Tough Bind: Father Asking for Money

[josetann]

Never lend to family. A gift is fine. And if that gift is repaid, even better. But don't lend. It just causes more problems.

In our own family...someone was lent money. Then they picked something up for us (bag of candy at the store) and when they were told they could just deduct that from what was owed us...well, you just had to be there. They were very upset. Lending and family just don't mix.

[papa_squat]

Never lend to family. A gift is fine. And if that gift is repaid, even better. But don't lend. It just causes more problems.

My father said in the email that he would repay us with interest, but part of me was wondering if he might have been hoping for a gift. He borrowed tens of thousands of dollars from my Mother's parents because they only gift, not lend. This did put quite a
bit of pressure on the family dynamic in the end (plus my parents divorced over money), but I'm just shocked that he continues to dig himself in these holes and borrow money from people for material possessions and lifestyle choices.

[kv968]

You said you wouldn't let your father "starve" which is understandable and, to me, the right thing to do. However, "starving" and buying a house he can't really afford right now just because his girlfriend "has her heart set on" and two COMPLETELY different things.

I'm with the idea of not giving him the money and letting him rent a place until everything gets taken care of. It sounds to me that by giving him money for this would just open a Pandora's Box and you'll be getting solicited for money again the next time he's in a jam.

[disneysteve]

In our own family...someone was lent money. Then they picked something up for us (bag of candy at the store) and when they were told they could just deduct that from what was owed us

I think this is really the problem in a nutshell. When you lend money to anyone, family or not, from that moment on, every time you see them spend money, a little part of you thinks, "Hey, if they can afford to do that, why haven't they paid me back yet?"

That said, on rare occasions my wife and I have lent money but only in very specific circumstances and only to a couple of people with whom we are extremely close and are well aware of their personal finances. For example, every once in a while, my mom might run into a little cash flow snag. I am totally involved in her personal finances and know everything she has and where it is. She lives very frugally and has a very adequate portfolio to sustain her. In fact, she is quite generous and has given us monetary gifts numerous times over the years. So if she comes to me and says that because of some one-time situation, she's going to be short a few hundred dollars for a month or two until a CD matures or something similar, I don't hesitate to write her a check. If she repays it, which she always has, great. If not, we more than owe it to her anyway for all she's done for us.

Another recent example: My cousin, who we are extremely close with (I'm the beneficiary of all of his accounts and insurance) retired 2 years ago and had a new house built in Florida where he moved last summer. For tax reasons, it turned out that his original plan for financing the house wasn't going to work out the way he thought. He could have done it but it would have been a stupid move. Bottom line was he ended up short $5,000. He has plenty of money. It was just all tied up in accounts where tapping it then would have resulted in a ridiculous tax hit. So we lent him the 5K with the understanding that after he filed his taxes this year, he'd be able to sell off some additional stock holdings and repay us, which is exactly what he did.

So there are always exceptions to the rule, but as a general rule, lending money to friends and family is not a good idea.

[seen]

In our own family...someone was lent money. Then they picked something up for us (bag of candy at the store) and when they were told they could just deduct that from what was owed us...well, you just had to be there. They were very upset. Lending and family just don't mix.

That's...something I would have done. Can you elaborate on this please? Did you ever confront them about it, about why they became so infuriated? Did you eventually resolve your differences, or is there a permanent wedge in your relationship with them?

I've always been of the mind that I would help family financially no matter what. I've done that a couple of times with my sister with no issues at all, but now I'm starting to wonder whether I'm walking on egg shells.

[josetann]

That's...something I would have done. Can you elaborate on this please? Did you ever confront them about it, about why they became so infuriated? Did you eventually resolve your differences, or is there a permanent wedge in your relationship with them?

I've always been of the mind that I would help family financially no matter what. I've done that a couple of times with my sister with no issues at all, but now I'm starting to wonder whether I'm walking on egg shells.

Well, each individual is different. But from our experience, and from what I've read, it seems that it's almost always, 99.9999% of the time, a bad idea to lend to family. Any amount given should be done so as a gift, with no expectation of ever being repaid.

I just found it quite, um, strange that someone who owed us money (it was in the hundreds, not a HUGE amount) balked at the idea of not getting paid back for a $5 or so bag of candy. It disintegrated into "but I did ____ for you" and I'm thinking to myself "Ok, not that big...and we did ______ and _______ and ________ for you...but who's keeping score?" I just sat there not saying a word.

But...your sister may be completely different. Not knowing about your family dynamics at all, I might suggest just swapping favors. So instead of lending $100 with the expectation of getting repaid, and anytime she spends $5 or $10 you deduct that from the balance owed...you could gift the $100 and she could gift you $5 and $10 here and there. But again, I know nothing of your family. Perhaps the way you're doing it is best for you? Just know that it's NOT best for us (well, not with this particular individual at least).

Now that I think about it more...I think we do a similar thing with my mom. We paid for part of her trip to come see us, because it was too difficult for her to do (not to mention the currency conversion). So she's just going to pay us back later. She's buying some things for us and will bring them with her (like stick deodorant, woohoo!), and that'll be deducted off what she owes us. So yeah...I guess we're kinda doing that. But our relationship with her is different. And if something happened where she couldn't pay us back, it wouldn't be a big deal (she's lent us money in the past too, and would say if we couldn't pay her back to not worry about it).

Thoroughly confused now?

[Like2Plan]

I'm drafting a reply to him and trying not to lecture, but he needs to know that we have his best interest in mind.

I think if you provide an explanation it might lead your father to believe your decision is up for debate.....

If you are angry at him for asking, imagine how angry you will be with him in the future when he doesn't pay you back and you see him frittering away more of his money.

I would not loan him the money. You know it won't be the last time he asks no matter how much of a sacifice it is to give your Dad the money this time.

[elessar78]

I've been/I am in your shoes.

My father is always looking for capital investment for his latest and greatest business ventures. I've flat out refused him for these requests.

It's not easy and I'm riddled with guilt. But I just do it because I need to support my wife and kid.

[Gailete]

I still remember when I was little, the schools had a program to help kids save money and we could bring 6 cents or whatever and it would be put in the bank for us. At one point my dad was broke and cashed in all our savings accounts from his 3 oldest kids. He never paid it back. That was just the beginning of seeing him in financial trouble because of his lifestyle. He even had the audacity several years ago to ask my mom (a woman he deserted with their 5 kids close to 30 years before) for money since he had heard that she had married a man who owned his own business. He is and always has been a leach. I wouldn't loan or give him 5 cents at this point in my life.

I think the original poster has probably been going through similar things throughout her life and I see no reason for her to loan or even give (bacause that is what it will be) her dad $9000 whether they can afford it or not. Yes it might make trouble within the family and with her dad, but at this point he has already stepped over the line. To say NO isn't going to make the situation any worse and I'm so sorry that he is putting you through this.