How much do we owe others? (and when should we walk away?)

Last January I loaned money to a friend who was in financial crisis: Her vehicle was about to be repossessed. The transaction troubled me for a number of reasons, which I detailed at my personal website in a post called “I’m not a payday lender. But I play one on TV.”

During my trip to the East Coast I spent part of a weekend with “Monica” and her family. (Names have been changed to protect the profligate.)

When we made a Wawa* run, Monica didn’t want me to pay for my own Tastykake.** She threw it in with her own order, which totaled a little more than $34 and which included a coffee cake, a box of doughnut holes, and a $2-plus bottle of iced tea.

* The world’s best convenience store. Yes, it’s a damn silly name. But Wawa rocks.

**The world’s best snack cake, bar none. Sure, Little Debbie is cute but she’s got nothing on a Butterscotch Krimpet.

I started to feel uneasy. In the next 24 hours, the following additional red flags flew:

  • Monica bought about $100 worth of maternity clothes for her married daughter, who right now is still as thin as a candidate’s promise.
  • They have satellite television and DSL. Her kids have cell phones with text packages.
  • She mentioned she was planning to buy a snow blower, which after their military discount would run “only” about $1,000. (This despite the fact that she lives in a state where it doesn’t always snow in the winter and the fact that she has three healthy teenagers.)
  • Monica also mentioned that her van was about to hit more than 200,000 miles. Her daily commute is about 50 miles each way.

You know what wasn’t mentioned? Paying back my $800.

An Unsustainable Way of Life

This isn’t just a cranky post about being a human ATM. I knew when I gave them the money that I stood to lose it. Actually, I don’t think I will. It took 18 months for the first loan to come back, one $50 check at a time, but ultimately it was paid in full.

After making the second loan I mailed a personal finance book to Monica and her husband, “Gordon.” I also suggested tracking expenses in order to plug money leaks, and urged them to contact a debt management program through the National Foundation for Credit Counseling.

My note concluded, “I know it’s not easy to take a critical look at your life and to realize that no matter what happened in the past, you are responsible for the present. Change is never easy. But no one will help you except you.”

Monica wrote back, promising they’d work to cut expenses. She said she’d already advocated dumping the TV and cell phones.

Nine months later the television is still on, the teens are still texting, and Monica and Gordon are still living an unsustainable, paycheck-to-paycheck lifestyle. Here are a few more details, to show you just how deep their denial runs:

  • Company-wide layoffs are looming at Monica’s workplace.
  • Gordon has lower-back issues and is in his early 60s, so there’s no telling how much longer he’ll be able to keep his job.
  • Neither one has any retirement savings.
  • They don’t have an emergency fund. In fact, they have no savings at all.

That’s right: no cash is being set aside in case that layoff materializes or for when the vehicle finally dies. But there’s money for satellite television, texting and doughnut holes. Maybe a snow blower, too.

Treats Before Necessities?

I’d hoped that the first crisis — nearly losing their home — would force them to wise up. It didn’t. Want to know the reason they needed the second loan? They couldn’t make the van payment because it had taken all available funds to pay…

…wait for it…

Bounced-check fees and Catholic-school tuition for their youngest.

They had money to buy technology and other treats, sprinkling NSF checks along the way, but not for an essential recurring expense. Without a vehicle, Monica couldn’t get to work. But they didn’t think about that.

I worry deeply about their future. It’s a pretty safe bet that more things will go wrong. When does something not go wrong when you own a home and are raising three teenagers?

And when it does, they’ll be right back in oh-shit-now-what mode.

No More Bailouts

In that “payday lender” post, I wrote that I could no longer loan money. But I also admitted that I wasn’t really sure what I’d do if she called again, frantic for cash.

Now I’m sure.

Let me be clear: I’m not suggesting you abandon people who through no fault of their own have wound up holding the gooey end of the lollipop. For example, every other week I send $50 to my 88-year-old aunt. She uses the money for medical co-pays.

That biweekly payment is a line item in my budget. What isn’t in my budget any longer is bailouts. I’m a freelance writer who funds her own retirement and insurance and makes regular charitable donations. And at nearly 54 years of age, I have finally given myself permission to enjoy some of the fruits of my labors (frugally, of course).

It’s important to care about your fellow man. But not if you’re enabling rather than helping.

I’m Not the Loan Arranger

If my friends ask for help again, bailing them out won’t really help them. It would just allow them to postpone, yet again, the very hard and very necessary work of changing the way they spend.

I’m done. Maybe you should be, too. The next time you write a bail-out check, swearing it will be the absolute last loan? Make it stick. Frame it any way you like, but tell your sister/son/frat buddy that you can no longer afford to do this.

Maybe it’s that your own financial stability is at risk. Maybe it’s that you’ve given and given and nothing has changed. Maybe you want to use your money on something for yourself once in a while.

Whatever the reason, state gently but firmly that your career as loan officer is over.

You could find some other way to help, such as:

  • Offering to loan your personal finance books
  • Helping to create a workable budget
  • Pointing out sites where people can learn smarter spending habits, such as Get Rich Slowly (duh) or MSN Money’s Smart Spending blog
  • If need is imminent — not much food in the house, kids need glasses — direct them to my previous GRS piece, “Unemployed? Underemployed? Here’s how to get help.”

If a relative or friend is a financial train wreck, you owe it to yourself to get off at the next station. It will be one of the hardest things you ever do — and probably one of the most necessary. For your sake, and for the other person’s, close the bank and keep it closed.

Readers: Have you had to cut off a family member or friend who needed rescuing but wouldn’t do much to help himself? Was it tough? Did you offer any non-monetary help, and did the person ever wise up?

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There are 241 comments to "How much do we owe others? (and when should we walk away?)".

  1. 20's Finances says 12 September 2011 at 04:26

    wow, that is quite sad. It’s unfortunate that they didn’t take your advice to heart. Now, it will be a long road ahead of them. I think this happens to someone in all circles of friends/family.

  2. Beth says 12 September 2011 at 04:26

    I’ve never faced this personally, but my parents’ church has. They’ve had people appeal for monetary help who really need help budgeting and managing their money instead. (I.e. they can’t pay their bills, but aren’t willing to give up luxuries.) The church isn’t supposed to judge, so that makes things really difficult to say no — especially if children are involved.

    • GJ says 12 September 2011 at 08:20

      Our church offers Financial Peace University classes and most of the church members have gone through the program in the past 3 years. It is so awesome to have an entire community of like-minded people around us (both spiritually AND financially) that we can have open and frank financial conversations with.

      I’m not sure what the “policy” is on financial assistance, but I believe a partial scholarship for the program is offered.

      • Beth says 12 September 2011 at 17:14

        That’s a great idea! I’ll pass it along. Thanks 🙂

    • Marsha says 12 September 2011 at 13:18

      What I’ve done in situations like this is to give non-cash help. I’ll buy a bag or two of groceries or take the kids shopping for new clothes or shoes. I’ll babysit the kids for free while a parent works a second job to get money to pay off debt. But to get my help, they must prove to me that they are cutting any unnecessary purchases. Sometimes, tough love is the best kind of love.

      • Beth says 12 September 2011 at 17:18

        I think the church has moved away from monetary assistance after it got burned a couple of times. I know the policy is not to judge, but at some point I think they had to set priorities. They could use the money to help someone who won’t give up the luxuries, or they could use the money to help someone who didn’t have much of anything at all. It’s really complicated.

  3. STRONGside says 12 September 2011 at 04:42

    I have not been asked, nore offered to lend, money to my sister and brother-in-law, but I know that they could use it.

    I really want to buy them personal finance books, and maybe even a Dave Ramsey Financial peace seminar but have been hesitant to do so. I think that this coming Christmas, I will forgo any feeling and emotions ans just buy it for them, in the hopes of turning around their situation.

    • tjdebtfree says 12 September 2011 at 10:35

      I actually did this for my friend last year (we don’t exchange Christmas presents anymore) so I gave it to her as a Happy New Year’s present (hoping she would READ IT and start her New Year off better than the last!!)
      I was also afraid that she would take offense but at the same time it was worth it because she needed some “guidance.” Not that it was any of my business, but she is one of my dear friends and I just kept watching her make one foolish mistake after another. Thankfully, because I have been on my own mission of saving more, spending less, and educating myself – and I have openly talked about it several times amongst several of my friends – no offense was taken and she DID read the book immediately.
      If nothing else, she established an emergency fund and started paying attention to her own personal situation – and that is a start!

      • tjdebtfree says 12 September 2011 at 10:38

        Sorry I forgot to add… I gave her the DR Total Money Makeover book

    • Jenifer says 12 September 2011 at 13:27

      you can give it to me! 🙂 I think it would be a great gift for anyone trying to get to the ‘other side’! 🙂

    • Amanda says 12 September 2011 at 20:24

      I agree with tjdebtfree that I’d be nervous about offending by doing this. I’m not saying it’s a bad idea to give but do consider in your decision making process if you are able to handle the situation emotionally if it goes south.

  4. Andrea Travillian says 12 September 2011 at 04:46

    I too have faced a situation just like this. It is heart breaking to watch what is going on and know that it can be fixed. I too decided that my financial help had to end. I offered books, I even took the time to work on a budget with them and review bills. Sadly it did not help and the next time the money was needed, they went to another person. I think the best thing we can do is try to help in the other ways you recommend, and be willing to lend an ear, but lending the money does not help them.

    I love what you are doing for your aunt, so nice!

  5. louisa @ TheReallyGoodLife says 12 September 2011 at 05:00

    Something about this post really makes my blood boil – I think it’s because we’ve been in/are in similar situations. We’re not hurting for cash right now but only because we’ve lived carefully, so it rankles to see people who’ve pretty much entirely forgotten they owe us money living frivolously.

    Our mortgage, our only debt, is a heavy weight on our minds and I think if we had borrowed money from a friend/family member, it would be even heavier – and we would do what we can to pay it back AS SOON AS POSSIBLE. I think we imagine our friends feel the same way when we loan them the money: they’ll do what they can to pay it back as soon as they are able. But I think we give our friends/family too much credit (no pun intended) – I think we’ve forgotten how easy it is to turn a blind eye to debts stacking up.

    I really agree with the idea that these loans are often enabling bad behaviour. While I do see how it would be hard to say no to a Monica-type situation, this bank is going to be closed from now on.

    • Tom says 12 September 2011 at 05:55

      I was in a similar situation when I loaned a hefty (at the time) sum to my sister (IIRC, she and her husband used the money to pay their rent). During that period, I was socking away money for school, so felt I could afford it, but years later I was IN school, had used up my savings, and was starting to keep balances on my credit cards to make ends meet. All that time, I had not seen a penny in repayment, saw my sister and her husband spending profligately, and noticed that I was the last thing on their minds when they received their yearly Christmas checks from his rich aunt (for sums that were more than what was owed me). I tried gently reminding her about the debt, and pointed out that that money was now costing me almost 20% (credit card rate). During a game of Scruples, she accused me (through the game mechanic) of being an “Alex B Keaton money-grubbing type who would demand interest on a loan from his sister”. That made my blood boil like nothing ever has. We did not talk for several years after that.

      • SLCCOM says 12 September 2011 at 13:49

        Tom, I’m sorry your sister thought that money was more important than family relationships. Watch out when there is an inheritance in the wind!

        • Tom says 12 September 2011 at 17:18

          The debt was finally paid when her father-in-law took over their finances, bought a house for them (with easy payment terms), and paid off all their debts. Having said that, I’m planning as if I’ll never receive any inheritance, so if our parents don’t have their affairs in order, I won’t be overly put off if my sister somehow makes off with the lion’s share of whatever it might be.

  6. Everyday+Tips says 12 September 2011 at 05:08

    I have helped out a friend or two, as someone helped me out when I was around 19, and I appreciated it so much. (My friend gave me his car as he bought a new one, and allowed me to pay for it a few months later. I think it was 600 dollars for a sweet 1979 Sunbird, and it was 1988 I believe).

    The people I have helped out always paid me back. There is someone else I have helped out over the years, but sometimes you just have no choice because you have to live with yourself, and it was a given up front that it was not a loan but a ‘gift’.

    I can’t remember the show, but this post reminds me of an episode where someone loans his friend some money, and then sees the woman being all extravagant and he gets frustrated. Oh, it was Frasier, and I think Frasier loaned Roz some money…

    • Samantha says 12 September 2011 at 06:38

      There was also an Everybody Loves Raymond – Ray gave (his brother) Robert some money because he was having a rough time, then Robert used the money to go on vacation.

    • Beth says 12 September 2011 at 07:36

      I just saw that episode of Frasier. He did lend Roz money, but the money he thought she was spending turned out to be gift certificates and a friend buying her lunch, etc.

      Big Bang Theory also did an episode on lending money to a friend/boyfriend.

  7. Jen says 12 September 2011 at 05:09

    My younger sister used to ask for money at least once a month, always for ‘groceries’, always framed in a way that made me look like I was personally starving her young daughter if I didn’t pony up with the cash.

    It didn’t take me long to find out that the money was actually funding booze-fueled karaoke nights with her friends. So for awhile, I switched to picking up groceries for her, or getting her a gift certificate (this was before gift cards) to the grocery store. She resented me SO MUCH for not just giving her the money, but I held firm.

    Eventually, even buying groceries wasn’t a workable solution, as she was figuring out she could just not budget for food because I’d inadvertantly taken up that cost for her, and she could just use more money to party with her friends.

    I put an end to that about 20 years ago. I was a STUDENT, for heaven’s sake – I absolutely could not afford to support her and still pay my own rent. I was gentle about it, and offered to show her how to construct a budget and how to be frugal, but she was really ticked off about it when I did it, and it took a long time (years) for her to really understand I was not going to make myself responsible for her finances.

    Flash forward a couple decades, and she’s better at her own finances, but only marginally. She still talks people into paying for stuff for her – and it works, until they figure out the money isn’t going where she said it would. She cycles through ‘friends’ pretty quickly this way. It’s sad, but I’ve learned that I simply cannot fix it, and throwing money at it does not help at all – as you said, it just enables.

  8. Jennifer says 12 September 2011 at 05:16

    I’ve had a similar situation occur with my dad and stepmom. They’ve asked to borrow tens of thousands of dollars, including asking me to pull money from my retirement accounts in order to help them stay in their house. The really crazy thing is that they live in a house that costs more than double what ours does and they spend money as if they have a pile of it. The most difficult thing I’ve had to do is say no to their requests for money. I make it a point to never mention anything about how we’re doing financially or about any purchases we make. I just don’t want them to think we’re a source for bailouts for them. I’m very concerned about how they will ever retire. At the same time, and I don’t mean for this to sound callous, we can’t risk them pulling us down with them financially.

    • getagrip says 12 September 2011 at 05:52

      Don’t feel bad and don’t give in. I have watched a sibling literally drain close to two hundred thousand (that I actually know about and I suspect much more that I don’t) over many years from an ailing parent. I kept thinking they would learn, but after more than twenty years and all that money, there is no change in the sibling’s behaviour. With no money in the bank, and only a social security check coming in, my diabetic, heart failing, 80 plus year old parent took out a home equity loan to cover this sibling’s debt. I mention this because you have to say no, or there will not be an end for you. I’m not adverse to helping, but you need to draw your line, make it clear and stick to it or they will drain you for life.

    • Adam P says 12 September 2011 at 06:10

      I hear you!

      It’s one thing to say no to a friend or a sibling, and no shortage of advice to be found on lending money to your adult children. However, when it is your OWN parents who gave birth to you (okay plus a step parent occasionally) asking for money then it’s a lot less clear.

      I’ve lent about $35,000 to my parents in the last 2 months for their business. I shouldn’t have but my stepdad just got diagnosed with cancer, and I don’t want my mother to worry about money when she’s worrying enough about the sickness.

      I’m pretty sure I’ll get it back, but if I don’t that’s about 1.5 years worth of house downpayment savings I’m out.

      But YOU try saying no to your mother (excluding mothers who have an addiction problem like gambling or drugs/alcohol which would make it easy to do!).

      • Lisa says 12 September 2011 at 16:12

        No it does not make it easier to do! It makes it harder! I would give a great sum of money to truly help my mother, but after this long, with her addiction and “friends” it would be a black hole. It’s depressing.

      • Jennifer says 13 September 2011 at 05:19

        Adam, just to clarify…my father was an absentee father when I was growing up. He didn’t understand that paying child support was to help me. He felt it was helping my mom, which he did not want to do. I wouldn’t have a relationship with him today if my mother hadn’t cultivated it over the years. Although he’s been much more involved in my life over the past 15 years, I don’t feel the same commitment to help him that I do my mother. For the record, he has already drained my stepmother of hundreds of thousands of retirement savings, plus hundreds of thousands of regular savings/investments. I love my dad, but I’d be more inclined to help my stepmom (to help offset her losses) after he is gone, than to help him while the spending continues to spiral out of control. Thankfully, my mother has taken care of herself and I don’t have to worry about all of this with her.

    • Donna Freedman says 12 September 2011 at 06:53

      That’s where I am now: If I keep loaning money nothing will change except that my wallet will be lighter and they might end up going down in flames anyway.
      I can’t risk going down with them — especially since I have done what I could to get them to plan and spend more responsibly.
      Very hard to watch, since there are kids involved. But as I told myself back in January: It is not my responsibility to fix her life.
      Still hard, though.

      • Well Heeled Blog says 12 September 2011 at 07:03

        Your first obligation is to your own family, so like you said, you can’t afford to jeopardize your financial situation because of your relatives, no matter how deeply you care for them.

      • FrugalTexasGal says 12 September 2011 at 07:38

        Your first obligation is to you. That said, if you decide to help (especially when kids are involved) I encourage giving that will directly benefit the kids. Harder when you are not there in person I know. In otherwords, I might volunteer to take said kid shoe shopping, or take said kid to the doctor and then the glasses store, as oppposed to sending mom money because they say kid needs x

        • Donna Freedman says 12 September 2011 at 08:02

          Agreed. If I get little Johnny new specs mom or dad can’t return them for cash, either.

      • chloe says 14 September 2011 at 09:23

        I agree, kids in the equation does make it harder. My husband and I have done things specifically for the kids in these kinds of situations. In a couple years these teens will be working full-time and/or in college, maybe on a trip to their area you take them out to dinner or pay for a text book or something. The parents have repeatedly proven that they have no intention of changing their spending habits, but those kids might have a fighting chance once they get out of the house!

    • Amanda says 12 September 2011 at 20:29

      You’re retirement?!?!?!?!? Don’t back down!

  9. getagrip says 12 September 2011 at 05:18

    Folks out there will bleed you dry with all the good intentions and apparent need in the world, then when they can’t bleed you anymore, you cease to be of use to them and they drop you and find someone else to bleed. But they don’t change. Why should they? They are rarely allowed to fail. Somehow for most of them things always seem to work out one way or another at the last minute. This is why they are honestly shocked when they actually do lose the car or the house and they get really mad at everyone else for the failure.

    • Donna Freedman says 12 September 2011 at 06:57

      I’m afraid that’s true in many cases. In this case, sadly, they have no one else to ask.
      But again: As painful as this is to watch, I have the choice of putting my own finances at risk or putting on that oxygen mask.
      I cannot be a burden on my own daughter when I get older, since she and her husband both have chronic illnesses and are struggling to save for their own retirements. Thus I need to do what I can for my fellow man while keeping in mind I can’t help everyone.

      • SB @ One Cent At A Time says 12 September 2011 at 08:41

        As JD ysys often, Only you can take care of your money, this true in all cases, even the person taking money from you doesn’t care it more than you. Now I wonder Donna, that $800 came out of somewhere where you were earning interest, or it might have come from your emergency fund. Either way it is a loss for you.

        I burnt my hands a couple times and one of them, I later discovered, asks for money from multiple friends. It is good to help out once in a while but , when it repeats it raises alarm.

        I stopped lending money these days and upon requests, I only say that all my investments are in retirement saving and long term CDs and thereby I can not lend money. I understand if someone very near asks for, it is very very difficult to turn the request down. In those situation I try to minimize the contribution as much as I can and give them a month or two to pay back. If they don’t pay I put them in my black list and consider the money given to charity.

        One more important aspect of lending money is to track it, we often forget that we are supposed to get back money from someone, and I am so far managing by relying on memory, but I think I should create a manual entry on Mint/Yodlee tool so that it’s constantly in front of my eyes.

        Just one advice, it is one thing to keep track of your money and it’s another to get stressed out of ‘bad loan’ situation. You can get stressed easily if you have given out a large loan and the person is to close to even ask for money. Perhaps you or JD can advice us how to cope with that mental dilemma..

    • jcbillings says 13 September 2011 at 08:27

      Sounds like many have had this experience. I had to cut off a friend who used me like an atm machine– she was always just on the verge of getting it together but needed money (usually in a crisis). Finally I realized she wasn’t going to and told her she had to quit asking me for money. She drifted out of my life. It’s been hard.

      • Donna Freedman says 13 September 2011 at 09:07

        It isn’t necessarily just the knowledge that you’ve been “used like an ATM,” either. We may genuinely miss the person’s company.

  10. Chris says 12 September 2011 at 05:25

    I have had a similar situation with my sister. She was in danger of losing her house so I payed a couple months of her mortgage payment to avoid the foreclosure process. The very next month, my mom tells me her husband bought a new truck and my sister bought a new sewing machine. I never saw a dime of the money that was owed. They ended up losing the house anyway.

    Recently, I paid over $1000 of my mom’s medical bills that she didn’t take care of for 3 years. In this situation, I don’t expect any money back and did it because this is my mom. I knew I wouldn’t get the money and was good with that.

    In the future, I will NOT be lending money of any kind to friends or family. It just isn’t worth it.

    • Donna Freedman says 12 September 2011 at 06:59

      What a kind gesture for your mother. Also for your sister, but shame on her and her husband for not paying you back. At least you now know not to lend to them again.

    • CincyCat says 12 September 2011 at 11:45

      I wish I could just flat-out pay for my mom’s medical bills (some of them aren’t really that much). The problem is that she is on partial disability, so if these bills suddenly disappear, then her other benefits may disappear also. The best I can do is give her a little at a time, which she then uses to pay the bills a little at a time… She’s truly in a catch-22 situation.

      • Donna Freedman says 12 September 2011 at 11:51

        Could you do other things to save her money and ease her mind, such as stocking the pantry, giving her a gas or drugstore card, or making sure she has good shoes? (“Good” as in comfortable ones that offer support.)
        She’s lucky to have such a caring child.

        • CincyCat says 13 September 2011 at 11:29

          Thank you for the kind words! 🙂

          Mom is actually very, very careful with her money, and has a spreadsheet system that she uses to keep track of her money. There just simply isn’t enough of it. 🙁

          I have taken her to get her hair cut, etc., and my sister does the same when Mom goes to visit her. Recently they helped her with a car repair, and I helped her cover the deposit when she moved to her new apartment. (It’s closer to me, which is good; but more expensive than her old place, which is bad.)

  11. Dan M53 says 12 September 2011 at 05:28

    Over almost 25 years of marriage, I calculated a few years ago that a certain in-law has put the touch on my wife and me to an average of $50/month (the total’s over $10,000). We can afford and they can’t. We now actually fund an account for this. If the pattern holds, they’ll be making the tearful call any time now, and we have the money set aside to cover it.

    There’s always a good reason they need the funds and I decided years ago that it’s the right thing to do to support family. When the post-dated repayment check sometimes show up, my wife calls and tells them that we’ll rip them up and they can pay whenever they have the cash on hand. I never want to be considered a victim in this and it feels better knowing that we’re helping keep the family afloat.

    • Brenda Pike says 13 September 2011 at 11:14

      I like this idea. I serve as the de facto emergency fund for a few of my family members, and I have a line item in my budget for it. The money’s usually repaid, but I make sure to think of it as a gift so I don’t get resentful if it’s not.

      The way I figure it, my parents and older sisters invested their time and money in me when I was a child, and this is just the compound interest from that. They could have been selfish and perhaps been better off today, but instead they sacrificed for me. This is the least I can do.

  12. carmie says 12 September 2011 at 05:37

    Ants and grasshoppers.

    • getagrip says 12 September 2011 at 06:04

      How many times did the ant bail out the grasshopper? Once. end of story.

    • Milly says 12 September 2011 at 07:07

      Hah. I mentioned the story of the grasshopper and the ant to my sister once when we were talking about money, and she said the ants were entertained by the grasshopper’s singing and owed the grasshopper for it.

      • E. Murphy says 12 September 2011 at 08:45

        Oh My God. Apparently there is nothing that can not be justified.

        • Bareheadedwoman says 12 September 2011 at 11:13

          in Aesop’s fable the grasshopper is the villain; in other –just as old Greek– versions, the ant’s virtue as hardworking is also portrayed as vice, which is where the version comes in that the grasshopper entertains the ants through “the long winter” as in “all work and no play, makes jack a dull boy”.

          In even older versions, it wasn’t an ant but a dung beetle who needed help because rain had washed away his food.

          In any case, I find ants who can’t sing to be as dull as grasshoppers who can’t work and anyone who thinks one is better than the will at some point be walking in the moccasins of the formerly disparaged because the universe hates a vacuum.

          At the end of the day, I would rather my epitaph be that I was too trusting and/or forgiving, than too fiscally hardcore.

  13. Kevin @ Thousandaire.com says 12 September 2011 at 06:16

    I don’t get in the business of lending to friends and family. If they need money I can give them a “loan” and ask to be paid back, but in my mind I’ve given them a gift. If they pay me back, awesome! If not, it was a gift in my mind, so it doesn’t matter that they are spending $1000 on a snow blower.

    However, if I know they are the type of people who would spend $1,000 on a snow blower, I wouldn’t give them a loan/gift in the first place.

    • Donna Freedman says 12 September 2011 at 07:01

      And now that I know that, it reinforces my resolve not to give any more money because it only postpones the inevitable.
      Perhaps they will pull themselves together before the next crisis. If not, there is nothing more I will do. As noted, I need to put on my own oxygen mask first — for my daughter’s sake, if not my own.

    • lawyerette says 12 September 2011 at 07:51

      Ditto. Giving a gift under the guise of a “loan” is the best way. It keeps the asking to a minimum – since you can’t ask me for any more money if you haven’t “paid back” what I already loaned you.

  14. Samantha says 12 September 2011 at 06:20

    I really like the substance of this article, but the writing is a little confusing.

    Mentioning Monica after bringing up the loan made me think that Monica’s story was separate from the loan story. I was confused while reading about Monica’s spending because I didn’t see how it was related to the story (or why we should be concerned about it) and had to go back to figure out that she WAS the person who received the loan money.

    Same thing when it was noted that Monica’s first loan was necessary because of nearly losing her home – I went back to check if that was the reason at the beginning or not.

    Maybe it’s because it’s assumed that we would have read the post on Donna’s blog, but I didn’t, so I was confused about whether this was the story of one loan or several loans, so I was trying to separate the stories into many different ones when really there was only one.

    Maybe this is just me – it could be a little Monday morning reading comprehension problem! – but I thought I’d point it out in case it applied to others.

    • Diana says 12 September 2011 at 11:11

      Completely disagree. I have never commented before on GRS, though I’ve been reading for a couple years, but Donna’s articles are the most clearly and compellingly written of all the GRS staff writers. Although I read this blog for the quality of its content, not the quality of its prose, the recent addition to Donna as well as JD’s dip into more emotional/personal territory (such as the post on his mother or on his desire to travel and ditch the house) has been satisfying my literary tastes in surprising ways.

      Thank you, Donna!

      • Donna Freedman says 12 September 2011 at 12:09

        Thank YOU, Diana….!

  15. Adam P says 12 September 2011 at 06:20

    I already commented above re: Parents who take money from their kids-who-read-personal finance-blogs like us, but just wanted to add that I really liked this post Donna, it was a great read!

    • Donna Freedman says 12 September 2011 at 07:02

      Thanks, Adam.

  16. CMN says 12 September 2011 at 06:26

    I find myself in this situation on an ongoing basis. The problem is, I am actually in debt (student loans), I am quite young (24), and the person asking for a bailout is my own mother.

    I have yet found a way to say no to her. I love her very much and owe her everything in my life. However, she makes very, very poor financial decisions. It’s tough when it’s your own (single) mother who has been at your side and been your biggest advocate your entire life.

    I will probably keep bailing her out. The fact is, I’m married and my husband and I make very nice salaries for our age. We still have many years before my ungodly student loans are paid off, but we’re not hurting day-to-day.

    I think this is a secret and sometimes shameful part of becoming significantly better-off than your parents. The care-giver relationship (at least financially) flips much earlier in life than most other people who have solidly middle-class parents.

    • Donna Freedman says 12 September 2011 at 08:40

      If you can do this while still funding your own retirement and making other smart financial decisions, do so.
      And if you can’t? You will have to find a way to say so. I just did a column about this for MSN Money:
      http://money.msn.com/how-to-budget/are-you-your-parents-atm-freedman.aspx
      I wish you luck, because I have a feeling you’re going to need it.

    • Linear Girl says 13 September 2011 at 14:35

      Have you considered bringing up the subject along the lines of “Mom, did you realize we’ve given you $x,xxx over the last three years? I want to help you learn to budget better because we can’t continue to give you this money indefintely.” It’s a sticky conversation, but one to have now because you’re creating a pattern that could continue for decades. It will be easier to talk now while than it will when/if you reach a breaking point.

      • Donna Freedman says 13 September 2011 at 22:00

        I like this approach: It clarifies how much money has been given (who wouldn’t want to “forget” how much she’d taken?) and also puts her on notice that this cannot continue.
        Diplomatic, yet realistic. Nice.

  17. Darla says 12 September 2011 at 06:36

    I’ve a friend of almost 30 years who is married with four kids and is ALWAYS in financial trouble. The rescuer in me has written many checks, never as loans, just as gifts. I know financial hardship — been there done that. But throughout the years I’ve noticed a pattern with her. It’s ALWAYS someone else’s fault she is in trouble, it is never her bad choices. I’ve always felt fortunate because I made more than she did and my life seemed easier. It wasn’t until lately that I stepped back and started paying attention to the pattern. Even though she chooses to stay in a job that makes minimum wage, they have a NICE house in an expensive neighborhood, filled with nicer furniture than I’ve ever owned, they have cell phones, a desktop, a laptop, a pool and my friend is always dressed to the nines. When a family member who is always helping them had the audacity to notice my friend always has new clothes — my friend was indignant and insisted that is because people give her clothes. I believe this…but only to a point. She goes out to eat — all of the time. She goes out drinking a LOT. Whenever anyone questions this she will get defensive and say she had a ‘gift card’ or that someone else bought her drinks. She’s oblivious to the fact that even THAT is an indication of a bigger problem. They are on public aid for health care — and always have been. So finally, I decided that I have given my last dollar of ‘help’. As honestly, until they hit their rock bottom — nothing will change. Turns out all the ‘help’ really has just been enabling. The cold hard facts are that no matter how much money you make (or don’t), if your expenditures are more than your earnings — you will always be in financial trouble. Until she accepts that it is her actions and poor judgment that got her in to this predicament — she will never get out of it. As for me, I will do my part in helping by not financially contributing to the problem. I will lend an ear or a shoulder, but not one more dime.

    • Donna Freedman says 12 September 2011 at 08:44

      I did a column on that, too:
      http://money.msn.com/family-money/your-best-friends-bank-you-freedman.aspx
      For what it’s worth, I think you’re making the right decision. Giving her money won’t help her in the long run (i.e., what will she do when she’s burned all her bridges?) and is causing your own stomach to knot.
      Good luck — and don’t be surprised if your friend is cool to you in the future or drops you entirely. Sad to say, some people are friendly only when their needs are being met.

  18. Dr. Jason Cabler (@DrCabler) says 12 September 2011 at 06:50

    You are what is called an “enabler”. That’s ok, though, you were trying to be kind to a friend. We pretty much all have been an enabler to someone for some reason. Usually we are trying to help but what ends up happening is that we keep feeding the bad behavior/decisions that got them there in the first place.

    It gives them the false notion that there will always be someone there to bail them out. Unfortunately, people don’t grow when they are bailed out, and growth is what’s needed here.

    Eventually these people will have to stand on their own financially and deal with their situation. The best thing you can do as a friend without being an enabler is to give them advice if they are willing to listen. Tell them that because you love them you can’t hurt them anymore be enabling their problem. Support them in any way you can without bailing them out.

    They are the ones that have to get to work and do what it takes to change the situation. It takes commitment and hard work but is so worth it in the long run.

    I teach this concept in my “Celebrating Financial Freedom” home study course and I’ve seen these concepts change lives. So keep up being a kind and loving friend without being an enabler. YOU CAN DO IT!!!

    • Donna Freedman says 12 September 2011 at 07:02

      I know that I am, which is why I used the word “enabling” in the post. But no more.

    • Bareheadedwoman says 12 September 2011 at 11:28

      okay with the friends and siblings…but although I often see comments about parents with article author commiserations, I rarely (if ever, can’t recall one other than JD’s mother’s stories) see any articles which address PARENTS.

      Just exactly how do you say no to an 80 year old who was forced into early retirement and then lived much longer than was expected with two bouts with cancer whom cannot pay rent in a rent controlled apartment whom relies on you to make up whatever shortfall in the month (while making other poor, but ultimately small choices–everything is a small choice on $800/mo in NYC—…you going to take away an old man’s sunday paper? there are no cells or tvs or such)…where upon if you DON’T help, said father will end up moving in with you after losing the apartment because it’s your one bedroom or a homeless shelter…and won’t qualify for section 8 because he has family…

      In today’s economy, especially with the government going after pensions THAT is the reality we are talking about when we say “what do I do when …”

      but no one talks about anyone but friends…and same generation, should-be self supporting siblings….people to whom it may be hard–but not impossible–to say no.

      Where does “repaying of lifecare” end and “enabling” begin when it comes to non-vice parents. I certainly hope you are not advocating walking away with your savings when/if no other solution is forthcoming–when its a parent.

      At best I hear from finance guru’s…”I don’t feel qualified to advise in that situation…” but I’m getting rather tired of reading about situations that are easily quantified.

      • Donna Freedman says 12 September 2011 at 11:39

        On the face of it, no one should refuse to help his parents. However, things are not always simple. Some of the people I interviewed for the MSN Money column had very good reasons for wanting to stop bailing out Mom and Dad.
        I’m not talking about paying for Dad’s newspaper because it’s such a treat in a life that’s very difficult. I’m talking about parents who refuse to cut back their lifestyles and expect their kids to make up the difference.
        I liked the advice given by one expert: To figure out what (if anything) you can offer your parents, along with tips on reducing their expenses. Then have this conversation with the parent: “Here are your options. If you can’t choose one of them, then this conversation has to be over.”
        Easier said than implemented, of course, but at least you’ve made your stand.

      • CincyCat says 12 September 2011 at 11:59

        What is said above re: “government taking pensions” is true. My mom is on partial disability, and her out-of-pocket medical spend-down is exactly equal to her portion of dad’s pension (they are divorced). I have private insurance and my oop obligation is only a fraction of what the government expects her to pay out of pocket. It’s ridiculous. She’d actually be financially better off letting the pension go and going on full disability – and what sense does that make???

      • Ely says 12 September 2011 at 15:06

        I think your dad’s situation is different. He’s not crying for you to pay his rent while he spends his income on toys or partying. Unlike “Monica,” he is genuinely doing all he can, and it’s not enough. If you can help him, do it.

        If you can’t… that’s a whole other problem. Good luck to you and your dad.

      • Linear Girl says 13 September 2011 at 14:50

        I think your dad’s situation *seems* like the friend situation, but I don’t see it that way. I think the real question you’re facing is more along the lines of “how entangled am I willing to be in my father’s life?”

        If you and your dad were just numbers on a page, you could work through various scenarios of where you could each live, separately or together, how adding one person to a household for food, toiletries, etc., would affect the bottom line. Would there be significant changes to transportation budgets? Entertainment? Communication? Then you’d chose the least expensive solution and implement it.

        I think the approach you take is similar, but you have to ask youself what are the scenarios you can live with. Could you live with your dad in your current place? Could you afford to move and would you want to? Do you like your dad? If so, would you still like him if you lived together? Can you live with yourself if you cut him off or see him struggling and living in poverty, if you could help? What will financing his retirement do to your retirement? Each of these will give rise to various ways you could help him.

        These are tough questions but I think that if you can answer them, then the answer of how far to go for Dad will fall into place. These aren’t answers anyone else can give you. I wish you the best of luck.

  19. jlg3rd says 12 September 2011 at 06:52

    NEVER loan money to anyone! It’s a horrible idea and 99% of the time it doesn’t work. The unfortunate truth of the issue is that most people who are in a situation like Monica’s need to fail in order to understand how money works. Sometimes when you lying face in the gutter the only place to look is up.

  20. Pamela says 12 September 2011 at 06:56

    Terrific post, Donna, for encapsulating the most important lesson of lending: you can’t change anyone else; you can only take care of yourself.

    I was building a small business when we determined that my mentally ill mother-in-law needed more financial support than we could provide with me starting a business.

    I took my current job to build some support for her into our budget.

    Yes, she made some irresponsible decisions with the money she had control over. And yes, she could have applied some of what she spent on trinkets and presents to her cost of living.

    But in the end, I could only be responsible for my own behavior. And I didn’t want to be the kind of person who left a family member in poor conditions just because she made bad decisions.

    Besides, even if she did everything perfectly, there’s no way she could have supported herself on her monthly disability payment.

    When we give someone money, we have to give up any idea of ever getting it back. And we have to give up any judgment about how they use it.

    We can’t tell other people what to do. But we can choose not to give if by giving we’re resenting the gift (or the receiver).

    The only person we have any control over it ourselves.

    • Robert+Zaleski says 12 September 2011 at 11:30

      I think it’s a bit different helping someone elderly who is struggling with other issues versus people who think they are entitled to more.

      Love is doing what’s best for the other. That’s not ensuring they can spend money on whatever they want, that rarely leads people to more happiness. So instead of enabling them to fail, you have to be stern most of the time. We cross wire the two way too often, and let ourselves be guilted for not wanting to do something others think we should, simply because we are prepared.

      It’s true someone may have a perfect storm of three things happen within a month that over extends them. But you’ll know the responsible people who work hard and really are just in a pinch, and they won’t mind nailing down how much they can pay you when and how their budget looks. They’ll also pay you back ahead of schedule.

      The ones who make you feel bad about not wanting to loan them money, or about being nosy and wanting them to change their habits, those are the people you should know you need to avoid giving money to. They are the ones who think it’s just “bad luck” when they fail to realize they never prepared ahead.

      • Donna Freedman says 12 September 2011 at 11:34

        Perfect storms do exist, but you’re right that a lot of people blame “bad luck” for situations that stem from poor money habits.

  21. Well Heeled Blog says 12 September 2011 at 06:56

    I’ve only loaned small amounts to friends (who have since forgotten about the loans and I’ve mentally written off the money). My mom always told me to never lend more than you can lose, which strikes me as an incredibly smart piece of advice. Also, because money is fungible, it doesn’t really matter what your friend do with the money *you* lent them – it’s all into the common pot. I don’t want to feel like I’m judging their every expenditure, so I think if my friends need help, I am going to do my best helping them in non-monetary ways. But for family… I’d be more ready and willing to lend/give money.

    • Donna Freedman says 12 September 2011 at 07:07

      I’ve lent/given to family and will continue to do so. But if family members were living the way Monica is, I’d have to change the way I loan/give.
      I might buy groceries vs. sending a check, or see if I could make a payment against outstanding utility bills.
      And I would gently but firmly let the family member know that my bailout days would be coming to an end unless I noticed changes in spending habits. I would resent helping make up someone’s rent if that person had gone to a casino or bought courtside tickets at a basketball game vs. taking care of business first.

  22. Geek says 12 September 2011 at 07:15

    These types of posts make me shudder – perhaps I’m extremely selfish. I’d take care of my parents or brother and let them move in with me, or I’d help out a child (of mine, if I had any) until they proved undependable. No money-handing-over otherwise. *Shudder*

  23. Tom says 12 September 2011 at 07:37

    Wawa, Tastykake, people buying snowblowers for snow that comes every 3 years, catholic grade school… sounds like you were in Delaware 🙂

    • Donna Freedman says 12 September 2011 at 08:02

      Close. South Jersey.

      • cc says 12 September 2011 at 08:56

        please, help the hungry- send a wawa junior meatball sub and a butterscotch krimpet up to nyc. i haven’t been near either of those in far too many years 🙁

        at least eat some krimpets for me 😀

        • Donna Freedman says 12 September 2011 at 09:05

          I have a family pack box of krimpets in my dad’s fridge even as we speak.
          Well, PART of a box. 😉
          Maybe I’ll get a hoagie for dinner. Once I get back to Seattle it’ll be back to frugal lockdown, but today I’ll get a shorti Italian hoagie, by gum.

    • El Nerdo says 12 September 2011 at 12:31

      Dang! I was gonna say Maryland. Close.

      I actually miss Utz crab chips, Yuengling beer, and seafood. MMM, SEAFOOD. (I live in the desert. Prices are absurd.)

      • Donna Freedman says 12 September 2011 at 12:54

        Herrs sour cream and onion chips, please. Or maybe Wise onion-garlic chips.
        And hoagies (Italian or meatball), cheesesteaks, Italian water ice (“wooder” ice), frozen custard, Silver Queen corn, soft pretzels from the Reading Terminal, “monster” cookies from the Amish bakery at the RT…but I’ll skip the shoo-fly pie and scrapple, thanks.

        • El Nerdo says 12 September 2011 at 20:22

          Ha ha ha– I like scrapple! Great with a couple of eggs after drinking and a show at the Recher Theatre in Towson (there used to have good shows there, once upon a time–maybe they still do).

          Anyway, since you didn’t like it, you might enjoy this little website:

          http://www.chickenhead.com/stuff/scrapple/index.html

          It’s an internet classic. 1998 and still awesome!

          (totally unrelated, here’s another gem in that site:
          http://chickenhead.com/stuff/outrage/
          have fun composing letters!
          )

        • Random+Anonymous says 13 September 2011 at 13:51

          I heard someone point out that sCRAPple has a word hidden inside, but that hasn’t stopped me from eating it.

  24. Kevin M says 12 September 2011 at 07:48

    This story hits home for me. We went through a similar experience and also like you have vowed to stop enabling the person. Our “snowblower moment” happened to be an iPhone and an American Girl doll…I don’t even have a freakin’ iPhone!

    • Donna Freedman says 12 September 2011 at 08:00

      It feels like a slap in the face: You risked lending this person money to help out, and the response is to treat himself to an iPhone?
      Sigh.

      • RosaMN says 12 September 2011 at 11:00

        I learned, from experience with a friend, that even though it feels like a slap in the face, it’s not. If she could make better decisions, and not have to live with the constant drama – the fear of being evicted, the fear of running out of food, the fear of failing her children, the fear ofher coworkers seeing her credit rejected, the fear of her car being taken away – she totally would.

        But she can’t. She actually treats her creditors better than herself, by eventually paying the money back when she is always in want herself.

        Some people are deliberate users but most are just what your “enabling” language suggests – addicts. They aren’t really treating themselves well with all that spending, any more than an alcoholic is with the booze. It looks like selfishness but it’s self-destruction.

  25. Ben says 12 September 2011 at 07:57

    My sister was like this. She’s almost 40 years old. She would make up some excuse (like owing the taxman money) to hit us up for a loan. Then she would slowly pay it back over a couple of years without interest. A couple of payments bounced. In the meantime, she would be out shopping, buying stuff. Luckily, she has only done that twice. Unfortunately for my parents, she borrow money from them but never paid it back.

  26. Hannah says 12 September 2011 at 08:08

    I don’t lend money to family, I outright give it. I’m not exactly happy about it, but when they have medical bills and live in the middle of nowhere and need gas money I just can’t say no. I do have concerns about their choices, a phone that could cost them a lot less a month if they gave up the packages, cigarettes that are only making their health worse, etc. But I decided a while ago that the extra line in my budget to get them what they need was worth them being able to feel like they have choices at all. They have very hard lives and a nice phone and some cigarettes are about the only pleasures they have. If my 50-100$ a month is spent on cigarettes and a cellphone bill, well then, that’s what happens. I can afford it now. If I reach a point where I can’t, then I’ll revisit my choice.

    • Donna Freedman says 12 September 2011 at 08:46

      You’re a kind person, Hannah. You say you can afford it now. I assume you’re looking out for your retirement et al.?
      If not, then pull back the donations and put that oxygen mask ON, lady.
      P.S. I like to send a gift card or a little cash to another relative, an about-to-be-single mom, “just because.” It gives her one night that week when she won’t have to cook and clean up after a long day of teaching. That makes me happy.

  27. Andrea says 12 September 2011 at 08:19

    I had a friend who made more money than my husband and I did combined. She was always in financial trouble- spent money like water- for things she “needed”- weekly massage, most meals out, trips and then retired early! I had lent her money in the past- and never saw it again. Now when she says she has no money and says (in a disaparging way)”you are so careful with your money” – she hasn’t changed her habits – and hints she could use money- I would never help her. in the past, I talked to her about cooking in bulk, buying frozen meals(not cheap but compared to eating out – yes),using the thrift store, cutting back on travel, the $90 weekly massage- she would say “you don’t understand- I need these”. I don’t understand- and I don’t care to understand.

  28. Janice Salomon says 12 September 2011 at 08:20

    Because of the emotional nature surrounding money added to the emotional nature of relationships, I make it a practice not to borrow or lend money. It’s easy not to lend money as it’s well known among my circle of family/friends that I don’t have any, so no one asks…LOL. And while I have been in situations where I could have borrowed money to make things easier for myself, I have not succumbed to that for the same reason. Easier meaning it could make sense to take a low interest loan from a friend rather than delay paying something and have it end up be more expensive for myself. As an analysis paralysis type person, I always end up weighing this, that and the other thing, so this “rule” takes all that out of the equation. I just don’t do it. And if I did, I would just write off the loan as a gift as others have said. Sometimes you just have to take a stand, and this is one of mine I’ve stuck with which has stood me in good stead.

  29. Jacq says 12 September 2011 at 08:21

    I have a friend that used to ask me for money all the time, but spends far more than I do going out to eat and buying electronics and whatnot. They usually paid me back over time, but it still bothers me to be treated by a friend like a credit card if not an ATM (mid-40’s and their own CC’s are constantly maxed out).
    I finally said that I couldn’t because everything is tied up in stocks and I’d trigger tax implications if I pulled anything out. So I lied.
    I also get a little tired of all the jokes along the lines of “well, you could give me the money” or comments about how “lucky” I was to make what I did or be able to take time off now. Sure. Very lucky to put in 80 hour weeks working 2 jobs in the past and living off of 25% of what I made. Just like winning the lottery.

    • Donna Freedman says 12 September 2011 at 09:27

      It’s frustrating to be put in that situation. You worked two jobs for a reason and now it’s assumed that “luck” put you where you are now.
      Or how about this one: “It must be nice…”
      Gah.

  30. Jason says 12 September 2011 at 08:27

    Out of college I found myself in a financial bind on a couple of occasions with a bill looming and no idea how to pay for it. Luckily I did have a relative who bailed me out, but in these cases (in addition to this relative helping me take a long hard look at why I was living beyond my means) my aunt insisted that I decide how much I could REALISTICALLY afford to pay her back each pay period, and then she asked that I set up a direct deposit from my payroll to her savings account. She commented at the end of the repayment period that while she questioned some of the things I did with my money while I was paying her back, she knew that we both agreed to the terms and they were being met, so she didn’t press it. Everybody walked away happy.

    • Donna Freedman says 12 September 2011 at 09:03

      Smart lady: She insisted on terms up-front, and stayed with them despite her trepidations on your spending habits.
      And now you have a new habit: Making a budget that includes regular payments on an obligation. This will come in handy if you have student loans. (I hope you don’t. They stink.)

    • Brent says 12 September 2011 at 13:04

      Yes! Setting up terms is critical to establish how money will be paid back.

    • Sydney says 21 September 2011 at 23:57

      The same thing happened with me, i needed help with buying a car to get to work and a computer for school, so i got two loans, one from each of my grandparents for both things, and over time i pay them each a fixed amount every month, and i’ll probably add a extra payment or two as interest. My question is, if im paying off these debts as i go along, is still alright to spend money on fun things?
      thanks
      sydney

      • Donna Freedman says 22 September 2011 at 07:57

        I would budget for fun — but if it were me (and it isn’t), I would make it a SMALL budget. You owe two different loans and it sounds as though they were decent-sized. Take care of your obligations so that they won’t be hanging over your head. Make extra payments if possible, since in this economy who knows whether a job will last — and wouldn’t it bother you if you became temporarily unemployed and couldn’t make any payments at all? (And if not, WHY not?)
        And yeah, it might bug your grandparents if they see you living large while making minimum payments. Obviously I don’t know their financial situations, but they might be stressing secretly over the outstanding monies.
        One more thing: After you’ve paid off the loans, keep making payments — to yourself, into an emergency fund. The next time you need a car, or a computer, you might be able to pay cash. Adults pay their own way, unless due to extraordinary circumstances (illness, job loss, et al.) they are unable to save. Personally, I think once we’ve reached our majorities we should no longer have Mom and Dad/Grandma and Grandpa as soft places to land. Except in extreme emergencies, we ought to be our OWN backup plans.
        That thumping sound you hear is me getting off my soapbox.

  31. Andrew says 12 September 2011 at 08:29

    Donna–great post, as usual.

    However, you weren’t hard enough on Little Debbie. For those of us with (ahem!) weight “issues,” Little Debbie is truly the devil’s spawn.

    • Donna Freedman says 12 September 2011 at 08:50

      Tastykakes are Satan’s preferred snack. Dang, they’re good. Probably not as good as I think they are; it’s just that they’re associated with my childhood, when getting a package of krimpets was a Really Big Deal.
      To test that theory, I had a couple of cream-filled chocolate cupcakes after my oatmeal this morning.
      Nope. They really ARE that good. But of course I will continue to test that theory — all in the interest of science.

      • Andrea says 12 September 2011 at 11:28

        Seriously, How can anyone compare Little Debbie’s to Tastycakes!!

  32. Lee says 12 September 2011 at 08:32

    I am the primary lender at the local bank of parental bailouts. I have a little different twist on the story though. My mom is terminally ill and her heathcare is very expensive. I know she can’t work (she did all of her life and now physically can’t), and I know my father’s job covers the house and groceries. I have been paying the electric and other expenses for about a year now and I have to say, I would rather do that than add more stress to my mom’s life. It’s not a loan, I’m not expecting any inheritance. I do it because it’s the right thing to do and because I want to be able to enjoy every minute we have left without taking about lights, heat and a telephone. Sometimes life just works out in a way where you can’t help being the enabler. I do it without any shame or hesitation.

    • Donna Freedman says 12 September 2011 at 08:38

      I’m so sorry to hear of your mother’s illness. Cancer took my mom eight years ago last month. Treasure every moment you have.
      You are not an enabler. You’re doing what, as you say, is the right thing to do.

    • Erika says 12 September 2011 at 10:31

      Lee – it doesn’t sound like you’re an enabler to me, unless your parents are consistently mismanaging money. Sounds like they have what they have, and you are helping them. I think budgeting for helping people, especially family, with a limited income is very different than lending money to people who clearly wouldn’t need it if they managed their finances better.

    • SEinSF says 12 September 2011 at 10:52

      Lee, I think your situation is quite different and that you are not an enabler at all. I think you’re doing the honorable thing in this situation by helping out your parents. Your parents are not wasting the money you give them on bad food or booze or cell phones and then turning around ot ask for more. Your situation is very different so please don’t feel any guilt or doubt about helping your parents. You’re not helping them dig themselves into a deeper hole, you’re providing comfort and support to people who deserve it. Good luck! Please take care!

  33. Holly says 12 September 2011 at 08:32

    I’ve never seen anyone turn around their financial life , sadly. Based upon the habits of some family members I expect to be asked for help at some point in the future when misfortune hits. My approach is to budget for it, with regular small automatic deposits to a passbook savings account.

  34. Catherine says 12 September 2011 at 08:50

    I hope it was Butterscotch Krimpet.

    • Donna Freedman says 12 September 2011 at 09:21

      All other varieties of krimpets are pretenders to the throne.

  35. E. Murphy says 12 September 2011 at 09:04

    What makes you hair-pulling crazy is that the reason we HAVE money to lend is self denial. The more years of self denial, the more money. When some family members realize you actually have money in the bank, miracle of miracles, they assume it fell out of the sky and should be shared.

    I know some people have had hard lives, I’VE had a hard life. I still managed to put some money in the bank for bad times.

    • Donna Freedman says 12 September 2011 at 09:08

      Agreed. It’s what help balance out the guilt I felt, i.e., “But I have the money and they don’t” was ultimately overridden by, “And WHY do I have the money to lend? Because I’m careful about how I spend.”

      • Angie says 12 September 2011 at 18:01

        Goes back to what you said earlier in the comments, “it must be nice.”

        I second the Gah! on that :/

  36. Shawn G says 12 September 2011 at 09:06

    I’m one of the successful family lending stories. My parents lent my wife and I a good amount of money. We didn’t ask, they offered. We paid them back in less than a year with interest because we felt it was the right thing to do.

    Owing my parents money was not a good feeling though, and I wanted to make sure we got it paid back as soon as feasible. While we definitely benefited from their loan, I will never borrow money from anyone again.

    Not all people feel this way, and that’s when problems arise. Not to mention, my wife and I do have a budget and are very conscious of our spending.

    • Donna Freedman says 12 September 2011 at 09:12

      I’ve got nothing against loans per se. I recently made one to my daughter and son-in-law so they could put a bigger down payment on a replacement car after theirs was totaled in an accident. (Not their fault; someone coming out of a parking lot without looking slammed into them.)
      Not all loans are created equal.

  37. Caterina63 says 12 September 2011 at 09:10

    My husband and I had a situation with our son who was in his 30’s and was at the time still living at home. We both loaned him a money for various situations he had got himself into. We co-signed on his car loans at least 3 times. Thousands. Car loans, Car Repairs, tickets, etc.
    He finally moved out and is living with yet another woman. He still maintains he does not owe us anything. We still pay for his cell phone which is on our family plan till 11-12. He quit or was fired from his job and is now on unemployment compensation. He says he will come over and do the lawn and never shows up. When he does show up we give him food because we don’t want to see our only son hungry.
    What did we do wrong? We can’t blame ourselves and each other any longer. Time to move on. But, how can we?

    • Donna Freedman says 12 September 2011 at 09:22

      Oh, boy. I’m so sorry that you and your husband are in this situation. Here’s my two cents, and you’re probably not going to like hearing it:
      “Time to move on. But how can we?”
      By closing the bank. By changing the locks. By taking his extension off your family plan. By saying, when he shows up hungry, “Well, we’re just fixing dinner. It should be ready by the time you finish mowing the lawn.”
      Somehow he’s picked up quite a sense of entitlement. As long as you keep going along with him, he’ll continue to use you. Why not? It’s an easy way of getting his needs met.
      Don’t be surprised if the current lady wises up and kicks him out and he shows back up, begging for a second chance. In fact, you and your husband had probably better discuss this NOW, so you’re not caught unawares. If you decide not to let him move back in, you need to know that now and you need to be prepared to back it up.
      Again, I’m awfully sorry. This must hurt. But look at it this way: You will not be here forever to bail him out. What will he do then? He needs to learn to make his own way in the world. Better late than REALLY late.

      • Bareheadedwoman says 12 September 2011 at 11:43

        can’t deal with an aged parent’s “sense of entitlement” the same way as a wayward son’s…even if it manifests the same.

        In a sense, their entitlement is justified put in a “I took care of you your whole life, and bailed you out at specific times when you are in trouble…now it is your turn until I die simply because while I am not fatally sick, I am too old and frail to help myself in the recognized means–and am disinclined to try and help myself because I am old and frail and that’s why I had kids….

        It’s a bit of a muck when a (noted) financial planner basically says you need to die as soon as possible because simply “you’re screwed.”

    • FrugalTexasGal says 12 September 2011 at 13:06

      Ill jump in here…you can separate the contract and make him take care of his portion of the phone. Tell him he hs to do that (you release it from the phone co, he calls and takes it on). Tell him if he cannot, then youll eat the cost of cancelling it early and do so. My life is far from perfect at the moment (she says as she counts pennies and waits for the finnancial aid to be desposited to her account). However, I have a 32 year old living with me temporarily before going overseas, and a 22 year old college student. While neither pays me rent, they pay their own bills, and I havent so much a dusted a blind since they moved it.

    • Linear Girl says 13 September 2011 at 15:40

      The only thing your son owes you is any money he promised to pay but hasn’t, though I wouldn’t expect you’ll ever get it. The only thing you owe your son is – nothing. Working on the assumption that you love your son, I’d recommend the following suggestions:

      1. Give him 30 days notice that you’re cancelling his phone service, then follow through.

      2. Make every arrangement with him explicit. If he’s invited for dinner, then feed him. If he’s offered to mow the lawn, than that’s all that will happen. If he wants to earn money, he does the work and then he gets paid – and don’t pay him any more than you would someone else in an arm’s length transaction for his actual skill level.

      3. Tell him up front that you won’t co-sign, lend, or make an apartment deposit, and that he can’t move back in with you. There are worse things than sleeping in his car or a shelter for a short time.

      4. Tell him you will help him plan, you will hire him (if appropriate), and if he wants, you’ll save his earnings toward that apartment he’ll need soon.

      Basically, you need to help him grow up. Somehow he missed that part, but he is an adult and it’s better late than never. You risk damaging the relationship, but he has been willing to risk it all his life.

  38. Laura says 12 September 2011 at 09:33

    I go with the saying, “Fool me once, shame on you; fool me twice, shame on me.” Unless it’s painfully obvious at the outset that the debtor is going to squander my money (e.g., drinkin’ & whorin’), everyone gets one chance to prove they can borrow then repay. If I’ve been screwed once, that’s enough.

    As for how to approach it, perhaps this is just me, but I think you can enable someone not only with your money but with an overkind approach to refusing. Depending on my past history with the debtor and my mood, I will either respond, “No, sorry, I’m still waiting for you to pay back the $X I lent you back in [date] and I need that to come back first,” or simply, “No, sorry, even if I bail you out this time, I think you handle money so poorly that it won’t do any real good and then I’m just enabling you.” Let me tell you, this makes most people madder than hell. However, either they then go away and never hit you up (or talk to you) again, or very occasionally the blunt truth stops them in their tracks and really makes them think about what they’re doing. When I’ve gotten the latter reaction, I then offer to help with setting up a budget, helping them find financial literacy material, etc., in the kindest and most non-judgmental way I can since it took guts for them to switch gears. Admittedly that hasn’t happened much.

    • Donna Freedman says 12 September 2011 at 09:34

      I bet it doesn’t.

      • Laura says 12 September 2011 at 10:47

        True, but OTOH I realize that all the deadbeats in my life have faded away, probably as a result of my bluntness. My family (who are just as blunt as I am) respect my financial boundaries and my friends now are wonderful people who don’t test them.

        If someone would break off a friendship because you won’t loan them more money, they’re not really a friend. Most businesses already see me not as a person but as a wallet filled with money to transfer to them; I prefer that my friends don’t do the same.

    • Tracy W says 15 September 2011 at 04:25

      What’s the saying? If you lend someone $20 and you never see them again, you got a good deal.

  39. Ana says 12 September 2011 at 09:35

    Money was always a problem between my mother and I after I married and moved out. It got to the point where she’d ask me for money to cover her bills and I’d physically get the bills, pay them but not give her cash. Money was one of the reasons we’ve stopped talking (she continues to support my deadbeat, unemployed, constantly in trouble brother – always a source of tension) and it became a nightmare.

  40. Michele says 12 September 2011 at 09:46

    My husband and I had a mess of finances for years. We just didn’t know how to budget and my parents saw us foundering.We actually ended up in Chapter 13 bankruptcy. They loaned us money to get our act together, helped us to set up a budget, and although it took a while, we paid back every penny to my parents and through the Trustee. It was one of the worst times in my life, because I felt so inadequate.
    My parents were so kind to us and supportive during that time. They still treated us as beloved children, but they were firm in their resolve to see us change our financial situation. They also didn’t share our stupidity with other family members. To this day, I don’t think anyone of my siblings know how much my parents helped us.
    I have to say that it was a good thing, though, because we learned from the lesson. That was 15 years ago and we are in a good financial situation today because of the lessons of love from my parents.
    It’s not always a bad thing to lend to family members.

    • Donna Freedman says 12 September 2011 at 09:51

      I never said it was a bad thing to lend to family members. As noted above, I’ve made loans to family members.
      I simply questioned when it’s time to STOP lending. The answer will vary, because every case is different, whether the money is for family or friends.
      Your parents gave you a lasting gift by helping you but also insisting that you help yourselves.

    • Adam P says 12 September 2011 at 11:57

      I hope you paid your parents back! And if they wouldn’t accept it, then buy them a cruise with the money or something!

      • Samantha says 12 September 2011 at 13:20

        They did pay back her parents: “although it took a while, we paid back every penny to my parents and through the Trustee”

  41. the other Tammy says 12 September 2011 at 10:01

    An elderly lady I know gives HALF her monthly Social Security income to her deadbeat son every single month. The son and his wife do not work, get $500 per month in food stamps, plus SSI money, then $850 from his elderly mother. Last month, they used this money to rent a car, drove to a rock concert, boozed the night away, and came home with four of those pricey concert T-shirts. Meanwhile, his mother can’t pay her bills and goes to the local senior center to eat because she can’t afford groceries.

    She knows she is enabling her son, but he threatens her that he will cut off contact with her grandchild if she doesn’t give the money.

    It’s so sad, and I know it won’t stop. I try to help her budget what she has left, but there just isn’t enough to go around.

    There’s a verse in Proverbs:
    The leech has two daughters–“Give, Give!” they cry…

  42. william says 12 September 2011 at 10:25

    Wow, this post hits home on so many points, from the loan/gift/family standpoint to a relocated New Jersian missing Wawa/Tastykake (hard to either find in Appalachia). I recently lost my father who as I learned after he passed had hid debt from my mother who is now bankrupt. I send her what I can monthly whilst saving for my retirement and thrifty lifestyle on a 30K/yr take home salary( small business is small…). She is highly independent and constantly tells me to not worry about her but I am her eldest son and I feel it necessary. BTW she lives a very modest lifestyle on her own and we rapidly cut expenses in a wise fashion. Don’t see my big $$ sibling contributing but I keep my trap shut. When he comes calling I politely decline, its easy when you can’t physically show any high $ items, and not tryin to be mean but ya gotta do whatcha gotta do. He is young and will soon learn, he is in the finance field for goodness sake, and that degree had to have taught him something…..

    • Donna Freedman says 12 September 2011 at 11:10

      Bless your heart. You’re doing the right thing. Hope your sib steps up, and soon.

    • Martin says 15 September 2011 at 11:20

      Sounds like you’re waiting for your brother to step up when he may not honestly know it’s expected of him. My mother kept her finances from me for a long time and kept telling me things were fine even as things got tighter and tighter for her. She looked fine, food was in the fridge, lights were on, there was heat in the house, nothing looked out of repair, why should I doubt her? She shared far more in many matters, financially, healthwise, etc. with my eldest sibling than with the rest of us. It wasn’t until he let the rest of us know he’d been helping her for over a year that we realized how bad things were and started pitching in.

      Think about it, you’ve already said you’re helping her despite her protests that she’s fine. If she were to rely on anyone, she’s likely to rely on the eldest child and shield the others. Now you automatically expect your brother to notice she’s not fine and do the same? Are you sure he’s as aware of her situation as you are? Resenting your brother and keeping your trap shut isn’t helping your mother.

      If you really want him to help your mother, don’t shame him, don’t brag about how you saw something he didn’t, don’t make a fight out of it. Simply let him know that despite your mother’s protests she could use some help and you’ve been helping her and it would be nice if he did something for her as well, whatever he can afford. Even $50 a month more to your mother is likely worth that conversation.

      Just a suggestion, but it’s about your mother, not sibling rivalry or resentment.

  43. Kathryn says 12 September 2011 at 10:33

    Yikes! Familiar story, with the primary difference being *I* was Monica a few years ago! Even down to the lack of emergency fund, catholic grade school and bounced checks. That was as little as four years ago, and today I have zero debt, growing retirement and emergency funds.

    This is just to say that if anyone is reading today, and hearing about Monica is like hearing about themselves… It is possible to turn it around. And this website has been a big part of my course correction.

    Many thanks to J.D., all past and present staff writers, behind-the-scenes elves, and regular readers. You are all part of a strong and healthy influence for myself and the Monicas of the world!

    • Donna Freedman says 12 September 2011 at 11:17

      Hear, hear!

  44. Anonymous says 12 September 2011 at 10:51

    There’s a flip side to this as well – the use of money to control people. I think it may be possible that some people who complain about supporting their offspring/relatives etc. might have an underlying desire to have more control over the lives of these people (of course, not the contributors to this list…8^)
    I learned the hard way that borrowing can be tough. Many years ago my ex and I borrowed money from his mother for part of a down payment on our first home. We verbally agreed to a payment plan and paid her back the agreed upon amount monthly. When we were 6 months from paying back the full amount we had a disagreement with her. (She wanted my ex (a lawyer) to represent her in her divorce proceedings against his father and couldn’t understand why he refused.) She then demanded the entire amount back immediately and we had to endure abusive calls from her and other family members calling us names because she told them a completely false version of our arrangement to gain their sympathy. Fortunately around the same time we had a windfall and decided to use the money to pay her back and end the harassment – but the whole situation ended any trust I ever had in her. It definitely influenced how I structured her interraction with my children.
    Needless to say I felt angry and manipulated – but it taught me never to borrow from anyone with whom I don’t have a written agreement. This applies to lending as well. If you are making a loan that you do not categorize as a de facto gift, get everything in writing – amounts, repayment schedule, term of loan – there is plenty of information on-line on how to do this. The reader who said that money carries emotional implications was right – my feeling is that it is best to remove any chance for emotional manipulation on either side up-front.

    • CincyCat says 12 September 2011 at 12:18

      This is a little off-topic, but yours isn’t the first story I’ve read about an adult child of divorce being a lawyer, and one parent expecting the child to choose sides by being their attorney. Just unbelievable! I’m an adult child of divorce (although not an attorney) and I made it clear upfront that I would not choose sides.

      Eventually it sunk in that I didn’t want to hear one blessed thing about their divorce proceedings, and they stopped putting me in the middle. It was bliss. (My sister, on the other hand, chose to “be a shoulder” and had no end of heartburn over what she heard…)

      I said all that to say this: You and your husband have my sympathy with his parents’ divorce situation. Just because he’s a “grown up” now doesn’t mean he wants to have to choose between his parents.

  45. Sydney says 12 September 2011 at 11:01

    I hate the fact that when my husband lent money to his sister and then she turns around and makes us out to be the bad guys when we ask for some payment back to pay our medical bills. From the start she promised to pay it back the very next month. I knew it was too good to be true. It’s been 3 years since and we have not seen one single cent of payback. The last couple of years we really needed the money back to pay our medical bills and tried to ask for it back nicely, she made us out to look like the bad guys to her parents (my in-laws). Nevertheless, she is NEVER welcome in our home again.

  46. Anne Cross says 12 September 2011 at 11:03

    I think that if you feel like you have to justify saying “no” to someone (especially someone who isn’t related to you) who’s asking you for money, maybe you need a self-help book yourself on co-dependency.

    “No” is a complete sentence — no need to send them books, prevaricate, or explain. When they’re ready to take a different approach to their finances, they will.

    • Donna Freedman says 12 September 2011 at 11:13

      I wasn’t justifying. I was explaining why I’m closing the bank, in the hope that the facts of the matter will help others realize what they’re potentially giving up by making excessive loans.

    • Tightwad says 12 September 2011 at 12:30

      Well said Anne. I couldn’t agree more. My family & friends don’t ask me for money because they know I loan money for a living & the interrogation of why they want it & when I’ll be paid back just isn’t worth the hassle. So they don’t even bother to ask.

      • Angie says 12 September 2011 at 18:11

        Maybe *Anne* and *Tightwad* should’ve written the article.

    • Ben David says 14 September 2011 at 16:11

      Very important point – especially when dealing with manipulative people.

      Miss Manners mentions the “Kafka Romance Dissolver” technique – refusing to give reasons for a breakup, and repeating various wordings of a general “I can’t right now”. It works.

      There is no need to justify your decision to these people.

  47. Jeremy Streich says 12 September 2011 at 11:06

    If I have the money, I give it (but I don’t lend it). I will attach requirements for their benefit. I have no problem when someone comes to me asking for help saying something like “I’ll give you the money, for a book report on this personal finance book.”

  48. Erika says 12 September 2011 at 11:16

    I can defintiely relate with this article. Because my husband & I have gone through DR Total Money Makeover and have established some savings, it seems to me other family members view as human ATM’s. I’ve had both parents and both brothers ask for me and have been mostly repaid, but we loaned my hubby’s dad and wife $6500 to avoid eviction a few years ago– and have only seen $500 of that repaid. It boiled my blood that we loaned $6 out of our retirement but now we just accept it that they aren’t going to pay us back and I see it more as a gift.

    But we refuse to be enablers anymore. Just the other day my brother asked us lend him money to get them going til payday, but I put my foot. Between he and his wife, they make about $70k a year and with 3 kids, you’d think they’d learn to make a bare bones budget. It’s distressing but no more!

  49. cherie says 12 September 2011 at 11:18

    Great article and great comments.

    There is a huge difference between the grasshoppers of the world and people who have TRULY been dealt a bad hand – health issues etc.

    For the grasshoppers you’ve got it down – it doesn’t help them if you say yes. If you say no it might hurt a bit but you’ll both be better off in the long run.

    My best friend is always on the ‘edge’ – I’ve lent money – as a gift – I stopped that ages ago – I’ve helped set up budgets on request – still would but they don’t follow them.

    They do buy things. They eat out too. But they don’t answer the phone because it’s usually a collections company.

    Sigh

    One paycheck away from disaster

  50. AnnieA says 12 September 2011 at 11:21

    Many years ago I made investments for my two nieces, after my sister took the money I had given her for an RESP spent it on car repairs instead.

    My older niece was accepted to university, and I told her I had the money for tuition, and that I just needed the information to do an electronic payment to the univesity. “Cool!” said she.

    The tuition date came and went without my getting the information from the niece. I then got a snippy email from my sister that she and her husband paid the late tuition on their line of credit. This somehow was my fault. I am at a loss at this point. I do know our mother is giving the family lots of money for “educational” purposes, including an overseas trip this summer.

    • Donna Freedman says 12 September 2011 at 11:25

      Did you respond to her? I’d have said, “I’m sorry you were inconvenienced, especially since I told Dear Niece that I would pay the tuition once I had the payment information. If she is willing to send that information to me on time, I’ll apply the funds to next semester’s tuition.”
      This is NOT your fault. You offered an incredibly generous gift.

      • AnnieA says 12 September 2011 at 12:00

        Thanks for the kind words, Donna. Yes, I have sent a note that I am willing to consider paying the next round of tuition. I might ask to see Dear Niece’s marks as well — sad to say, I can’t tell whether her (in)action was the result of Teenage Brain, or no brain at all…

        • Alyssa says 12 September 2011 at 14:38

          Another incidence of parents babying their kids and not readying them for the real world. They’ve got to learn to take care of themselves. I’m 25 and it shocks me the helplessness of some kids in college. Some I know don’t even bother to look up deadlines for applications, then gripe when their apps are late. No Entitlements Allowed At All.

  51. CincyCat says 12 September 2011 at 11:38

    We’re in a strange situation in that we are knee-deep in debt (which we are diligently climbing out of), but still feel the need to occasionally help family members out – especially when it comes to medical expenses that they can’t pay.

    The way I see it, I would rather they go to the ER with questionable chest pain than to have them keel over on their couch because they don’t think they can afford the ER co-pay.

    For this reason, we give my mom $50 a month to help us pick up the kids after school. (This is more than twice what it costs her in gas, and the extra goes toward a medical bill she is paying.)

    Could that $50 go to pay down our debt? Sure. But it would *cost* us about $200 more in gas to have to use both cars every day for 35 miles round trip in order to manage the drop off & pick up ourselves. So this is a win-win for both of us.

    • CincyCat says 14 September 2011 at 10:31

      Following up to my own comment… I found out yesterday that my mom’s situation is WAY worse than either my sister or I originally thought. She’s actually been hiding expenses & going to check-loan places to avoid being a burden to us. I met with her yesterday to work out a plan of action for all of it, but deep down, I feel awful for her, and wish she would have asked for help sooner!! Neither my sister, nor I would have expected repayment, and certainly not at 15% interest!! 🙁

  52. Teresa says 12 September 2011 at 12:09

    Over the past 4 years I have gotten to know my child’s babysitter quite well. Well enough that my son feels like he is adopted member of her family and I count her as a dear friend. But for the past 4 years I have also watched her throw away her money on cell phones, eating out, camping, cable and clothes – while her telephone was shut off, her gas was shut off (no heat, but she had cable!) and her 3 kids were eating out of cans. Last year I loaned her $1000 and knew I might not get it back. She did pay it back, but she was back just a few months later. I said no and offered to help her set up a budget…nope. I do cook food for her kids and take it over, but that is the best I will do. she is angry now her daughter went to live with her dad – why? She no longer gets child support and will be short on her bills!

    • the other Tammy says 12 September 2011 at 12:19

      I think I know these people, LOL!

      Our friend’s neighbor had their natural gas shut off in late November (in Ohio, it gets cold here!)–but they could afford satellite TV with the NFL Sunday Ticket!

  53. Perry-David says 12 September 2011 at 12:12

    I believe you’re doing the right thing at this point by cutting them off. It’s the sort of thing I believe Paul is calling for in 2 Thessalonians 3, “If anyone is not willing to work, let him not eat” (v. 10). While Monica and her husband are willing to work jobs, they are not willing to “work” in regards to their finances. “Now such persons we command and encourage in the Lord Jesus Christ to do their work quietly and to earn their own living” (v. 12). They are clearly not earning their own living if they have rely on others to get by, despite being fully capable of doing it on their own.

    It will be tough on you, but hopefully they’ll learn once they’ve been broken. In the end it’s for the best.

  54. Golfing Girl says 12 September 2011 at 12:14

    I am flabbergasted at how folks don’t see the giant leaks in the budget and how it’s draining them. I can’t imagine being in my 60s with no savings or retirement. I hope that by leading with a good example and talking to my children about money openly (unlike my parents) they’ll have the same financial sense and discipline. I always try to explain to my daughter (she’s the oldest at 7) why I buy something or don’t buy it and when she asks for something expensive or totally unnecessary, what we’d have to give up to have it. She’s usually on board after those chats.

    • akajb says 12 September 2011 at 13:48

      “I am flabbergasted at how folks don’t see the giant leaks in the budget and how it’s draining them.” <- Me too.

      I have a friend with 3 kids. One parent is in school, the other works almost full time, but at a low-paying job (doesn't have any extra schooling after high school).

      Talking about food budgets one day, I mentioned I probably spend $100-150 on eating out in a given month. My friend figured they did too. Yet, also said that eating out as a family often costs $80-100 at a time, and that they eat out pretty often. My friend also usually buys lunch at least 3 times a week.

      Not sure where the logic is there…

  55. Dan M53 says 12 September 2011 at 12:46

    Interestingly, even people who have posted (including me) indicating that they consider the loan to be a gift or otherwise have no expectation of being repaid, seem to never forget about “spending” the money loaned out.

    If I’m honest, I have to admit that I’m always a little nervous when the caller ID shows that it’s the relative who has needed money in the past. Is this just a social call or is it another tearful plea?…..

    • Donna Freedman says 12 September 2011 at 12:51

      Do you let it go to voice mail? And do they leave a message that doesn’t mention money, only to hit you up when you call back?
      Sigh.

    • Aunty says 12 September 2011 at 21:03

      Over the summer, my aunt’s a/c quit. My mom heard about it through their mother and she refused to call even to chitchat with my aunt for fear she’d ask for money.

      So there’s 2 problems with that scenario – the aunt who asks for money and my mom who doesn’t feel like she can say no but wants to say no.

      SMH

  56. Somebody says 12 September 2011 at 13:10

    I have a step-daughter with 6 young mouths to feed and care for. Often, she will come to my wife and ask to borrow money.

    Conditions and a schedule of repayment are always set. Sometimes, we get paid back, sometimes we have to forgive some or all of it as a Xmas/birthday gift.

    While there is a need, we will be there for her. But when she starts spending money foolishly like other people here, then the tap will dry up.

    If I thought for 1 second we were being played, then it would stop.

    But for other family siblings, unless imminent death or medical catastrophes loom, it’s “unable.”

    Parents are another class also. Every situation is different, so play it by ear. The guy who lent $30k to him mom and stepfather. Wow is all I can say. Lending big money to an aging stepfather for his own business is not on my menu, ever.

  57. Joanna says 12 September 2011 at 13:18

    I work in the cell phone industry, and several times a day I speak to people who have given cell phones to friends in need who promised to pay them. Inevitably, fried stops paying.

    Now, the “friend” wont give back the phone, because they’re selling it. They wont pay the cancellation fee.

    The “friend” wont take over the contract. I ask, “why not?” Because they already had a bill in collections with us in their own name.

    If they had already had a contract with us, and not paid. What made you think they’d pay you?

    I have decided that anyone who is irresponsible enough with money to need help with something as simple as a cell phone contract, or other luxuries, isn’t going to pay me back.

    Anyone who is responsible enough to pay me back reliably, doesn’t need my help in the first place.

    • CincyCat says 13 September 2011 at 11:08

      This is exactly why we got my mom a cheap-o pre-paid-minutes phone with no contract. 🙂

      • CincyCat says 14 September 2011 at 10:34

        OK, in re-reading my last comment, it seems to imply my mom isn’t good with repaying a loan. That’s not what I meant. I meant that a cheap-o pre-paid phone is perfect for someone who only needs a “phone” and has limited resources.

  58. supermouse says 12 September 2011 at 13:26

    On another related note, my partner is happy to be a lender despite being in pretty deep debt herself.

    Recently, her sister is about 9mos pregnant. Fiancee lives in another state, but drove in to be there when the baby was born. Unfortunately, she goes past the due date and it looks like the fiancee will have to go back home and miss the birth of the baby or miss about a thousand dollars in pay that’s needed for bills.
    My partner gives her a thousand dollars, with a note, “this is so he can stay, and see his son being born”.
    They accept the loan, but baby ends up being born in time. He goes back home in time to work. They keep it anyway, knowing that my partner really didn’t have it to spare in the first place. I don’t understand people.

    • Donna Freedman says 13 September 2011 at 06:37

      I wonder if the operative word is “gives.” Did partner make it clear that this was a loan to cover his lost pay?
      Maybe they interpreted it as a gift. Or maybe they willfully misunderstood.
      That’s either going to be a very expensive lesson for the two of you, or partner is going to have to ask sis for the money back.
      P.S. After reading some of the scenarios in these comments, I don’t understand people, either.

  59. The+Other+Brian says 12 September 2011 at 13:26

    Here’s the question I haven’t seen answered:

    Did you send your friend “Monica” a link to this post? I don’t see anywhere in the article where you make it clear that you want your money back.

    Personally, “Monica” would cease being my friend after the 1st unpaid loan. If she doesn’t value your friendship, why do you?

    • Joanna says 12 September 2011 at 13:31

      She stated that “monica” paid back the first loan. So, there hasn’t been any unpaid, and she expects this will eventually be repaid as well.

    • Donna Freedman says 12 September 2011 at 13:52

      What Joanna said.

      • The Other Brian says 12 September 2011 at 19:08

        OK… then let me rephrase.

        from: “Monica” would cease being my friend after the 1st unpaid loan.

        to: “Monica” would cease being my friend after she made it clear she didn’t respect me or our friendship.

  60. stuck says 12 September 2011 at 13:45

    So what do you do when the you are funding payday loans to your spouse? My S.O. and I have had a lot of changes in the last couple years: bought a new, bigger house, I had to take a new job with lower pay, and we have a baby starting in day care. All together, I think it’s about $2,000 a month less money/more expenses that we’ve got to cover.

    I’ve started tracking expenses on Mint, but my partner doesn’t want to take time to watch expenses. I’ve tried to talk about it, and show that we’re very close to the break-even point month-to-month (fortunately, after 401k funding). What else can I do to make it clear that I’d like to put some more money away each month?

    • Linear Girl says 13 September 2011 at 16:03

      I’d start with a serious discussion that tells him what his behavior does to you. Maybe it adds stress, maybe it make you scrimp more and builds resentment that he isn’t, maybe you feel belittled or disregarded, maybe you think it’s a small problem with the potential to grow – whatever you’re feeling, lay it on the table. Then tell him what you want and ask him what he’s willing to give (financially, emotionally, whatever). If you’ve stated the problem and proposed solutions, you have a chance of resolving this.

      There are many books and programs for couples to learn to reconcile financial styles and management. Try your library, trusted family, church, but do try something. Financial arguments are often a giant component of divorce. Settling these arguments, I posit, could be a giant component of a successful marriage.

    • Linear Girl says 13 September 2011 at 16:05

      And sorry about the gender assumptions – I’ve been thinking about this exact scenario with a guy I’v started dating and it leaked through.

  61. anonymous says 12 September 2011 at 13:48

    Just in case he’s reading this – which would be awesome! – I’m posting anonymously.

    My brother asked me and my husband for a loan of around $2,000 about two years ago. That is a LOT of money for us, and we knew we would soon be transitioning to a single-income household. I really struggled with it because I wanted to help my only brother – he helped me make the rent once, when I was in a tight spot in college – but the hubs was firm that we really couldn’t afford it, and of course, it’s his money, too. So we didn’t give him the money.

    Saying no was one of the smartest financial things I’ve done.

    Since that request, my brother had an extremely expensive wedding and honeymoon, leased a brand-new car and bought several very expensive pieces of furniture for his new abode. All with credit cards, of course – which is why he wanted the loan, so he could make some payments. I also found out that he owes thousands of dollars to our parents that he has been slow, at best, in repaying.

    In the meantime, my husband’s income is now no more, and we’re expecting a baby next month – but we’ve paid off our debts, we live within our means, and we have a plan to make the next year or so work on one income. If we had to live with $2,000 less cash than we have now, I would be seriously stressed.

    Bro is still frequently strapped for money and worried about all the debt he’s in, and though he pays lip service to how he’s changed his ways, I haven’t seen a lot of evidence of that. Even though he loves my brother, my husband was less clouded when my brother made the request, and I’m glad I listened to him.

    It’s so hard when you genuinely care about the person who’s asking you for money. But sometimes the most loving thing you can say is “no”.

    • Donna Freedman says 12 September 2011 at 15:06

      Well put.
      The most loving thing in this case will also be to say “no.” I’m just praying that they come to their senses before they lose their home.

  62. retirebyforty says 12 September 2011 at 13:58

    I sent some money to my brothers to help out with education expenses and I don’t really expect anything back. I would hesitate to loan to a friend who is having problem capping their expenses though. You’re right, it just postpone the problem.

  63. Ash says 12 September 2011 at 14:09

    I just wanted to say I love that stories like this are being covered. It’s a perspective that I rarely see written–not “how to loan” but “when to stop”. Thanks for the article, Donna!

    Makes me feel better that I’m not the only one out there with reckless friends/relatives.

    • Donna Freedman says 12 September 2011 at 14:27

      I’m afraid the “reckless friends and relatives club” is not terribly exclusive. If we were to meet, it would probably take a continent to hold us all.

  64. J.D. says 12 September 2011 at 14:36

    It’s no secret that I’m pretty burned out by financial blogging. It’s tough for me to come up with new info every day, and sometimes I just want to walk away.

    But then there are days like today. Days like today remind me why I started Get Rich Slowly in the first place. Days like today remind me why this site is needed. Days like today remind me that this about more than just me.

    I love days like today.

    Great conversation, folks. Thank you.

    • Donna Freedman says 12 September 2011 at 15:48

      Group hug!!!

    • Jennifer says 13 September 2011 at 18:32

      JD, please don’t walk away. I’ve only been a GRS reader for a few months, after tiring of TSD. Your column is truly fantastic. I love the format, the way in which articles are written and the variety of staff/guest posters. Please stick with it!

  65. Felice says 12 September 2011 at 14:43

    It is sad that they are in the situation, but you did offer very sound and friendly advice. I think saying “no” is sometimes the best medicine for the person. It is hard especially if you’re close to them, but we are adults and have to figure things out. Offering websites and other materials that can help is probably going to be the best one can do. They must help themselves.

  66. Leo says 12 September 2011 at 16:08

    I’ve been reading comment after comment and I keep relating this to a book I’m reading: “Vampires – emotional predators / who want to suck the life out of you?” from Daniel & Kathleen Rhodes. It is about emotional predation, but it is not emotion that leads us to help someone in need?
    It is shamefull that some “in need” are sometimes in a better situation than those who provide help. But, as they say “fool me once, shame on you; fool me twice, shame on me”. we have to keep our eyes open I think, or some people will drain us.

  67. CT Smith says 12 September 2011 at 16:11

    Yuck…relatives/friends that piss away your money are just manipulative. People say I’m mean and uncaring because I won’t bend and dole out cash for “emergencies”…but these “friends” are worse…they know they’re not going to pay you back when they ask.

  68. Suba says 12 September 2011 at 16:40

    Few years ago when I was living on a meager student stipend, I loaned tuition money to a friend I knew from high school. He was going to a different school, so as soon as I sent him the money he was impossible to get hold of. I heard from a mutual friend he dropped out of school within days of receiving the money from a few other friends! It really hurt because it was my two months salary from a 40 hr job I was working along with a full time load.

    I “met” him on facebook a couple of years ago. I asked him about the money and he gave a real bad sob story how he is living in poverty, etc, etc.. And I see all his updates coming from an iphone. I still have a freaking black & white flip phone!! I wrote it off as a lesson learned but it still bothers me. I have a LOT of medical expenses and we could really use the money. I won’t hesitate to spend money on my sister or my parents/inlaws. Anyone else would hear a “sorry, we don’t have accessible cash right now, we will help in any other way we can” statement.

    Great article Donna!

    • Donna Freedman says 12 September 2011 at 16:51

      To some extent, social media have made it harder for people to scam. If the same person who said he needed $50 for rent shows up on Facebook saying “Just picked up my brand-new iPad!” — well, he’s going to face some irritated friends.
      Sorry about your friend’s “problems.” And thanks for your kind words.

  69. Regrerful says 12 September 2011 at 17:10

    Yikes, stories like this stir up all kinds of regret.

    I have a brother who has very poor money habits who I supported for years. When times got really bad for me (think BK, foreclosure, repo, total implosion bad) was he there any help for me? nope.

    I finally landed a decent job and spend the next four years digging out personally and guess whos back for more. Yep. I finally put an end to it, now I am a cheap greedy bastard for not helping him support a lifestyle way beyond his means. That was several months ago, not sure I will ever talk to him again. Very depressing, but I cannot support him any further.

    Has anyone reconciled with a sibling/friend after a situation like this?

    P.S. Financially imploding was the best thing that has ever happened to me. I am no longer part of consumer nation, and should be able to retire within 5 years. See ERE, I am now on that path.

    • Donna Freedman says 12 September 2011 at 21:26

      Congratulations on your hard work and perseverance. Glad you made it through to the other side and have found a way of life that works.
      As for your brother? Well, maybe he has narcissistic personality disorder. I’m sorry that there’s discord but it’s probably best to distance yourself, at least for now.

    • Tom says 12 September 2011 at 21:54

      I eventually made up with my sister (see my response to #5). She still lives beyond or at the very edge of her means (now in her 40’s), but I’m not involved in her financial life, anymore.

    • Ash says 13 September 2011 at 08:36

      For what it’s worth, the last time I had a knock-down drag-out verbal brawl with my sister like that (it was bad enough I thought we weren’t going to talk again and took her number out my phone) she called me a few months later like nothing was wrong. :

      IIRC the conversation was about money… she may have called me emotionless/unfeeling/soulless something like that.

      People can be strange.

      • Donna Freedman says 13 September 2011 at 09:11

        Manipulation. If someone calls you “soulless” or “unfeeling,” it’s to get you to prove that you’re NOT — by giving the person what s/he wants.
        As for her calling you months later as though nothing were wrong…well, I’ve had that experience with a family member myself. It’s very disconcerting.

  70. krantcents says 12 September 2011 at 17:17

    I normally do not loan money to people because I find it very uncomfortable to ask for it back. Too many people do not act responsibly and repay what they borrow. My only except our my children and they have let me down.

  71. KathyinMN says 12 September 2011 at 18:21

    Just wanted to say thanks for a great post. My family has gone through this for years with my sister. Shed been hitting us each up individually. I caught her after she called me asking for money (I said no and told her to call my parents, we’d already talked about her pleas for money). Then I got a call from my aunt-turns out she also hit up her and some distant cousins. Got the sisters on a conference call and we all agreed we’d 1) tell each other when she asked for money 2) only give/offer directed payments or gift cards (gas or grocery) 3) ask her to review her budget if she wanted directed payments (ie we want to see the bills were paying). She refused us, but the parents still give her money every month AND she has no problems taking vacations, etc. Had a long talk with my dad about the situation, but he swears he only gives her what he can afford. At least the rest of us have come to our senses. AND it’s nice to see others in the same boat also refusing to be taken advantage of.

  72. PB says 12 September 2011 at 18:40

    Back in the 1950s, when I was quite small, my mother’s sister called right before Christmas (long distance — quite an event at the time) in tears because she had no money to get anything for my cousins for Christmas. She had a very hard life, including a husband who was shell-shocked in WWII and never quite got over it. Anyhow, my father had just gotten his year-end bonus and sent the whole thing to her.

    We would never have even known about this except for our cousins, who have never forgotten that Christmas, and who honored my parents their whole lives. My parents never expected or wanted the money back — it was truly a Chrismas gift of love.

  73. Dan says 12 September 2011 at 19:12

    Heh, I’m not in this position (yet.)

    With the exception of my wife’s sister’s husband, every one of her family members has financial problems. Said husband is quite loaded and does plenty of enabling (er, I mean “helping.”) This includes her dad, and quite possibly her mother — who is getting laid off at the end of the month.

    Said mother just got out of rehab after being a hardcore alcoholic for 15 years. I don’t have pleasant memories of her. My wife and I were married a little over two years ago — before we married, I told her that her family is on their own, period. I make a really decent income (great nationally, below the country median where I live though) but it doesn’t go as far as one my think. Not when you consider my $85k in student loan debt. I was honest with my wife and told her that I won’t consider helping out the fam until my student loans are paid off and we have a sizeable house downpayment (around here, $200k buys an ok house, you really need $300k for a “decent” place.) I’d *really* like a 20% downpayment, so we need to save $40k-$60k just for that. Considering I’m just getting my e-fund up and running, it’s going to be a long time before we’ve got those two things taken care of and we can think about other people.

    On a day-to-day basis, we do quite well, but long term, the kind of “help” that her family wants is just enabling them, so I don’t feel bad about really not having it.

  74. Petunia says 12 September 2011 at 19:56

    I have a friend who I have lent money to several times, she was making more than me, but something always seemed to happen and she had to quit her job, or move really quickly and needed money for a bond…

    She would pay me back, but the last time it took her four years. I kept saying to her, ‘You know you can make payments per month’ and she said ‘No, I really want to make a lump sum payment’.

    The amount was only small, less than one thousand dollars, but as I said, she eventually paid me back. No more loans for her though.

    We are still close and recently she has been asking advice about how I budget and how I can have so much money and take so many holidays and also afford a house. I am so happy! I have sent her heaps of information and told her that I live within my means, am very frugal and put away ten dollars a week for my holiday fund and ten dollars a week for Christmas.

    I think she might have turned a corner.

    Yay!

    • Donna Freedman says 13 September 2011 at 06:34

      How does it feel to be a role model? Good for you!

  75. regular guy says 12 September 2011 at 20:08

    many years ago I had a tax lien because I did not have enough money for taxes– from selling refinanced real estate.

    My cousin, lawyer, did two things. 1. Tried to negotiate with government on my behalf. 2. Loaned me the money to pay it off… actually paid it off for me but required me to sign an IOU. Which I did.

    And, with regular payments, over time, I paid it off. And we’ve remained close to this day.

    So, may I suggest that when anyone, family included, begs for money, get a legal IOU and have them sign it. I’ll be some will actually pay it back.

    • Donna Freedman says 12 September 2011 at 21:23

      I commend you for working through this tough spot in your life. Your cousin was generous, and you were honorable. You make a great team.

  76. Donna Freedman says 12 September 2011 at 20:28

    @El Nerdo Loco: Someone from the West Coast asked me what scrapple is. The best description I could give was “Amish Spam.”
    A friend of mine says, “You know why they call it ‘scrapple’? Because they can’t call it ‘crapple’!”
    Myself, I distrust any comestible that looks like a slice of drywall. In addition, I have a very basic gustatory rule: I won’t eat food I’m afraid of. Scrapple qualifies.

    • Andrew says 14 September 2011 at 14:21

      Sorry, Donna, I have to disagree. I grew up (and still live) in Massachusetts but my father was from a long line of Pennsylvania Dutch, and I grew up on scrapple, shoo-fly pie, and pickled eggs in beet juice– not to mention Lebanon bologna.

      Time for dinner!

  77. AnnW says 12 September 2011 at 22:00

    Some expert on TV once said, “Money doesn’t solve money problems.”. That is entirely true. People have money problems mostly because of their lifestyle. Monica doesn’t want to get financial advice. In her mind she doesn’t need it. She just has had a string of bad luck. You said that she wouldn’t be able to get the money anywhere else. How do you know that? If she hadn’t asked for a loan for several years, she might have found other lenders. She might have asked her daughter, or another friend. She also could have asked for scholarship help or a job at the parochial school for her teenager.
    My younger brother is a worse case. My mother gave him a down payment for a house THREE times before he used it for a house. He is now 59 years old. In the last year and a half, he had our 90 year old father pay his $700 mortgage many times because he said he couldn’t make it. I had to give him money to come to our father’s funeral because he said he couldn’t swing it, even though he had just received a life insurance settlement from his wife’s estate. He says his house is in foreclosure now, but I don’t really believe him. I found out that his wife had been a jewelry hoarder and used to scrap out her stash to fund trips to the race track. all the while asking our parents for support. So who is the dumbest person in this story? Probably not my brother. I have lent and given money to relatives who appeared to be in distress. It was not appreciated and was never enough and was soon resented. I have decided that I cannot save the world, and now have to save my money for when my mother gets to the end of her money in the Alzheimer’s ward. It was a hard lesson learned. ann

    • Donna Freedman says 13 September 2011 at 07:02

      Monica has no living relatives except an elderly mother in a retirement home who can’t even pay all her own expenses (Monica has had to cover some of them).
      Her daughter’s husband is underemployed (apparently willfully) and the two of them don’t have money to burn.
      She doesn’t really have any friends, other than the neighbors with whom they’re hey-how-are-you friendly. The past years have been too tumultuous, for reasons far too voluminous (and personal) to note here. Since high school her friends have been those she hung out with in her industry, and she’s moved from job to job within it as layoffs (and babies) occurred.
      Monica was already receiving scholarship help from the Catholic school, and had for all of her kids. (The youngest is no longer attending. He started public school last week.)
      Had I not given them the money, I believe the repo company would have taken the vehicle. In the future, the repo company is gonna HAVE to take the vehicle, because I’m unable to do this again. And then I guess we’ll see what we see.
      Sorry about your family’s pain. Your brother stands as an example of what happens when people KEEP bailing someone out, I guess.

  78. bemoneyaware says 12 September 2011 at 22:55

    Well written post bringing out the dilemma whether to loan money to our near and dear ones or not and then getting it back. We must remember -Our one small mistake can spoil the whole relation, so be really careful about our relations if we don’t want to lose them. I had read somewhere If you lend money to a friend you loose both your money and friend.

    • Donna Freedman says 13 September 2011 at 06:53

      That would be Billy Shakespeare: “Neither a borrower nor a lender be/For loan oft loses both itself and friend…”
      And you’re right: It changes the dynamics of the relationship because the borrower feels uncomfortable about owing (well, SOME borrowers do) and the lender either feels bad that his friend feels bad or irritated when his friend seems so blase about his obligation.

  79. James says 12 September 2011 at 23:20

    This is very frustrating, it happened to me, for 700 dollars. Then I see facebook posts of the things he’s frivolously spending money on. After repeatedly asking him and he saying he would pay, he just never would. I would never do this in a million years. I had to just release it, because it was making me to angry. I chalked it up to an educational mistake.I’d say after somewhere to 6 months to 1 year and not seeing any money-just neer do it again.

    • Donna Freedman says 13 September 2011 at 06:47

      That had to sting. When you decided to “release” the obligation, did you write him one more note to say that you are disappointed in his sense of priorities — that he chose to spend money on non-essentials rather than to fulfill his responsibilities to the friend who bailed him out? And to make it clear that this was the last time you will ever help him?
      On the other hand, he might very well turn it around and make YOU the bad guy: “How dare he! He knows how hard it was for me to ask for help. What are friends for? And he can afford it anyway. He’s so greedy! I can’t believe he’s doing this! I’m totally un-friending him on Facebook!”
      Another expensive lesson. I’ve had a few of those myself. But no more.

  80. bg says 13 September 2011 at 00:53

    I haven’t exactly been Monica, but I had debts with my grandmother (it was implied that I never need to pay them back, so I didn’t, and didn’t cut my spending either) and smaller ones with my brother (where pay back was planned and it was all officially on paper, including the interest).

    After years of ups and downs in income, when I earned more money again this year, my first actions were to pay back _all_ debts my husband and I had (6K EUR in total), including that old one with my brother. It felt SO GOOD to be debt free, and part of why I managed to change the way I handled money is this very blog here.

    So yeah – enabling bad spending habits isn’t really helping anyone. I’ve lost 10-15 years I could’ve spent on building better finances because of just not knowing how to handle money and spending in a better way.

    • Donna Freedman says 13 September 2011 at 06:50

      An excellent point: the lost years. All the money my friends are allowing to dribble away is money that ISN’T going to retirement, to a new-car fund, to an emergency fund, to college monies for the kids, etc.
      Good for you for paying the money back. And yep, it feels g-r-e-a-t not to owe anybody a thing. Long may it last.

  81. Lynn says 13 September 2011 at 03:55

    I have a sister who is in a situation. She’s been unemployeed for 3 years and has tapped all her retirement and credit cards to continue to fund a lifestyle she was accustomed to. She will loose her house and everything else she’s accuired soon. I know shortly that she will be asking in earnest for money to pay her mortage and I will have to tell her no. She is aware of what she is doing ,but I think is expecting the Money Fairy to bail her out. Somehow, Someway. I love her dearly but some people learn the lesson only after they bounce hard on the concrete., others figure they survived the bounce and can survive it again. Sometimes you just have to let them go splat on the concrete.

    • Donna Freedman says 13 September 2011 at 06:41

      At that point she may ask to move in with you “just until I get on my feet.” You’ll need an answer for that, too.
      I’m sorry for your sister’s situation, but you are probably right: If she kept on spending, expecting the Money Fairy to show up, then she needs to experience the (very) painful consequences of her actions.
      And I’m going to have to remember what I just wrote, lest my friend contact me six months from now with the mortgage-is-late blues. Sigh.

  82. adriano says 13 September 2011 at 06:08

    I think it is ok to ask for interest on a loan, even when lending to a friend. Does not have to be much, but at least enough to cover inflation. A payment plan with set dates for paying back the loan would also in my mind clear up any confusion on it not being a handout. I don’t want to call it a gift, because i feel one can not ask for a gift.

    When doing the logically complete opposite tasks of budjeting for loan repayment or savings, i myself feel exactly the same. I’m allocating money that i can not spend NOW. For this reason a person who has a history of saving money regularly, even moderate sums, is in my mind a far better candidate for loan repayment than someone who has never saved.

    If asked to lend $1000 i’d ask about repayment, if they are unsure about when they’d be able to pay back, i’d suggest $10 (yes TEN dollars) a month to start with, with payment increasing to $50 a month in 6 months. plus two percent annual interest.
    If they feel these amounts are too much i would not lend them the money. Having them pay even the slightest amount of interest would hopefully speed up the repayment. with these conditions repayment would be complete in about two years and total interest would be about $30.

  83. Mom of five says 13 September 2011 at 07:09

    Donna, I always love your submissions!

    As the economy gets worse, the begging relatives get more bold. In some respects, I understand. My husband and I make enough money to live well and still have some left over to save. That differentiates us from a lot of people these days.

    But when I see my husband and I making frugal choices, like driving to an out of town wedding and back in the same day to save $ on a hotel room, while people we’ve helped financially get themselves a room, it gets under my skin. I wish it didn’t, but it does.

    The wedding incident is just one example, but there are many. The result is we’re no longer as generous as we once were as we feel many people’s situations are not as desperate as they’re being portrayed to us.

    • Donna Freedman says 13 September 2011 at 08:26

      Thanks for your kind words. And I know what you mean: It shouldn’t bother me that my friend bought that bottle of iced tea for one of her kids, but it did bother me. Two dollars here, two dollars there add up to…not being able to make a van payment. Sigh.

  84. Kaylen says 13 September 2011 at 08:46

    I completely agree. Having been the one cut off, and the one doing the cutting off, I can say this does force both parties to change the way they operate.

    That is a good thing on both sides.

    • Donna Freedman says 13 September 2011 at 09:09

      If we’re lucky, being “cut off” may be the wake-up call we need.
      Judging from some of the other comments, too many people just move on to the next potential lender — and maybe bad-mouth the other guy as well.

  85. Quest says 13 September 2011 at 09:22

    I am right there with you. I just recently cut off a family member from constantly dipping into my bank account and all the while she ‘has money’ to smoke pot. Just this past week, I’ve entertained family requests for me to donate the following (just because I used to spend money 4 years ago like Rockefeller doesn’t mean I’m rich people!!):

    1. “Can we please have your third vehicle?” NO
    2. “Can you pay my $120 phone bill?” NO. You just bought $225 boots and spent $100 last night on dinner at the Red Onion.
    3. “Do you have any guns you don’t want?” HA!
    4. “How about that little Honda you have … do you want it?” YES. It’s the car the spouse drives to work.

    And so on. I don’t know when people – especially family – became so entitled. I have shut down this particular personal spending spree bank. I will no longer lend money to family or friends. We have a retirement to fund ourselves. If people ask me for money now, I tell them no, I am having to save everything we earn for retirement. It’s the truth. I love my family but there comes a point when one realizes that one is doing more harm than good in enabling poor financial behavior.

    • Mom of five says 13 September 2011 at 10:03

      I know what you mean. Over the last few years things have changed. Our relatvies aren’t asking for loans anymore – they’re asking for handouts. If there’s any mention of a loan, it’s in the context of “I don’t know if I’ll ever be able to pay you back.”

      On a positive note, two relatives to whom we gave some money a couple of years ago have turned their financial lives around. Asking for help from us was rockbottom for both of them.

      • Donna Freedman says 13 September 2011 at 10:50

        Two positive things have come out of the past few years, then. That’s something.

  86. Daniel says 13 September 2011 at 12:57

    I believe loaning money to friends or family is a very bad idea for this exact reason. If you want to help them out then it must be a gift. Otherwise you will grow to criticize and resent every purchase they make in front of you. This will lead to a deteriorating relationship at worst completing ending the relationship. Either tell them no or give it as a gift. This can be difficult I understand.

  87. marie says 13 September 2011 at 16:41

    I’m coming at this from the other side of the coin I guess.

    About 2 years ago my cat got really sick, and long story short, the bills added up to over $2,000. I was going to put it on my credit card, but my sister offered to pay it for me and I’d pay her back.

    She works full time while I’m still in university. Although she hasn’t said anything about paying her back, and I *know* she doesn’t miss the money at all (I do her taxes etc so I know she doesn’t miss it), she has made a couple comments when I bought a new television or about spending too much.

    Because I don’t want it to become a bad situation and because I’d rather owe the bank and the government, I’ve been using my student loans to pay her back. I now make her monthly payments + interest, but I’m still broke.

    I honestly wish that she hadn’t given me the money in the first place so that I wouldn’t feel like she had something to hold over me. The thing though is that she offered. I never asked her!!

    • Angie says 14 September 2011 at 07:24

      Well, you shouldn’t have agreed to it if you didn’t like the idea.

      That’s the *responsible* other side of the coin.

    • Linear Girl says 14 September 2011 at 09:58

      Your story highlights the importance of making the details of the deal explicit before money changes hands. Learn from this that *whoever* you borrow from – student loan, mortgage lender, parent – you need to take the responsibility to find out what is expected from you before you accept any money.

      I’d also like to add that just because you do her taxes, you don’t know that she doesn’t miss the money. She may miss the peace of mind it gives her to have $2,000 in the bank, she may miss the things she chooses not to do while she’s been replenishing the savings, and she may simply resent that you value the new TV more than repaying her (yes, TV is a luxury).

      It sounds like you and she have worked out a payment plan and I applaud you for meeting the terms of it. You’ll feel better when you’re done and so will she.

    • CincyCat says 14 September 2011 at 10:47

      Marie,

      Everybody who I know was broke (and most were in debt to Uncle Sam) when they first got out of college. Don’t beat yourself up on that point…

      If you are meeting your agreed-upon terms to repay your sister, then it’s my feeling that she has no right to hold anything over your head.

      But to clarify expectations, have you considered drawing up a repayment schedule yourself and giving it to your sister? It may be that she’s getting a little blinded by what she sees as your “frivolous” expenditures and forgets that you’ve already given her the XYZ that you promised to this month…

      • marie says 15 September 2011 at 05:19

        After two years, I was the one who said I should start repaying her. Although she kept saying that I didn’t have to hurry to pay her back and could wait until I was done school (one more year), she still made comments once in a while.

        That’s why this summer I made a payment schedule in excel (very simple, like what you’d learn in first year finance), and it shows how much interest I’m paying along with each payment and so on.

        Also, I’m planning that each semester when I get my student loan to make her a big payment like $250 while I have the money.

        She never actively asked me to pay her back or anything.

        And I know she doesn’t miss the money because she doesn’t have a car or mortgage and doesn’t want one, and has over $50K sitting in the bank. I obviously understand that it’s her money.

    • a says 15 September 2011 at 06:21

      I was once in a similar position, except I owed my cousin. He didn’t need the money back at all, he offered it as a gift. But I felt guilty, so we set up a repayment plan. We both honored the terms and I actually paid it back early. But I know that sometimes he didn’t agree with the way I spent the rest of my earnings (I was in school at the time, so only working part time). He just wanted me to be responsible and make good decisions so that I would be self-sufficient in the future. Sometimes the reason the comments stung so much was because they were true. I realize your relationship with your sister isn’t the same as mine is with my cousin, but maybe her concern isn’t that you could be repaying her instead of spending on luxuries, but rather she’s worried that you should be saving this money so the next time there is an emergency, you won’t need to rely on anyone else for funds. Or maybe she’s just concerned that you’re borrowing more money than really necessary to fund these purchases. The intent of a student loan is to pay tuition and basic living expenses. Her comments may not be meant to make you feel guilty, but genuine attempts to help you make better financial decisions so when you’re done school you have less debt to repay.

      • a says 15 September 2011 at 06:42

        Also I just wanted to say that it was owing someone I love money and wanting to pay them back that was a catalyst for me to change my spending habits. I started reading GRS around that time and since then have paid off all my credit cards, set up savings and paid off several of my student loans. Many thanks to JD and the rest of the writers.

  88. Jaime+B says 14 September 2011 at 12:37

    I tend to be a very open person, about myself and my views. So, not surprisingly, I have never really had to deal with relatives or friends asking for money. They know I’m extremely unforgiving in the money landscape – I’m honest about the fact that there are few people I could “lend” money to and not scrutinize their purchases if they don’t pay it back quickly. I don’t feel bad about that aspect of myself, I’m just honest about it and letting people know. Plus, I’m not exactly swimming in cash either.

    But that is why I get so FRUSTRATED with some of my family members. I had a stepsister who has been enabled by almost everyone in her life. My parents, our oldest sister, various aunts, uncles and cousins – then they all complain about her and her poor choices. Finally, for once, our dad put restrictions on her most recent request for money and told her she needs to start taking care of herself because he won’t always be there. She’s 37 years old. :eyeroll: I think the concurrent lesson needs to be that everyone needs to STOP giving her money and maybe she just might.

    At this point, I’m mostly just tired of everyone complaining about behaviour they encourage. And the worst, WORST, justification for it is my nephew. “the real loser in this is ____”. Yes, I agree, but my sister is not a monster. She will not let him be homeless, or hungry or go naked. She will not pull him out of 9th grade to work full-time to support her (she works full-time) or move to a bad neighborhood, etc. He will *maybe* have to get clothes from Target more, instead of Hollister (gasp) or eat less McDonalds. It makes me even more angry that this is the excuse most use for themselves when they enable her poor choices even though they know she’s not going to let him suffer for real.

    It does him NO GOOD, to grow up with his Mom’s spending habits. To see her example of being angry with people who expect her to be a responsible adult, to see her deny access to herself and him when she’s mad because her father had the audacity to push back a teensy bit when she’s begging for money. All it does it teach him to think it’s “unfair” for them to be in a situation of their own making, that everything is always done to them instead of the result of their own choices.

    Soapbox put away now.

    • Jaime+B says 14 September 2011 at 12:40

      *have. My stepsister is still alive, lol.

  89. Allison Best says 14 September 2011 at 19:05

    One of the best books I’ve ever read is Zombie Economics — it has an entire chapter on people like “Monica”; it’s titled “Shooting Dad in the Head — Cutting Off Relationships With the Financially Infected”.

    Perhaps that should be one book you give to the kids.

  90. marisa says 14 September 2011 at 21:04

    very timely post for me. i am in a situation that a friend needs and ask for financial help. she needs this money for a new job. she has to move to another state and need money for air ticket and other expenses for the move. she’s single but she’s been helping her brother and sisters kids sending them to school and never saved for herself. now she’s in a situation that she needs money and her family cannot help her. i feel bad that i cannot help her. but i already lend her some money before (not yet paid) and from my husbands point of view, i have helped enough. i would always help friends ones before but i noticed that ones you lend them a hand, they would always come back for a second time, a third time. so now i don’t lend money to friends anymore.

  91. Mr T says 15 September 2011 at 06:41

    Thanks for this article. I can see that I have been an enabler for my wife. Resolving this, however, is much more difficult than saying ‘don’t lend to that person’.

    My wife and I have joint accounts for income and bills, but separate personal accounts for ‘living’ expenses (clothes, haircuts, frappuccinos) into which we get a monthly stipend of £125. My wife also gets £50pm because she pays cash for playgroups for our young kids.

    Over the last 3 years (the period I’ve been tracking, we’ve been married 7 years), my wife has regularly overspent. This happens both with our bills (food, days out etc) and with her personal account.

    With the bills, I find it hard to say no. Regular bills (electricity, mortgage etc) are taken care of, and I have a budget for known future expenses (eg shoes, xmas) but it’s the day to day living expenses I find hard to control. I try to track weekly expenditure on ‘discretionary’ (eg outings, fuel) and ‘non-discretionary’ (food, household) spending but it’s really, really difficult to control. We overspend maybe £100pm on an income of £2000pm, but I find it hard to actually work out.

    With her personal account, she’s also overspent regularly. I’ve been aware of this, as I have access to her account, and periodically I’ve asked her to curb her spending. She always agrees to behave.

    In 2009, she overspent £550. In 2010, £1050. In January this year, I used our savings to ‘zero’ her account and clear debts (ie a total of £1600). She agreed to an automatic £20pm withdrawal back to savings to slowly pay off what she’d ‘borrowed’. This is meaningless, however, as she’s still overspending.

    So far, Jan-Sep she’s run up a debt of £1250. I feel I will have to pay off this debt again, although that will mean using money that should be going to pay off a 5K credit card debt when the 0% period runs out next month. (We bought a bigger car last year – I’m quite easy to convince/enthuse!)

    I’m frustrated and angry and I want this to stop, but there’s no easy solution. The only way to “stop lending” to this person is divorce, which I don’t want for the sake of my sons.

    Otherwise, the only solution I see is to take her credit card and bank card and give her £10pw to spend (which takes into account her direct debit mobile bill etc). I would like to make it so that she can’t buy anything online either. It’s actually hard to stop that but I’m working on it.

    I would welcome any advice. Thank you.

    • Jaime+B says 18 September 2011 at 21:55

      Ok, so I hate to suggest things that are very basic that you’ve already done, but oh well.

      First, have you and your wife had a series of conversations about your financial goals? Have you both really agreed to these allowance amounts, or did she just say yes because she knew it was what you wanted to hear? All the while, knowing that she would overspend? If you both have different financial goals (or one of you has no goals at all, or they’re very vague) then you’re going to keep having friction with money. I would suggest reading some books about marriage and money to get some actual expert advice about how to broach these conversations, how to talk without heaping blame on her (or yourself) or having her become defensive.

      Secondly, it sounds as if you try to manage the financial reins while leaving her to do the actual spending. If you’re not doing the shopping or meal planning, could you be dictating a food budget that is not realistic for your family? If she’s taking care of the day to day expenses, but you’re setting the budget then you probably need to communicate much better.

      Third, does your wife work? It sounds to me like you work and she doesn’t. The way you speak about it “she agrees to behave” and “take her cards away” sounds like you (or she) are relegating her to a child-like role in your marriage. Perhaps this is also an issue you two need to work on. Perhaps she is not feeling as fulfilled (working or not working) in her life and needs encouragement to find more interests or hobbies so that shopping is not her fallback for boredom or dissatisfaction. Perhaps I’m talking out my a%%.

      Good luck.

      • Mr T says 19 September 2011 at 10:57

        Thanks for your input, I appreciate it.
        * I need to include her in financial decisions, including allowances/partitioning of money, but she doesn’t seem to want to know.
        * We do agree expected future costs, and we have ideas about goals, but they’re not written down. Would be good to agree them.
        * Talking without blame or having her become defensive is difficult. I am getting counselling for my own anger, but any book recommendations on how to talk finances appreciated! (I’ve got general finance books eg ‘Your money or your life’ but she’s not interested in reading those).
        * It’s true she does most of the spending & shopping (although I do the cooking!) so maybe I’m unrealistic. That comes back to agreeing the partitioning of our money – there’s only so much to go round and if we need to spend more on food, we have to spend less on something else.
        * She hasn’t worked for 5yr, bringing up kids, but is looking to go back now. Should ease our situation. although there’s a danger that we relax and spend even more!
        * Maybe I (or we) have set up a parent-child relationship. Something that came up in counselling today, coincidently.
        * And maybe you’re right about boredom and hobbies.
        A lot for me to think about. And discuss with her 🙂
        Thanks,
        Mr T

  92. Nicole says 16 September 2011 at 15:52

    Just had a similar experience listening to DH talk to his relative about the relative’s new $400 computer that he bought a day after the old one broke… when most months they can’t pay their regular bills and the wife can’t get a min wage job because their credit report is shot. *Sigh*

  93. EngineerMom says 17 September 2011 at 14:14

    My parents had a standing policy: No loans, only gifts.

    If they couldn’t afford to give the money as a gift, they just said “No”.

    Also, no money for things like jail bail. My uncle actually called my dad for bail money because he’d gotten one DUI too many. My dad (and all of his siblings) refused. My uncle finally got a clue and stopped driving drunk.

    We have the same policy – if you need food, clothes, school supplies, etc., call me and I’ll help you find a low- or no-cost way to cover your needs. But don’t call me for money. We have a family of 4 on $40,000/year in Cincinnati. I know how to get by on little, I can teach you, but I definitely will not be handing out bailout checks!

  94. sunset says 18 September 2011 at 22:39

    This is why I always complain about being broke. Whether I am or not. I don’t spend much money on tangible things so it makes it that much more difficult for people to call me out on my fake brokeness.

  95. sunset says 18 September 2011 at 22:50

    Also, I try not to loan money to people as a means of helping them. I’ve helped friends in school by giving them a place to stay. I’ve helped a couple saving for their first house by letting them stay with my (paying for all of the utilities so I benefited as well)

    I’ve helped people out by getting back to school items for their children, or donating furniture and items. I’ve been pretty clear that I don’t loan money. I will loan my time, and any non-monetary things. I also don’t accept money from friends. I’m more of a bartering mentality. If you really need my help and it’s not just a easy quickfix you will be willing to earn it.

    The result is they really need help, so they will accept it on my terms, or they won’t bother with me and will hit up someone else. I always told myself that if I win the lottery I will pay loved one’s debts, buy homes for them, in their name, cars….anything to make their life easier. And I will do this in one fell sweep…..none of this continuing to ask for things.

    But they will not get any cash from me. By me giving them a big leg up they can not [validly] complain that they are struggling. And I will make it clear that they will never get cash from me so hopefully that would encourage them to manage their gifts.

  96. Lucille says 26 September 2011 at 02:49

    The only way to help someone to help themselves is to say NO.
    This is my policy unless it’s a matter of life and death.
    There is no such thing as an “emergency” in a developed society. You have to be resourceful and look in the right places. Educating yourself is vital and necessity is the mother of re-invention!

  97. Ryan H says 12 March 2012 at 20:44

    I don’t have personal experience with this, but my mother-in-law does. Her sister had been a stay at home for over 10 years and just last year got divorced. It has been difficult for her to get back to being fully independent; because of this my mother-in-law has been helping her financially. It has been quite stressful for my mother-in-law but she doesn’t want to bring it up for fear of creating tension with her sister.

  98. Myhouse385 says 20 February 2016 at 23:02

    Speaking from the other side of the fence… I needed $5,000 for an emergency. Since I am on disability money is tight. My brother-in-law had over $400,000 in the bank and would not help me. It broke our relationship forever because I realized he did not really care what happened to me. I think the feeling of abandonment and betrayal hurt more than the financial situation. This after years of doing favors for him and my sister. Yes, financial prudence is good… but there comes a times when humanity is more important. And I am not an irresponsible person. My credit score is 860.

    • Donna Freedman says 22 February 2016 at 12:53

      The hurt and abandonment must have been tremendous. But your example is not what I’m writing about here.

      As I noted in the piece, I’m not suggesting that people ignore those who have wound up in serious distress through no fault of their own. Rather, I’m saying that help should not equal enabling.

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