Should I lend my sister money?

[bro]

I have a dilema and I'm hoping I can get some good advice here. My sister needs some money to repair her car. It's essential that she have the car or she will lose her job, and if she loses her job, she won't have any income coming in.

The problem is she isn't good with money. I've been trying to get her to put aside money in case something like this happened, but she just can't seem to do it. I know she needs to learn the lesson, but I'm hesitant to make this the one since it could be so devastating to her. On the other hand, I know if I lend her money for the car, something else will happen when she'll need to borrow more again in the future.

I guess my question is, do I let the nuclear option happen by not lending the money to her where she loses her job, or do I pay this time and then when she needs something in the future where it will be painful, but won't mean the loss of her job, teach the lesson?

[disneysteve]

No, you should not lend her money. Not now. Not ever.

If you are financially stable yourself and would like to give her a gift, that's up to you.

As you stated, though, doing it this time probably means she will keep turning to you to bail her out every time she gets herself in trouble.

Also, giving her money will poison your relationship. Every time you see her blow money on stupid crap, you'll think, "Geez! If she can afford that she should be able to pay me back. That's really my money buying that garbage."

If you decide to gift her the money for the car repair, you need to sit down with her and make it crystal clear that this is a one-time gift and that if she gets in trouble again, she's on her own. Offer to help her set up a budget. Offer to pay for her to go through Financial Peace University. But make it clear that you will not give her any more money.

[ua_guy]

If you lend her money, the problem (her inability to make/manage money) doesn't go away. It's just a bandaid until something else happens and she needs more money. I'm sure you love your sister, but at some point, she needs to manage her own money and get herself out of trouble, and learn to stay out of trouble, on her own.

If you do lend her money, do so with the realistic expectation that you might never get it back. The choice is yours, but you shouldn't go into financial hardship to lend her money. Only do so if you have the resources available.

[bro]

But if I don't, won't it make her money situation so much worse? If she loses her job, then she won't have any money to pay any of her bills. I understand what you're saying, but can I really just leave her to hang out to dry like that?

[disneysteve]

But if I don't, won't it make her money situation so much worse? If she loses her job, then she won't have any money to pay any of her bills. I understand what you're saying, but can I really just leave her to hang out to dry like that?

Obviously you don't want to see her crash and burn. She's your sister. So do as I suggested. Sit her down and say, "Listen, Sis. I love you and don't want to see you struggle so this one and only time, I'm going to give you the money to fix this problem. But from now on, you need to start taking care of yourself. The next time you allow yourself to get in trouble, I'm not giving you any more money. I'm happy to help you figure out a budget and start saving money for things like this that pop up in the future but you need to do it. Next time, I won't bail you out."

[ua_guy]

But if I don't, won't it make her money situation so much worse? If she loses her job, then she won't have any money to pay any of her bills. I understand what you're saying, but can I really just leave her to hang out to dry like that?

Yes, it will make her situation worse, at least temporarily. But I don't see why it's your sole responsibility to save her. I love my family too, but like I said about you giving her money won't fix the problem. The car will break down again, or she'll lose her job. Are you ready for a lifetime of bailing your sister out?


Why can't she borrow a car? Rent one? She works. Why doesn't she have ANY money whatsoever? Can she get a ride with a coworker? Take the bus? Ride a bike?

[Eagle]

Obviously you don't want to see her crash and burn. She's your sister. So do as I suggested. Sit her down and say, "Listen, Sis. I love you and don't want to see you struggle so this one and only time, I'm going to give you the money to fix this problem. But from now on, you need to start taking care of yourself. The next time you allow yourself to get in trouble, I'm not giving you any more money. I'm happy to help you figure out a budget and start saving money for things like this that pop up in the future but you need to do it. Next time, I won't bail you out."

I second this idea Bro!

I'd consider buying and reading "Total Money Makeover" by Dave Ramsey with your sister Bro. It's also available in audiobook. It could very well revolutionize her life. Yours too.

[Leo]

I was in a similar situation several years ago. I lend my young sister money for car repair. I don't have a lot of money at the time but I was in a better position compare to my sister. She is not good with money. What I thought was, if she pays back, good, if not, I would treat it as a gift to her. I did not expect anything from her but at the same time I keep calling her every month about the money. We're really close.

Bottom line, never lend any money to anyone and my only exception is I will only lend the amount I can lose and I will treat it as a gift and don't expect anything back.

[snafu]

Would it be fair to surmise sister is desperate and only requesting your financial help because her car is critical to her work and is in need of repair? Can you help her get her spending under control? Does she simply not earn enough to hold it together when something goes wrong?

I found myself 'loaning' a much loved brother serious sums knowing that it would never be repaid.

[SavingSteve]

Yes of course you should help your sister. I agree that it should be a gift and not a loan. But I don't agree that you should tell her anything about this is the only time you will help.

It sounds like your sister has a behavioral problem that you can help but it may take some time and watching over her. This may not be the only time she needs your help, but I don't think anyone is beyond change when it comes to money.

I was in a much worse place once and my family helped me to get back on track. Your sister can too.

[wjcalderon]

Lend her the money with these conditions:

1. She MUST let you go over her total financial situation and work out a budget for her.

2. Is she fails to adhere to the budget and has this problem again, she's on her own.

3. Get everything in writing.

[bro]

Thank you for all who have replied. A lot of you seem to think that I should sit down with her and help her budget if she is willing to do that, but I'm not sure that I'm the right person to do it. I do okay with my money and I have been suggesting that she put aside money for a situation like this, but I'm not a financial expert. I'm not sure that I feel comfortable telling her what she should do with her money when I'm not all that confident with what I do with my money. I know that I'm better than her at managing money, but I am by no means an expert. So, I don't think it's realistic for me to help her with her budgeting. In that case, what should I do?

[hillary]

If you decide to give the money, it should be as a gift, not a loan because as you readily admit, she doesn't have the money. Making a loan will ruin your relationship with her. If you don't want to gift her any more money, explain this money is one time and you won't be able to help her out in the future. If you can't help her with learning to better her finances, get her a book that can.

[marvholly]

Thee are many standard things you can help your sister review and/or adjust in her budget.
Some ideas;

Is her rent/mortgage within reasonable parameters (22-30% of her take home)
Does she have a gym membership? How much/month? How often used?
Cell phone-does she have a fancy phone/plan? is there a cheaper plan that allows same usage?
Does she have a landline AND a cell phone. Kill the landline.
Internet same questions as cell phone
Cable/dish tv - does she really use/need. Can she downgrade?
Insurance home & auto-has she priced out different carriers?
Entertainment: how often does she eat out/meet up w/friends for activities/movies. Cut back to 1-2x per month. Set up a set $ amount/month. Pay cash only and when it is gone that is it for the month.
What does she spend on grogeries, household & personal care stuff? How much is actually wasted. Limit spending here on a weekly allowance basis - cash only and when it is gone it is GONE.
What is she spending on gifts & for whom? Cut back.

I would guess she could probably save 10-25%/month total. That needs to be swept into a savings account EVERY pay period.

[disneysteve]

A lot of you seem to think that I should sit down with her and help her budget if she is willing to do that, but I'm not sure that I'm the right person to do it. I do okay with my money and I have been suggesting that she put aside money for a situation like this, but I'm not a financial expert. I'm not sure that I feel comfortable telling her what she should do with her money when I'm not all that confident with what I do with my money.

I'll bring up the Dave Ramsey suggestion again but modified. Tell her that you are going to take a class to better manage your finances and you want her to come too and you'll pay her way. It's called Financial Peace University. I'm not 100% a fan as I disagree with some of his teachings but overall, I think it's a good solid program and helps thousands of people improve their situation.