In my experience, never loan because it will never be repaid.
The money an adult sibling (chronic money mismanagement, bankruptcies, etc.) borrowed from our late mother and never repaid, despite assurances that she would, has caused an irreparable rift. Fortunately mom documented the expected repayment as well as sib’s telling her it would be done.
An aunt and uncle offered to loan us money for a car some 30+ years ago. It was a competitive interest rate and handled as if it was to a bank. No problems.
An irresponsible person will always be irresponsible.
H and I have a policy. If we don’t both agree, the answer is no.
I have a brother who doesn’t have a degree that has been chronically unemployed over the past 5 years and realistically cannot hold a minimum wage or above job.
He is probably mentally spent and doesn’t have the intellect or drive to improve himself. I have been supplementing his income over the past three years.
I am surprised that noone in my family has asked to borrow from us. My only explanation is that DH is so intimidating that they are too afraid to ask. I have one brother and sister who I would loan to if asked. The other two – no way in #/^&.
He does have a plan to generate more income in the near future, so it isn’t completely hopeless to think he’ll pay back. My H doesn’t want bro to lose his house.
@ohiopublic I would be more inclined to support your brother. Sounds like he’s making his best effort.
I suspect my sibs have never asked for a loan because DH is so intimidating. Two of my sibs I’d loan to. They are the two who would get second jobs and sell possessions before asking. The other two sibs – no way. This includes a sib who is in dire straits. He has made repeated poor financial, family and behavioral decisions that wrecked his family. He made his bed.
We did a large loan but there was collateral behind it. This has gone well.
We did a slightly smaller loan but still in the several tens of thousands. Relative seemed surprised that we did indeed want it back even though it was structured as a loan and had paperwork. It took years and so much hassle to shame the person into repaying but the person was living in a $5000 a month rental (which was ridiculous) and didn’t want to scrimp at all in lifestyle. It was just a pleasure (not) to get bill collector calls because of his credit card debt. All the while he is telling relatives what a great business man he is and asking if they would like to invest. This is my relative and I don’t care if I ever see him again.
We turned one down from a relative who had a history of laziness and didn’t really seem to have a plan.
We have paid mortgage payments for a relative where both of the couple were injured by a drunk driver. Happy to help out.
We pay for funerals for the poorest and elderly in the family. Again happy to help out.
What may work for the OP-
Another young relative we asked for a breakdown of monthly expenses and budget items, so that we could get a sense of how much money was really needed. We didn’t get it so we knew that the money wouldn’t actually help anything. There was no interest in developing a financial plan.
Would your husband be willing to help the brother set up a budget?
Certainly nobody wants to lose their house, however…
Does he have some equity in the home? Perhaps not being able to pay the mortgage is the nudge he needs to sell it. If he has no equity, then losing the house is not such a big deal, particularly if he can’t afford it. Why doesn’t he sell the house? It sounds like it is too much mortgage for him.
I think this is a really good post! Very clever, asking for money for essentials like child support and to prevent him from losing the house. Where is the money that he would have spent on that going to? Why is he asking for money now, did he lose his job? And why can’t he borrow elsewhere, loans are very cheap now.
I have realized that people rarely pay money back. They usually aren’t asking for a loan, though they call it that, they want a gift, but are trying to make it sound acceptable to you. Especially when you appear to have plenty of money, they conveniently forget to pay it back. Fortunately now that I’m older, nobody asks for money any more. I’m sure my husband would say no way, anyways.
I used to have friends ask for “loans”. I’d either have to completely hassle them for the promised payback, or just give up. It never works out well. I honestly can’t imagine doing that to any of my friends or family. We have borrowed 10K from my parents twice for home loan purchases, and paid them back within a week.
Years back I asked a similar question on CC. (Would you lend money to a friend?) We did, knowing that we should think of it as a “gift,” although the guy said he’d pay us back. It wasn’t a large amount ($700), which H and I agreed we could afford to lose. The guy said that when he got a job (he was unemployed at the time and needed a car repair), he would pay us back $50/mo. Well, after about 9mo he sent us $50. And that was all he ever sent! (I think he had some mental health issues. We don’t hear from him much.) We pretty much forgot about the money and don’t expect that he’ll ever pay back. We joke about it sometimes/don’t resent it.
Your H should ask his brother what he spent his mortgage and child support money on. Tell him he needs to downsize, and scale back on sports activities. Offer to go over his budget with him. (I’m sure he’ll appreciate that.) Because if he’s asking you for money, then his finances become your business. It irks me when people don’t plan ahead or waste $ on luxuries–then suddenly someone else needs to rescue them on the necessities.
My nephew didn’t attend our son’s recent wedding because he couldn’t afford a plane ticket. He is nearly 27 and employed full time. He asked his parents to pay for his transportation. They could afford to do so and wanted him to come to the wedding, but they refused. Their son knew about the wedding for more than 6 months and failed to plan ahead. But just a month before the wedding he somehow had $ for a new tattoo.
Funny thing is that DW is giving her sister a “salary” on a monthly basis as a consideration for her taking care of Fil. We tried to give her a lump sum to get them out of debt but sooner or later their hands are in our face again and again. So DW decided to give her a salary instead.
From the stories shared here, it seems like every family has a financial irresponsible relative or two. Comforting in away to know we’re not unique but scary as well to know there are so many out there.
NEVER lend money to family. If you have money to spare and want to give a gift, that’s great…but don’t do it any other way.
Lend help moving to a house they can afford. Lend a hand with babysitting while they’re interviewing for jobs. Tell them you believe in them, and be their best cheerleader.
Sometimes enabling people’s bad choices is the worst thing we can do. It cripples them.
Instead…believe in their ability to improve and help themselves.
It also ruins a relationship. The “borrower is slave to the lender” concept. The lender feels taken advantage of when they don’t get paid back on time (or at all), and starts thinking about all the wasteful things that the borrower buys. The borrower feels guilty (if they have any conscience) and resentful that they have to pay the lender back, when the lender has so much more than they do. Who wants that relationship in their family? If someone really needed it, and wasn’t just being wasteful with their spending, I’d give a gift.
atomom said, “Their son knew about the wedding for more than 6 months and failed to plan ahead.”
This reminds me of people failing to save for Christmas spending. They have 12 months to plan ahead, yet every year there are many of my customers who can’t pay their bills in December, January, and beyond because they used their bill money to buy Christmas gifts.
For the OP, I would never lend money to anyone except maybe my children (depending on the circumstances) and then I would consider it a gift.
I have 3 siblings. Two siblings and I have loaned money to each other over the years (since we were in our teens), and there is one sibling I wouldn’t loan even $10 to because it would be a gift. My other 2 siblings and I have helped each other out over down payment of a house (hundreds thousand $) or 10-20K for something specific. We have always paid each other back.
A lot of this can only be concluded by having a historical perspective for the individual involved.
Is their current circumstance an aberration or is it a continuation of their normal behaviors.
We have two bils who have asked for money both of which showed no initiative to work more and while at the same time spending huge amounts of vanity time in the gym and spending huge amounts of money on muscle building supplements.
Our answers were very quick no’s in both cases.
If someone is working hard and staying within their means and life delivers them some bad luck we would do whatever we could do to help. It is all about the history and the circumstances.