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If you "loan" money to loved ones, don't expect to get it back.

The first time I "loaned" money to some loved ones, after a year of foolishly expecting it to be repaid, I had them mow my lawn at $25.00 per mow (this was 30 years ago) until it was repaid.

Later, another loan was asked for and I refused citing their history.

Still later, a financial crisis occurred and I gave them the money as I couldn't bear to insist they repay it. I also advised it would be the last money I would give away. Get in another financial jam, don't look at me for help.

On another note, I overpay my Granddaughters to clean my house and do various chores rather than just give them the money. Why? Well, I love them of course and they are teenagers without any means to make money otherwise and are great kids. Plus, I like to spoil them.

From the other side of the coin, a bunch of years ago I needed to have the roof on my house replaced and I, temporarily, did not have the ready funds. I asked my parents to loan me the money and they were kind enough to do so, but they made sure that all of my brothers were aware of the transaction. I was actually able to pay off the loan before the roofing job got started due to weather and insurance delays, and had enough left over that when the demolition phase began I was able to take my wife and young son on a trip while we were out of the house. Removing a slate roof with lead sheathing underneath is a hazmat operation and moving out of the house during demolition was actually required, so we just went a little farther away than the local motel.

My parents never bothered to let my brothers know that I had paid them back within two months of inception and that eventually became one of many sore points in the rift that eventually occurred. My brothers, knowing of the loan but not the repayment, made their feelings about my going on vacation after having to beg for money well known, and my parents did nothing to correct their mistaken opinion. Of course I probably didn't help matters by making copies of all of the associated paperwork and sending them to all of the participants with dates of insurance claims, roofing estimates, and all that carefully highlighted.

During the family battle that became the rift, two things were revealed. Of the four brothers I was the only one who had ever paid back a loan from my parents, including the brother who borrowed heavily to purchase a bar and then was convicted of a felony and lost it. And my parents had actually borrowed the money they loaned me from my grandmother, AND NEVER PAID HER BACK.

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My sister in law came to me a long time ago, asking me to co-sign for my nephew's semi-truck. AFter a careful analysis of about three seconds I turned her down. She was angry at me for a few months, and then he was in a small wreck and lost the truck, underinsured, not properly registered, and DWI. She forgave me.

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Being young and foolish I co-signed a loan for a fellow sailor in the Navy I had to join the Navy Federal Credit Union and establish a savings account with adequate finds in it to do so. He paid off the loan on time, and we parted ways going to different duty stations. Some years later I received a letter from that credit union stating that since the automatic deposits stopped in 1970, the account was established in 1967, and there had been no activity in ten years, they were considering closing the account and they wanted to confirm that: A) I was alive, and B) that I wanted to close the account. I had never established an allotment going into the account so I was mystified. A call to the credit union revealed that he had set up an allotment equivalent to an interest payment into my account, without telling me, and had never canceled the allotment before his discharge in 1970. The account was all but forgotten by me, so the infusion of funds was a welcome surprise, and apparently also forgotten by him. Efforts to contact him to pay back the money he had put in my account were unsuccessful, not that it was all that much, and I have always been impressed with his actions.

Don't loan money to people you care about.

Gift it to them. A loan will put stress on the relationship.

Again, thanks for the responses. All sound, all good advice. I really, really, hate to start a topic
like this and then back out of it. But, I'm backing out. I hope (pray) that in a few months I am
able to report a happy ending. Right now I am questioning myself. Doing the right thing many
times requires carrying a weight. Is a major rift worth it? A rift of hard feelings on each side?
I will post the results/outcome but it may take several months. Then we can decide if I handled this
correctly.
Posting can be therapeutic.

When I was in high school, I had a bundle of money from working. I lent my sister many thousand dollars because she was having trouble paying her student loans (her husband was in med school at the time). We did up a promissory note, complete with interest payment. It worked out just fine, though their payments were a little sporadic. If anything, I think it enhanced our relationship. I think your question really boils down to the relationship and the circumstances.

Is it a matter of survival, a matter of quality of life, or a matter of convenience? These considerations plus the quality and importance of the relationship are important. Also is the amount an amount that you could afford to lose without becoming a matter of your survival and quality of life?

I'm a big Dave Ramsey fan and I like what he says on the matter.

"So the old joke goes: if you lend your brother-in-law $50 and he never talks to you again, was it worth the investment?

The joke may be funny, but experiencing this in real life is anything but funny. Loaning money to a friend or family member is a bad decision. Someone who lends money to a loved one has their heart—not their head—in the right place. It is okay to give money, but loaning money to someone with whom you have a relationship will lead to broken hearts and broken wallets.

Check out the statistics from a recent money-etiquette survey:

57% of people said they have seen a friendship or relationship ruined because one person didn't pay back the other.
Almost 50% have loaned $100 or more to help out someone, but 55% don't get repaid.
71% lend money to immediate family members, 57% to relatives, and 54% to friends.
One fact not quoted in the survey is that Thanksgiving dinner tastes 100% better when friends or relatives don't owe one another money! Eating with your master is different than eating with your family.

Loaning money makes relationships awkward. Parents who lend their newly married daughter and her husband a down payment for a house think they are helping out the new family. Soon, however, they are giving the young couple disapproving looks when an upcoming vacation becomes more important than repaying the loan. This leads to nothing but resentment and pain on both sides.

Don't do this to people and relationships that mean something to you. If someone is in genuine need, it's great to help. If you help with money, make it a gift instead of a loan. By not having an I.O.U. hanging over your head, you will keep your relationships strong."

misterlarry wrote:My believe is, never lend money to a relative that you can't live without or that you wouldn't just gift to them with no strings attached. Almost any other possible lending arrangement or scenario will usually create more heartache and drama than simply saying "no" to lending the money in the first place.

imho

Bingo, someone told me a long time ago not to lend anyone anything more than you can stand to lose........

I have only loaned to my brother in law and one friend because I knew they would repay . The money is unimportant but I take it as a sell out if the person borrowing makes no attempt to repay . If the person wanting to borrow has made foolish choices then let them gain a lesson by dealing with their own mess . You are only setting them up to make more bad choices if you bail them out . Experience is the best teacher .

If someone is enduring trials not of their own making then give them the money and help as you can if you love them .

I once loaned a friend money and accepted his vehicle as collateral. I ended up owning the vehicle.

I have one rule when it comes to loaning money to friends or relatives: consider it a gift, because you're never getting the money back. On that basis, if you can't afford to give that much money, then don't. If you loan money and it can't be paid back, the relationship will be ruined anyway, because that person will always feel guilty around you and will thus avoid you. If you don't loan the money they may be mad for a while, but they'll get over it.