Loaning Money to Family Members Is a Losing Proposition

by Hank

I was proud of one of my Soldiers today.  He received an e-mail from his mother last night asking him and all of his other siblings to help bail out their youngest sister who is facing foreclosure after six months of delinquency on her mortgage. 

 

Like popular radio talk show host, Dave Ramsey, I am against loaning family members money.  It only leads to hurt feelings and resentment when the loan is not repaid.  I am in favor of helping family if you are able though.  If a family member is struggling financially and you can give them money, that is probably a better course of action that a loan.

 

Depending on the family member’s need, there are other non-monetary ways you can help in those situations, such as giving them a job, referring them for a job, getting them financial planning help, etc.  Even something as little as giving them a book can help.  For example, Dave Ramsey’s Total Money Makeover changed my life.

 

No matter what you decide to do, make sure that your home is taken care of first.  You cannot help others until your financial wellbeing is secure.  Do not feel guilty if you cannot help because you are struggling to payoff your own debt or save for your 3-6 months emergency fund.  There will always be family emergencies that need our attention.  Set yourself up for success so that you are the helper and never have to be the helped.

Share and Enjoy: These icons link to social book marking sites where readers can share and discover new web pages.

Add to Technorati Favorites Delicious Del.icio.us Digg!

{ 1 comment… read it below or add one }

Jerry August 29, 2008 at 9:15 pm

This is really excellent advice about an issue that too often leads to family trauma… if you can afford to GIVE a family member a monetary gift, then that is infinitely better than loaning it. There is never any insurance that they will repay the debt, and that can lead to an untenable family situation. Great points!
Jerry

Leave a Comment

Previous post:

Next post: