Family finances

[noppenbd]

We have a quandary, and I could use some help from the forum. My wife's brother, who has a steady job probably making in the $30k region, has come to us for a loan. He plans to pay us back in January, because he will get 3 paychecks that month instead of 2. We haven't decided what to do yet and I'd like to hear your thoughts. We plan to call him tonight to discuss. Some important facts:

1) His monthly expenses should be fairly low. His highest bill is probably child support. He is a great dad but his ex has custody so he pays a hefty amount to her each month. I should point out that he spends a lot of time with his kids and doesn't begrudge paying child support. Other than that, he pays some small rent to live with his fiance's parents, and his a cell phone and probably some CC debt. I think he had a big car repair bill a few months ago ($1k or so).
2) He has already told us that he won't be able to spend much if anything on Christmas this year. I am speculating that he is asking for the loan so he can buy his kids gifts.
3) Even though I love him dearly, he is not too good with money. I think he spends a fair amount on what I would call frivolous things, like T-shirts, shoes, gadgets, etc.

I figure we have a couple of options:
A) Loan him the money with conditions. Maybe we help him set up a budget and he reports back on how is doing. Or maybe if it is for Christmas we just buy the gifts directly and let him give them to his kids.
B) Turn him down. Tough love approach. I would think one Christmas without gifts would be enough to steel his resolve (although I think he was tight last Christmas too).
C) Give him the money as a one-time goodwill gesture, but not expect to get it back.

What are your thoughts?

[rizzmo]

Many people say it is not a good idea to loan money to friends and family. I lent some money to help a good friend of mine out of a jam, long story short he won't speak with me because he feels guilty about not being able to pay me back the money he borrowed. Sad thing is I don't even care about the money; had I known lending the money would have ruined our relationship I would have simply given him the money. On the other hand, in the past I have lent money to family and friends and everything has worked out great for both sides.

Since you say he is not good with money, I would advise against lending in this particular instance as he might not be able to pay you back.

[jIM_Ohio]

Do not lend family money.

Unless you are willing to never see the money again.

[noppenbd]

Originally Posted by jIM_Ohio

Do not lend family money.

Unless you are willing to never see the money again.

So do you think it is better to give him the money no strings attached or just flat out say no?

[jIM_Ohio]

Originally Posted by noppenbd

So do you think it is better to give him the money no strings attached or just flat out say no?

Say NO
then offer to help him come up with budgeting ideas or ways to make extra money.

[Ima saver]

How much money? I lent some money to a friend once. If she had just paid me back $5 a week every week, I would have felt like she was making an effort. But she never once mentioned it. (It was when I was young and poorer)

[noppenbd]

Originally Posted by Ima saver

How much money? I lent some money to a friend once. If she had just paid me back $5 a week every week, I would have felt like she was making an effort. But she never once mentioned it. (It was when I was young and poorer)

We're not sure yet how much is asking for. My wife and I decided that we would be ok giving him up to $300 if he is using it for Christmas gifts for his family, even if he never pays it back. We still have to talk to him about it to find out how much he needs.

[Ima saver]

Try to work out a payment schedule, even if it is only $10 a week. He need so learn how to handle his money.

[boosami]

There's something about lending cash that puts an extra strain on relationships. When I help friends or family, I do everything I can to avoid dealing with cash. I find paying for the service or item has less of an straining effect on the relationship. Though done like this I never really expect to get the full value amount (or anything) back.

If you really want to help, I'd suggest helping buy some of the Christmas gifts. That way, you're not "lending," you're just "helping." While he may not pay you back in cash, maybe he'll take your family out for a nice dinner or something out of gratitude when he's in a better position. Don't expect to get anything back, that way if you do it's a nice little bonus for helping a friend in need.

[meatloafkend]

If you can afford it, I would definitely just give the money. We're talking less than $1000 I assume if he wants to buy his kids Christmas presents right?

My husband and I had a coversation recently about loaning money. We are very frugal about some things so we have a lot of money in the bank. If anyone came to us and asked us for money, we would say yes under 1 condition...They sold their "toys" and other things we have passed by in order to have money in the bank. If they still needed money, we'd give it to them.

[Ima saver]

Meatloaf, I agree, I don't have any toys!! I am still watching my 20 plus year old tv and it is fine for me.

[KatieNK]

If you have the money, and it will not be a hardship to help him and you really want to, then lend him the money but do not expect to see it again. You can consider it a gift (although he should still consider it a loan) and if you get paid back, then consider that a bonus!

[scfr]

If you can spare the money and you want to help him out, what about offering an opportunity for him to earn a bit of extra cash helping you out with something like babysitting, chopping wood, or whatever he is good at and you would like to have someone else do?

I once "loaned" my sister some money to put her suffering cat to sleep ... I was fully prepared to never see it paid back, and so far I have not. When I was preparing to move cross country and was selling off many of my possessions, same sister started expressing interest in my bed but hinting that she "just did not have the money for it right now." I was not interested in selling it to her on credit, but I did give it to her in exchange for her helping me with my garage sale. I was thrilled to have the help on a big project, and she was thrilled to get the bed for "free."

[disneysteve]

I'd want to know why he needs the money and what it will be used for. When I say why, I mean why he can't come up with it himself. If he is able to pay for a cell phone, shoes and gadgets, as you say, why can't he come up with a couple hundred dollars for holiday gifts?

I definitely wouldn't give a loan to family. As for giving a cash gift, the problem there is if you do it once, what happens the next time he needs money? He will come to you again, knowing that you gave him money the last time. Do you really want to set that kind of precedent?

He's an adult. He needs to figure things out for himself.

[cooliemae]

I think every family is different. My wife and I give money to her mother and sisters when they need it and we can afford it. They never ask for it, but if we know that they're in need, so we just drop a check in the mail. We never expect them to pay anything back. Sometimes they take the money, sometimes they tear up the check.

My wife's sisters and mother have very close relationships, and the money has never been an issue.

[KGeary]

Originally Posted by noppenbd

We have a quandary, and I could use some help from the forum. My wife's brother, who has a steady job probably making in the $30k region, has come to us for a loan. He plans to pay us back in January, because he will get 3 paychecks that month instead of 2. We haven't decided what to do yet and I'd like to hear your thoughts. We plan to call him tonight to discuss. Some important facts:

1) His monthly expenses should be fairly low. His highest bill is probably child support. He is a great dad but his ex has custody so he pays a hefty amount to her each month. I should point out that he spends a lot of time with his kids and doesn't begrudge paying child support. Other than that, he pays some small rent to live with his fiance's parents, and his a cell phone and probably some CC debt. I think he had a big car repair bill a few months ago ($1k or so).
2) He has already told us that he won't be able to spend much if anything on Christmas this year. I am speculating that he is asking for the loan so he can buy his kids gifts.
3) Even though I love him dearly, he is not too good with money. I think he spends a fair amount on what I would call frivolous things, like T-shirts, shoes, gadgets, etc.

I figure we have a couple of options:
A) Loan him the money with conditions. Maybe we help him set up a budget and he reports back on how is doing. Or maybe if it is for Christmas we just buy the gifts directly and let him give them to his kids.
B) Turn him down. Tough love approach. I would think one Christmas without gifts would be enough to steel his resolve (although I think he was tight last Christmas too).
C) Give him the money as a one-time goodwill gesture, but not expect to get it back.

What are your thoughts?

Don't loan him money, period. You might think you're helping but you're not doing him any favors. On top of that, he's family. That's the fastest way to screw up a relationship.

[noppenbd]

Thanks for all the advice. After speaking with him last night, here is the situation.

He is currently on a budget, a very tight one (he carries it around in his wallet with him). It has been working well for the last 6 months. What caused the problem recently was that he set up his cell phone for autodraft. The payment was drafted a week before he expected it, and it caused an overdraft. Even though he claims he normally uses cash, in this case he used his debit card a few times thinking he had money in his account. Of course he ended up with 9-10 $35 NSF fees.

Here is what we decided. We are going to loan him $600. He is going to write us a postdated $600 check for January 15th (when he gets his "extra" check). The conditions for us doing this for him are the following: He is going to continue to look for part time work (interviewing at Toys R Us today). I am going over his budget with a fine toothed comb this weekend to figure out what he can cut. I am telling him that we are going to cash the check on January 15th regardless of what is in his account to give him a little incentive to stay on budget.

I will post back later to let you know how it goes.

[zetta]

Sounds like a good plan. You're being both helpful and firm, and if he's been sticking to a budget for 6 months that's really a good sign. How will you handle it if the $600 check bounces in January?

You might consider giving him a copy of YouNeedABudget for Christmas...help him get toward living a month ahead of his paycheck.

[tripods68]

Originally Posted by KatieNK

If you have the money, and it will not be a hardship to help him and you really want to, then lend him the money but do not expect to see it again. You can consider it a gift (although he should still consider it a loan) and if you get paid back, then consider that a bonus!

I tend to agree. I always believe that family come first and foremost. With that, comes with expectation family will come ask to borrow some money some will not you back. I know. If paying back the money is not an issue, consider it as a gift. If they insist in paying you back, its a bonus. But I always make sure that the second time, its no longer a gift.

[disneysteve]

Originally Posted by zetta

How will you handle it if the $600 check bounces in January?

Very good question. It all sounds fine and dandy, but what happens when the check bounces? Considering he ran up $350 in NSF fees recently, it sounds like he doesn't track his account nearly closely enough.

What is this $600 for, by the way? I guess $350 is to cover those bank fees, right.