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We've never loaned money to friends or family. One of my sons in law always terrms his requests that way - can you guys loan me $XXXXX? LOL. Yeah, right. I've been married to his father for 8 years and we've not seen any ofthese "loans" repaid. But as many have said before, don't "loan" money to friends or family you can't afford to lose. We both knew these would be gifts regardless of how it was termed, and I don't event want to go back and add the amounts up.
I also regularly subsidize my mother who can't afford her motnhly expenses, but that is a regularly budgeted thing.
The thing is, there is a wide variety of reasons for giving money to friends sand family and thus different things to consider. OP, you indicated you bought a house for a child - well, that is most generous! But more to my point, it is a single thing you are investing in to help your child advance. We invested in my other son-in-law's college education and I think of that in a simialr way as your house. We worry more about the one that needs regular infusions of cash because once we retire in 5-7 years we won't be as able to do that, so we worry and confer constantly about how to break him of any dependency. So, not all contributions are the same.
Honestly, I'm not a fan of this. About 10 years ago, right after my wife and I got married, my father in law asked to borrow $3,000 from us. Mind you, we were tight on money at that time (only kept about that much buffer in our checking account) and were trying to pull ourselves out of debt (credit card/student loans) and we prided ourselves on having good credit as we wanted to buy a house.
At the time, we begrudgingly agreed to give him the money as he said he'd pay us back within 30 days. Well, 30 days passed and he didn't pay. Same with 60 and 90 days. We had to reduce our credit card payments and carry interest (which we paid for) to be able to pay the rent and other expenses. He finally paid us back after about 4 months.
We ended up BARELY making our bill payments, never getting reimbursed for the additional expenses we incurred with our own credit card interest and having to take on the burden/stress of having his financial issues become ours. It did cause some strain on the relationship. For this reason, I've vowed not to loan family members money in the future. Not saying we'd never do this, but would need to look closer at the situation and set up more detailed terms and conditions prior to even considering this.
Its recommended you never lend to close family or good friends for a reason. For me, Family never.
Friends I think it's been about 4 to 5 people. I'll cover 3 of them.
Friend 1: I loaned $200 to like 12 years ago. We were both 17 and he needed money to buy some textbooks. I never told him but it was a gift. I never asked for it back or ever brought it up again. I was sort of shocked he never offered to pay me back. But it was a gift. Today hes still my very best friend and I stood up with him as his best man in his wedding this year. I pretty much forgot about this $200 until this post came up.
Friend 2: was one of my best friends in middle school. Very affluent family. Never asked me for anything in the 10 years or so we were friends. He asked to borrow $1400 for a week until his college loan funds were deposited. He jerked me around for 6 months before paying me back in full. Our relationship has never been the same. He lives a few miles away and we havent spoke much in the last 8 years or so since this happened.
Friend 3: loaned him 200-500 a handful of times. Always paid me back. The last time he borrowed $400 he couldnt pay me back. He had a life changing circumstance and he became homeless and hes never got back on his feet. I told him to pay me back whenever he could and I didnt expect it back when he became homeless. It's been years and everytime I reach out I just want to see how hes doing but hes too embarrassed to even talk to me. Friendship shattered for life.
Location: Formerly Pleasanton Ca, now in Marietta Ga
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I lost a friend of 30 years over a loan. I loaned him several thousand so he could Finnish a house flip. When he sold for a profit he didn’t pay me back. No one else would help him out including his family but me.
I also gave him my loyalty in real,estate transactions. I did 4.5 million through him so he earned a fair amount of commissions from my business.
If you loan money, do it with the expectation you won’t get it back and feel okay with then result.
Yes, this is about that most taboo of all subjects...MONEY!
Reply in same format:
Yes.
It's a terrible idea for all. People murder each other over money throughout history.
Anything over $500 is 5% vig, compounded weekly.
Anything to families is "gifts" not loans, obviously.
One person owes my late father $2K. I'm choosing not to collect from that man's family, sins of the father and all that.
Contracts matter if they can be enforced legally or via other means. Only makes sense, though when time to collect inevitably YOU are the bad guy/gal.
Yes, the same deadbeats "borrow money" because they're too stupid to life-plan. More than twice, have to ask yourself what on Earth is going through that other person's mind.
I'd not be inclined to loan anything to anyone. See the above as to why, thus no one asks me for "money" anymore, thank God.
The most? $500. See above.
No.
No, it's all (manure) anyway.
Yes, because when it's collected somehow "I" am the bad guy. (Manure), again.
Family never asked me for money, that's 100x worse.
Good luck with other answers. Could write a 5,000 word essay on this subject, but will spare OP and others the burden of actually reading it.
Its recommended you never lend to close family or good friends for a reason. For me, Family never.
Friends I think it's been about 4 to 5 people. I'll cover 3 of them.
Friend 1: I loaned $200 to like 12 years ago. We were both 17 and he needed money to buy some textbooks. I never told him but it was a gift. I never asked for it back or ever brought it up again. I was sort of shocked he never offered to pay me back. But it was a gift. Today hes still my very best friend and I stood up with him as his best man in his wedding this year. I pretty much forgot about this $200 until this post came up.
Friend 2: was one of my best friends in middle school. Very affluent family. Never asked me for anything in the 10 years or so we were friends. He asked to borrow $1400 for a week until his college loan funds were deposited. He jerked me around for 6 months before paying me back in full. Our relationship has never been the same. He lives a few miles away and we havent spoke much in the last 8 years or so since this happened.
Friend 3: loaned him 200-500 a handful of times. Always paid me back. The last time he borrowed $400 he couldnt pay me back. He had a life changing circumstance and he became homeless and hes never got back on his feet. I told him to pay me back whenever he could and I didnt expect it back when he became homeless. It's been years and everytime I reach out I just want to see how hes doing but hes too embarrassed to even talk to me. Friendship shattered for life.
In my experience. Dont do it.
Backwards order:
Last sentence: best advice of the thread. Propose that it be closed now
Friend 3: interesting exception to the rule; friend lost. Bummer
Friend 2: yes, it was all your fault for wanted to be paid what you were owed. People, jeez.
Friend 1: but you DID think of it, and it still burns your biscuit from 12 years ago. People remember deadbeats.
People....get...killed...over....money. Don't ever loan it or gift away to bums, family, etc.
The thing is, there is a wide variety of reasons for giving money to friends sand family and thus different things to consider. OP, you indicated you bought a house for a child - well, that is most generous! But more to my point, it is a single thing you are investing in to help your child advance. We invested in my other son-in-law's college education and I think of that in a similar way as your house. We worry more about the one that needs regular infusions of cash because once we retire in 5-7 years we won't be as able to do that, so we worry and confer constantly about how to break him of any dependency. So, not all contributions are the same.
Very good point. Thank you, you're right.
Last edited by NORTY FLATZ; 12-14-2020 at 01:42 PM..
Reason: Bolded important stuff
If you have he ability and the.. gumption.. Not sure if that's the right word.. To loan the money.. Then do so, as was said previously as a gift.
Never, ever loan money to family or friends where you expect or require repayment. Hell, never loan money to anyone when you can't afford it.
Without going in with the mindset that you will not get repaid.. You're setting yourself up that the relationship will be ruined. If you do get repaid.. Hey.. Great. But don't bet on it.
I've loaned money multiple times and.. Save for the "Can you spot me $20" style thing.. I've never gotten repaid. I've also said no many, many times.
It is NOT a good idea to loan money to family and friends. It's onething to pay for a drink at a bar or spot them a few dollars because they forgot their wallet but anything over a few dollars, involves signing documents or puts the responsibility solely on you lending money is NOT good.
There are reasons OLD sayings are around like "NEVER DO BUSINESS WITH FAMILY". The word 'family' corrupts the deal. The borrower will assume the family that would loan them money doesn't need it or care when when or if the money is going to be paid back. The lender will assume since it's family that they will pay them back.
Not only have I gotten stiffed by family I've seen parents, senior parents get screwed over by their adult children. If an adult child is running to a parent like a young teenager asking for allowance or lunch money something is wrong in more ways than one. I've seen parents struggle to pay a remortgaged house after an adult child making 90 thousand dollars a year didn't pay pack a 6 figure loan. It does not end well period.
Also many family or friends will want to borrow off of you in other ways like using your address for their mailing address for insurance and legal reasons. Even worse I've seen people put friends and family on their auto insurance policies thinking their doing them a favor yet they stand to lose the most if their policy is charged. I've also seen parents let their adult children access to and use their internet provider for email and streaming reason then get upset when the service was disconnected when the house was being sold.
If an adult and I use that term losely comes to you and has the gall to ask for money and favors for what should be the basics in life say NO because their are other issues at play besides the lack of money. And that includes poor character, addiction issues, mooching and/or flatout criminal grifting. People want to help but there is helping and then there is enabling.
Consider "loans" to family and friends to be gifts, and further consider it a bonus if they actually pay you back. If you're not willing to give it as a gift, don't give it as a loan.
I agree
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