Update to Tough Bind: Father Asking for Money

[papa_squat]

Hey Everyone. I just thought I'd provide a little update to the post about my father asking my husband and I for money.

I couldn't be more secure in the idea that my husband and I made the right decision in not giving my father the $9K he requested for the downpayment on the house. I talked to my father over the weekend to ask how the first week at his new job went. He apparently hates the place and is interviewing for a job in a different state now. Had we given him the money, he likely would have turned it over and made the offer that day, only to have to have to back out of the deal once he discovered the job wasn't to his liking, and this probably would have tied up the money for a time, or give him an excuse to spend it on something else he needed for moving costs.

Once again I am reminded how emotional, knee-jeck reactions can ruin a person financially. My father was clearly acting on emotions to be settled in a nice house without thinking ahead about whether he would even liked the job he was relocating for. If I had acted on my initial emotions (pity, indebtedness to the man who gave me life, etc.), I would have given him the means to make that mistake and essentially given my father permission to ask my husband and I for money in the future. I'm glad I took the time to examine the facts and request the advice of my friends here at SA .

On a final note, this situation has made me a little more aware of posts other people have made on the boards lately involving money borrowed from family, and this almost insprired me to make a new thread asking this: Is it common for family members to gift and/or borrow money from each other? This seems to be pretty common in my family (my parents borrowed from their parents, my aunts still borrow from grandma, etc.) but this is pretty much unheard of (and taboo) in my husband's family. I'd hate for my family to think I'm selfish with my money if they knew I refused to help my Dad, but if I did help him, I might have DH's family thinking we were foolish to lend money to anyone. We kept this whole story out of both our families' business thank goodness, but it did make me wonder what would be considered a normal reaction if a family member asks for money.

[LivingAlmostLarge]

Depends on the family member, how much, why? There are different situations for everyone. I just can't say no under no circumstances because life will bit me in the ass.

[marvholly]

I have ONLY loaned/needed to loan money to my daughters. I loaned each in turn 5k toward the downpayment on their first homes WITH the caveat that it was to be repaid ina specific amount of time or it would accrue interest at the standard bank raate.

I also loaned DD2 the $$ for a car AFTER her Dad totaled hers (we paid her the ACV). It was paid back over 2-3 years at the same rate as we would have gotten in interest.

Last summer DD1 had a MAJOR disaster in her home requiring a total gut of the kitchen, family room and 1 full bath. Knowing they probably did not have sufficient $$ on hand I gave them a check and told them feel free to write up to 50k (DD1 can perfectly forge my signature). It was never used.

I never needed to borrow from either my parents or any other family. Late DH did borrow from his Mom MANY times b4 we married BUT she always had the (bad) habit of throwing it up to him. The last time was for my engagement gift. She crowed about him HAVING to borrow from her to buy it in my presence. I gave him the cash the next day and made him pay her back immediatly.

[disneysteve]

Is it common for family members to gift and/or borrow money from each other?

I can only speak from personal experience.

My parents have given (not lent) me and my wife money numerous times over the years.

I have periodically loaned my mom some money when, for one reason or another, her cash flow didn't match up with her expenses. NEVER has it been due to her mismanaging money. She is in her 80s and lives very frugally but between rock bottom interest rates and some not so good investment years, occasionally she comes up a little short. Rather than having her dip into principal, I'll cover something until things turn around. In every case, she has repaid us within a month or two.

Last year, we lent my cousin (who is like a brother to me) money to buy his retirement home. He had plenty of money but for tax reasons, it wouldn't have made sense to draw from it during the 2011 calendar year. After he filed his taxes this year, he was able to tap those funds and repay us, as I knew he would.

So on very rare occasions, we lend money and only to very specific people about whom we know pretty much every detail of their personal finances. I help my mom manage her portfolio and I am the beneficiary of all of my cousin's accounts.

[phantom]

My mom used to borrow money from me when I was a kid. She opened a savings account in my name with a couple hundred dollars in it when I was very young that I didn't even know about at first. When she told me about the account and showed me the ledger, I was confused to see some deductions on it. She explained that when she needed money, she borrowed it from my account and always paid me back with interest. Seeing that she was giving me way more interest than the bank, I was okay with it. I'm not entirely sure where the money in the account came from in the first place, whether it was gifts from other people to me or whether she had just put it there. At the time, I just assumed that she had put it there, so it was hers to take back if she really needed to. I am pretty sure she never took money out of the account again after telling me about its existence.

Nowadays, the only time my family and I owe each other money is when someone buys something for someone else. For example, if I need something from Sam's Club where my parents are members and I am not, they'll pick it up for me, and I'll pay them back. Or if my husband's friend is selling his hockey tickets, and my parents want to go, my husband will pay his friend for the tickets and my parents will pay him back. We never owe each other more than a couple hundred dollars, and we always pay each other back right away.

The only time either my husband or I have received large monetary gifts from our families was when we were getting married and building a custom house. My mom gave us money to upgrade the cabinets and the carpet, my grandma gave us money to make the kitchen bigger, and my husband's mom and step dad gave us money just to help in general. We didn't ask for any of these gifts, but they all wanted to make it easier for us to get into a really nice house, so we accepted them happily.

[MonkeyMama]

That sounds like a happy ending, and maybe someone else can learn from the experience.

Honestly, people don't ask us for money (most our friends and family are pretty "together." To the point even if they needed money they wouldn't bother us). We'd say NO!

I do like the rule to only "lend" that which you can afford to "give."

My parents like to lend money (first car, etc.) and dh's family likes to give money. I think we will do a combination of both with our kids. If they prove to be repsonsible I don't mind helping paying it forward a bit. For example, when we bought our first home, we needed $10,000 more to our cash cushion, to please the lender. My parents gave us $10,000 and we paid it back like the next week. Same when we bought our second home. My first car died about the time I graduated college, but before I had started my new much higher paying job. I took a very short-term loan at that point because it made much more sense to upgrade (based on future wages) than to fix my 20-year-old car with my cash. {I only bought a $5,000 car, so was nothing extravagant!}. I don't think I could have gotten a loan if I tried, at that point in time, but was able to pay it back in a few months. Those loans always made ALL The difference. WE probably never asked dh's family for money because we don't *ask for* money. But we knew if we asked them for a loan they wouldn't let us pay it back. His family paid for his first car and gave him money towards our first home, etc.

I don't particularly plan to borrow from our parents again now that we are more established, and I don't foresee ever giving money outside of the family. Probably only to our kids.

[feh]

On a final note, this situation has made me a little more aware of posts other people have made on the boards lately involving money borrowed from family, and this almost insprired me to make a new thread asking this: Is it common for family members to gift and/or borrow money from each other? This seems to be pretty common in my family (my parents borrowed from their parents, my aunts still borrow from grandma, etc.) but this is pretty much unheard of (and taboo) in my husband's family. I'd hate for my family to think I'm selfish with my money if they knew I refused to help my Dad, but if I did help him, I might have DH's family thinking we were foolish to lend money to anyone. We kept this whole story out of both our families' business thank goodness, but it did make me wonder what would be considered a normal reaction if a family member asks for money.

I've never borrowed money from a family member, nor have I lent money to a family member. My wife's family is a different story; she has 4 siblings and parents that have been diligent savers. Most, if not all, of her siblings have borrowed money from her parents. In most cases, I don't think those loans will be repaid.