Maple Valley Money

Debt Free 2010! Minnie The Moocher…Adult Children Who Borrow!
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February 16th, 2010 at 1:43 pm by Stanette Marie Rose

Today’s topic of borrowing between family members is fraught with angst.
Sometimes a request for funds is absolutely necessary and understandable.
Other times it is habitual and disrespectful to all concerned…and then there is the matter of the family debtor who never pays back…NEVER!

Money can be one of the most difficult topics between family members.
In my financial practice I have heard it all…”He is out of the will because another $5000 would give him enough drugs to kill him.” Father of addicted son.
“He just was laid off for the third time and now he is losing his home, wife and my grand baby will be on the street.” Mother of an adult son with a grand child she adores.
What you decide to do regarding giving a loan needs to include a healthy perspective.
Sometimes it is healthier to say no…or to say yes with limits boundaries and a signed contract that includes tidy time frames.

The key thing is to be sure lending to family members does not do more harm than good. Sometimes loans only weaken the bond and the respect adding tensions and distance.
Look underneath the need to borrow.
Is there an unmet need for love, affection, closeness that borrowing is masking?
Is there a hidden need for punishment, shame and continued distance from loved ones?

Ask yourself what is the most empowering action for me to take both for myself and for this family member. Giving and lending money often is not the best solution.
If you do lend be sure to put everything in writing, get signatures and agree to a pay back program that includes interest. I recommend a 6% interest rate on any and all money borrowed.

What happens should the borrower not repay the loan and has a track record of borrowing many times and not repaying? Be sure to let your Executor of your Estate know as well as your attorney so there can be a carve out of the will. It is a relatively simple thing to make sure your estate distributes to the the child with the loan reduced from the balance. Believe me it causes a ripple if you let the loan be ignored as the other children are keeping track of the siblings debts even if you have long forgotten.

A reminder to us all is lessons about money start so young it is unbelievable. I was four or five when I wanted some money for a treat or toy and was taught to fill out an I.O.U. slip of paper. At allowance time the I.O.U. was paid back and then the residual allowance given. It is the way the lending in a family is taught and how the all important repayment is handled. Keep it grounded and practical and not driven by fear.

Stanette Marie Rose
CEO/Founder
Maple Valley Money

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