn't feel bad. As you said, you've already been burned a few time.

 

[oogieboogie]

You're not a BANK! You're not a PAYDAY LOAN!

There... I've said it. If you are going to lend him money, then do as a bank would do.

Put everything in writing - from how much you're lending him, how much payment is per month, what is the interest rate (if any), and when he's going to pay it. Plus what would happen if he was late on the payment (like late charges etc)

Make up a contract with him, have it signed by both parties, and notarized! Once notarized this becomes a legal binding contract, and if he decides not to pay you, you have legal recourse and you can sue, file for garnishments, put a lien etc. (Worst case scenario here)

I think the problem with lending money to relatives is that it's too close of a relationship and the relatives think that you won't ask for the money back if they're late with the payment, etc.

JMHO!

 

[N.Bailey]

We've loaned money to BIL before too and have never gotten it back. If it was truly a life or death situation, that would be a different story, but I would feel no guilt telling my BIL no otherwise.

 

[phillybeth]

I don't borrow money, and I don't lend it. Of course, for true emergencies I will bend the rules- serious illness and unable to work, etc. Of course, if I had plenty to give, you know, like hitting the lottery, I would be generous, but that would be a gift with no expectations of repayment.

 

[gymnasticsmom68]

Just say no, what did he want to borrow the money for? Remember, if you loan it, prepare for it to be a gift.

 

[sk!mom]

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[Lisa F]

If they are selling their old house to move into a new house, then I don't think that it's necessarily a frivilious request. Coordinating a purchase and sale at the same time is pretty difficult and it's stressful when you have to close and be out of your old house before you can close and move into your new house. I also know that if they are trying to have that much cash and equity tied up in two houses for that week, it could stress the resources of someone who is not really frivilous with money.

From your original post it sounded like they wanted to borrow money to buy a big screen tv or a new car when their old one works fine or something like that. Of course it's still your decision whether or not to lend them the money but if this were a person I cared about and it could make their life less stressful by lending them the money for a week, I would (and I have). We did write up a contract so that everyone felt better about things. On the other hand, if they are selling a house to pay you back and something goes wrong with the sale of that house, it would be impossible for them to pay you back until they actually sell the house. You'd have to be OK with that, and it doesn't sound like you are.

I know everyone says "never lend money" but frankly, I have more than once and I just can't imagine why its such a big deal... though I guess I'm lucky to have great family and friends.

 

[AirForceRocks]

Originally posted by gymnasticsmom68
Just say no, what did he want to borrow the money for? Remember, if you loan it, prepare for it to be a gift.

I was just going to say the exact same thing!!! On the few times that family/friends have borrowed money, no matter what payment arrangements were made, we always just assumed we wouldn't get the money back. Except for my late BIL, we always eventually were repaid, but we found that it made for much less stress and fewer hard feelings if we just left open the possibility that we would never see it.

 

[gymnasticsmom68]

Originally posted by Lisa F


I know everyone says "never lend money" but frankly, I have more than once and I just can't imagine why its such a big deal... though I guess I'm lucky to have great family and friends.

I don't have a problem lending money, I just think if you consider it a gift, getting it back is a bonus. If I can't afford to give it away, I say I just can't do it.

 

[diznee25]

I have 3 rules about family:

1. Never borrow money
2. Never lend money
2. Never work together or get into business together (My father and Uncle tried this and it put a riff in their relationship, just as lending money would.)

It's not rude to say no. I'd rather keep my family relationships in tact, then to jeopardize it by lending or borrowing money. In my opinion, your brother was rude to put you and your husband in that position. Please don't take that comment personally. I'm sure your brother is a great guy. But I believe asking family for money is rude.

Diznee25

 

[Disney Doll]

I live by the 2 adages "if you lend money, consider it a gift" and "don't lend money you can't afford to lose". If the person pays you back, it's a bonus. If they don't, you've given them a gift. Then you can decide whether to lend them money again when they ask you again.

But if you're the type that wouldn't be able to let non-pay-back go, then don't lend.

 

[Eeyore1954]

Originally posted by Disney Doll
I live by the 2 adages "if you lend money, consider it a gift" and "don't lend money you can't afford to lose". If the person pays you back, it's a bonus. If they don't, you've given them a gift. Then you can decide whether to lend them money again when they ask you again.

But if you're the type that wouldn't be able to let non-pay-back go, then don't lend.

BTW, you are not a jerk for not lending the money. Fool me once, shame on you; fool me twice, shame on me. You've learned your lesson well.

 

[Toby'sFriend]

if lending the money makes you feel uncomfortable, then you shouldn't do it.

Our family is pretty much the same way, when they call for money we pretty much know we won't get it back.

 

[jkovick]

Don't feel bad about not lending them money! In the long run you may very well have SAVED a relationship because so many families end up in big problems over things like that. Look on it as a smart family preservation decision!

 

[sk!mom]

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[gymnasticsmom68]

Please don't think that we are totally cold-hearted.

I don't think you're being cold hearted at all. Say no, and don't feel even slightly guilty about it. Saying no is absolutely the right thing to do, I know I wouldn't loan them the money.

 

[oogieboogie]

Originally posted by sk!mom
Please don't think that we are totally cold-hearted.

You're not and don't ever think you are.

In fact, I think you're marked as an easy target by your relatives! "Yeah, just go to sk!mom... she'll give us the money" type of mentality needs to be broken by saying "NO" and meaning it!

Just tell them, sorry you can't do it! And stick to it!
Good luck.

 

[Lisa F]

BTW, I'm not saying that you SHOULD lend them the money... I'm just saying that there are some circumstances where I'd feel more comfortable about lending money than others. In the case of tiding someone over between the purchase of their new house and the sale of their old house, I would be pretty confident in getting the money back (yes, I've done that before) because you KNOW where the money is coming from.

On the other hand, if someone were borrowing money and you have no idea whether they will ever be able to pay you back (for whatever reason) then yes, I would consider it a gift if given at all. If they are the type to decide that rather than paying you back they's rather put a pool in, or redo their kitchen or something like that, then yes, you should consider it a gift if you lend money to them at all. If they are borrowing the money to live above their means, then I would not lend it to them... however, it doesn't make a person financially irresponsible to rely on at least part of the equity from the sale of their old home in order to close in their new one.

BTW, I don't even know that this is the situation... I'm just making a guess based on the info that the OP shared. IMO this type of loan is a lot less risky than any other type of a loan because you know where the money to repay you is coming from. Of course if they are not the type to pay you back at all, any type of a loan is risky.

Edited to add since our posts crossed: If they are buying new furniture then obviously they don't care THAT much about closing in their new house early. You're not being cold hearted at all... the fact that you are second guessing what is a wise decision actually says the opposite, your heart is probably a little too big for your own good.

Life is all about making choices and tradeoffs and it's REALLY unfair of them to expect that you will make it possible for them to "have it all" if they are not able to do so on their own.