How do you feel about helping family members with debt?

[jaine]

Would you give monetary assistance to a family member who is in debt?

If your gut reaction is "no" - are there any possible situations that might lead you to say yes instead? Would you expect to be paid back? Would you have any contingencies or "rules" that they would have to follow to continue receiving your help?

And would you accept monetary assistance from a family member if you were in debt?


I'm mostly curious to hear everyone's opinions ...

[Joan.of.the.Arch]

I would easily lend or give money to family when they need it. I would also accept money, no problem.

About seven years ago I set aside a small emergency fund for family members....Now, my sister and BIL were flooded in Nashville and think their losses are about 50-55K. The loss is uncovered because, with a house near the top of a hill and not near a river or stream, they did not have flood insurance. I told them about the EF and they were glad to hear it, but think they can cover things. I am quite proud of them because they are not high earners at all and I don't think many people in their income level could deal with that big a loss. That's the way my family is; so if they needed money I would know it would be genuine need, not having lived too high on the hog....I would be really shocked if they would not extend help to me if I needed it in a similar position.

[disneysteve]

Obviously, it is hard to say what I would do in a true emergency. My general answer is that I would not lend or give money simply because someone was in debt. There would have to be some truly catastrophic situation for me to consider it. If they were losing their home, couldn't afford food, needed life-saving medical care, etc., I would consider it, but even then, I'm not sure how much I would or could do. I'm not willing to sacrifice my own well-being and that of my own family in order to aid someone else. My wife, my child and me come first. If I had more money than I could possibly need, that would be different, but that's not the case.

[BlackDiamond]

I would do it. Not to help the adults, but to make sure my little nieces were eating healthy food and had a roof over their heads. There is no way I would let them go hungry.

[terces]

It would depend on who the relative is and what the situation was. I've been burned by one relative and its not about the money but the way he treated and continually treats my family (kids included) after we helped.

I've been helped and have helped other family but the gratitude and respect was always there. So for certain members I would help them if they were in dire need. But like DS, I wouldn't hurt my family in the process.

[FHA Loan]

Originally Posted by jaine

Would you give monetary assistance to a family member who is in debt?

If your gut reaction is "no" - are there any possible situations that might lead you to say yes instead? Would you expect to be paid back? Would you have any contingencies or "rules" that they would have to follow to continue receiving your help?

And would you accept monetary assistance from a family member if you were in debt?


I'm mostly curious to hear everyone's opinions ...

IMO there is no blanket answer to the above questions. It depends on a lot of things... You know your family members. So you have to decide.

I'm not going to "loan" a family member money if I feel they are likely NOT going to pay me back unless a) I can afford to write it off if they do not repay me and b) if loaning them the money and not getting paid back doesn't create a hardship for me and MY immediate family.

If one of my family members whom I know to be responsible needed money and I had some that I could spare, certainly I would loan it to them. If the amount was substantial (thousands) then I would, however, get it in writing... the amount borrowed, when it was borrowed, and a description of the repayment plans.

Personally, I would never ask family members for money as I don't think it is their responsibility to take care of me and my loved ones.

But that's just me... It's all a personal choice.

[wincrasher]

I say yes. I would not sit by and watch family members suffer if I can help.

But I can afford it. You don't want to "do yourself in" financially to help your family if it's not a true emergency. So you have to measure your response.

Sometimes it goes beyond emergencies. I'm thinking about giving my sister $75,000 so she can buy a better house. She HAS NOT ASKED for it and NEVER would. But she is looking at houses and they are all dumps, but that is all she can afford. So I'm thinking about it.

[FHA Loan]

Originally Posted by wincrasher

I say yes. I would not sit by and watch family members suffer if I can help.

But I can afford it. You don't want to "do yourself in" financially to help your family if it's not a true emergency. So you have to measure your response.

Sometimes it goes beyond emergencies. I'm thinking about giving my sister $75,000 so she can buy a better house. She HAS NOT ASKED for it and NEVER would. But she is looking at houses and they are all dumps, but that is all she can afford. So I'm thinking about it.

Can you adopt me? ROFL

[disneysteve]

Originally Posted by wincrasher

I'm thinking about giving my sister $75,000 so she can buy a better house. She HAS NOT ASKED for it and NEVER would. But she is looking at houses and they are all dumps, but that is all she can afford. So I'm thinking about it.

While I think that is incredibly generous of you, why should she have a house that is $75,000 more than she can afford? Or any amount more than she can afford for that matter? Will she be able to afford the taxes, maintenance, utilities, etc. that come with a more expensive house?

If all she can afford is a dump, perhaps it isn't appropriate for her to be buying a house at this point in time. Not everyone can or should be a homeowner.

[wincrasher]

I haven't done it yet, so no pats on the back.

Well I went looking with her last weekend. The houses she picked out all had issues - work that needed to be done and were not really much bigger than her current house. They were all older and would have less energy efficiency and will too soon need new AC, roofs, etc.

The houses I picked out were just about $75k more, but were also much larger, fairly new and in better neighborhoods.

With this gift, she could stay within her budget in every respect. Also, they could move into the new house and then fix up and sell their old house afterwards.

But I'm still mulling the whole idea. I also have to figure out a way to do it without creating a big tax liability for her - I already paid taxes on this money!

[jaine]

Wow, 75K is a lot for a random gift!

I'm actually surprised at how many of you are willing to help your family ... I thought more people would be staunchly against it.

I'm helping my little sister save for college and also helping my little brother dig himself out of debt. It started out as an offer to help both of them save for college. But then found out my brother already has the GI Bill for that but the debt is the thing that's holding him back from doing the things he dreams about. I felt controversial about it for about 2 seconds - then offered to help. It makes me happy. The total amount that I'm giving to them is about 1/6 of the amount that I'm saving for myself. I don't want to be paid back... it makes me feel good to help my family have more options.

[wincrasher]

Most people have other considerations - their own immediate family (wife and kids).

If you don't have that, then you can be more free with your money - family, charity, adventure, whatever.

A trip to Borneo would be alot of fun. So would a new Mercedes. I could do either or both because I've been a good boy for a long time.

[Mjenn]

We helped out my MIL who doesn't carry a lot of debt, but prioritizes money in a way DH and I don't 100% agree with. She decided to skip dental surgery, despite pain, in order to throw a big graduation party for her daughter. So our family and my bil family chipped in and paid for the dental surgery, as we didn't want to see her in pain.

We gave the money as a gift to be used expressly for the surgery, which she did. Don't expect to be paid back, and would do it again if needed. She is one of those people who is always trying to help others, but doesn't look out for herself, so it felt good to help her. Also, as I said, she doesn't carry debt, she just doesn't save at all either and spoils her youngest children.

[LivingAlmostLarge]

Probably but it depends. It's hard to say no to family but then sometimes they do make stupid choices.

Example, my grandfather gambled his money all away. My grandmother was always broke and needing money. Her kids and myself circumvented this by buying her things. I bought and still do plane tickets, grocery gift cards, etc. I loved my grandfather but money?

[maat55]

My older brother is horrible with money. In 2008, I gave him a copy of The Total Money Makeover and The Automatic Millionaire. I also emailed him an summary of my financial history and conversion to a debtfree financial plan. I also gave him a detailed opinion on how to get his finances in order.

I did this because he had mentioned to our mother not long before that he figured if he were to have an financial emergency, he would have family to fall back on, I made it clear that I would give him advice only.

IMO, houses, cars and stuff are not perminant and I will not sacrifice my future to save someones things. I will offer a room and food if necessary.

[disneysteve]

Originally Posted by Mjenn

We helped out my MIL who doesn't carry a lot of debt, but prioritizes money in a way DH and I don't 100% agree with.

But by helping her out, weren't you then supporting her misplaced priorities? I guess what I wonder is what does the person learn if they screw up and someone else bails them out? Seems to me they learn that they can keep on doing what they've been doing rather than changing to a more responsible way of managing their money.

I'm with maat55. If someone is struggling, I'll be happy to sit down with them and help them work out a plan to turn things around but I'm not going to pay for their mistakes.

[Mjenn]

Originally Posted by disneysteve

But by helping her out, weren't you then supporting her misplaced priorities? I guess what I wonder is what does the person learn if they screw up and someone else bails them out? Seems to me they learn that they can keep on doing what they've been doing rather than changing to a more responsible way of managing their money.

But that is kind of the point. I am not doing something to teach her a lesson,or show her how I think she should do things. She is a grown up, and chooses to live pay check to pay check. If she has car trouble or something else, I wouldn't step in. But she was in pain and we knew she would never prioritize herself, so we helped out. Because we could.


I wouldn't step in if I wanted something in return - be it a learning experience or money back, because I wouldn't want that aspect in our relationship.

[JoshuaHeckathorn]

In general, I wouldn't step in and provide monetary assistance either, but in some circumstances (e.g. emergency medical need) I would have to break my own rule. And if I did, I wouldn't expect to ever get paid back. My view is if you're prepared to give money to a family member, then you should simply treat it as a gift. If you eventually get paid back, that's great, but don't count on it.

And no, I would never ask for monetary assistance from a family member, but that's probably just because I'm too prideful and not humble enough to actually do it :-). Maybe I would feel differently in the heat of the moment...it's hard to say.

[snafu]

I've given money in increments of $1,000. - $2,000. to my late brother several times. He just couldn't manage money and made ridiculous financial decisions. It never occurred to me to expect to be re-imbursed. Our mom gave him significant sums which were also poorly managed. Some loving, wonderful people just can't learn from experience!

[jaine]

So I'm helping my brother with his debt, $250 a month. Then I found out he quit his new job. Mostly because it wasn't creative enough and they wouldn't let him keep the blue highlights in his hair (they originally said they would). I'm starting to question whether or not I want to keep helping him. Quitting a new job just doesn't seem like something he would do if he were really motivated to pay it off. I don't want to be pulling more weight than him. I might end up telling I have some debt of my own that I have to snowball. And then double up my college savings for my little sister....at least she is motivated to do something with my help!