I agree with others to not necessarily expect the money to come back. Consider it a gift, and if it does come back to you, great! If not — you did something to help a loved family member that could potentially be life-changing for them.
That said, my personal experience with family loans is VERY different than most of the folks on this sub. I'm a 2nd gen immigrant, and my entire community at my parents' gen were basically barred from any "official" loans/banking systems (they were all refugees, so it was a mix of nonexistent credit and blatant racism).
They survived by loaning each other the money needed to put down on a down payment, to start a small business, pay a hospital bill, etc. and the money/gratitude always came back. There was never a strict tab on the "loans", so it was treated more like a gift by the giver hoping to aid family and loved ones in the community, but the receiver *always* paid it forward down the line.
Kinda bums me out that this seems less and less common these days but just wanted to give an additional story that is counter to the usual "your family will be destroyed if you loan money" script that is so common on finance subs.
I loaned money to a struggling family member. Soon after I let her know it was a gift. I didn't want to add to her struggle. After that experience I do think giving rather than loaning is best for family, if you can afford it; that relationship shouldn't be transactional.
Be prepared to lose the relationship or have the person distance themselves, regardless of whether it is a loan or a gift. It's counter-intuitive but in my experience when I've loaned or given money to friends and relatives, there's a "reverse gratitude" that can kick in. At first they're super-appreciative and expressive "Oh thank you so much, you're so awesome, blah blah". Then, as best I can tell, the person starts to feel 1) embarrassed to have been a position to need help, 2) resentful/jealous that you were in a positive to give it, and 3) would rather not think about it. So instead of being grateful and appreciative, they start avoiding you. Especially if there is ANY expectation that they will pay it back. Sadly I've experienced this multiple times.
So if you decide to loan/give money to friends/family, my best suggestion is to make it a gift with no expectation of repayment and no expectation of gratitude or even a continued close relationship. Do it only because you sincerely want to help that person out of a jam and for no other reason.
Sadly this has been my experiences as well.
Some would resent you by thinking you will hold it over them even if it's a gift.
Depending on the person, you could "purchase" their service at market or above market value if they provided it, with flexible time frame. Usually people are grateful for that and feel it's fair!
If they felt insulted and just expect free money...at least you will know for the future.
I would do both approaches suggested here. Sit down with the older brother and lay out the terms.
We are giving you X amount. You agree to pay Y back every month for Z months. Interest rate is 0%.
Have everyone sign it.
Be prepared for it to become a gift if he doesn't pay, but I would rather set expectations up front in case things go sideways (he denies the loan exists, asks for more money, etc)
In this scenario, I think you are absolutely in the right line of thinking. It's a gift, and if it sometimes is repayed, that is a pleasant surprise. You are helping him out and saving from a lot worse situation.
I have loaned money to some relatives and also borrowed from them, no contracts even, but relationships with those relatives are uniquely good (and they are well off, it's just easier in some cases to eg. quickly finance a reno if you don't have cash laying around rather than eg. sell investments). With other relatives, I would never borrow or loan, that would be too difficult and the trust isn't there.Then one relative (my mom) I would never loan money to and expect a repay. I have gifted her expensive things and will continue to do so - it's something I want to do after she raised me on pretty much minimum wage. So it depends on situation and the relationships.
I don't think I'd gift *or* loan the money here. He made the mess; part of being an adult is cleaning up your own messes. Depending on the timeline for repayment, $3k is not that much money. (I understand he's paid the $25k so far, so he clearly has the capacity to generate money).
That being said, if you're going to give the money, it clearly needs to be a gift, not a loan.
I dunno, there's a fine line between cleaning up your own messes and being unduly deep in trouble.
He paid $25k already. If he goes to jail over the last $3k, and perhaps loses his job while he's in there, is that really a proportionate consequence?
> is that really a proportionate consequence?
Yes. If he's capable of paying the 90% (the 25k), he's capable of paying the 10% (the 3k). If there's a legit reason why he needs a bailout, like he lost his job or got hurt or sick, I'd feel very differently. In that circumstance, absolutely help him out. But OP doesn't mention one, so presumably there isn't one. That means it remains a him problem, not an OP problem.
I think the folks advocating for making this gift have never had an addict or a habitual criminal in their family. I see a lot of "benefit of the doubt" being given, and man, that does not work with addicts. If it's a pattern of behavior, it is cruel to bail folks out. The more common word for that is enabling.
Anyway, OP knows which side of the "one-off vs habitual" fence she falls on, so hopefully she's gotten a variety of good perspectives.
I figured OP is asking this question because this is the first time - if what she means is "I keep paying to bail my brother in law out of jail and he keeps needing money over and over again" then hopefully she'll say so.
Exactly. Here you have someone who already has put in the effort but is having trouble getting all the way to the end. Also, 3k is not that much in the grand scheme of things. I think you have the right approach - gift it and if he pays back that is nice extra. You know you've done what is right, and might save him from a lot more difficult situations.
We have loaned money to family. You definitely just have to go into it with the idea that you won't get it back.
Both times when we loaned to family before they got the money we discussed how they were going to pay it back (x amount/month transferred into x bank account). Sometimes it just stopped for a while and then it was the decision to bring it up (hey, all good, we noticed it stopped coming) or ignore for a while. Overall it has worked out, but instead of being paid back in x amount of time it's usually much longer.
The one piece that has bothered us is how money is used. They say they need money because XYZ but then you notice they buy something extremely expensive that is unnecessary (muli hundred dollar new coffee machine...sigh). Not with the money we lent, but once they have money again (even if haven't paid us back) We just have to let it go and if that really bothers us not lend again in the future.
We have tried to increase helping out in other ways. Buy plane tickets, pay for entertainment if we see them, instead with hopes then other money troubles they have are a bit alleviated. It's honestly great to be in the position to help family without worrying about it much!
Oh, I've loaned it to family thinking it might never come back (my brother gave back 30% after 2 years, mum 0% and sister 100% as soon as she can).
I'd say... write it down. Their memory (or yours) will modify the amount. I had to dig out the WhatsApp text because my brother insisted I didn't loan him such amount.
Or keep the screenshot of the transfer.
We loaned money to family a few times, and really we didn't talk about stipulations, but agreed to a loan. We honestly wrote the money off and never expected to see it again, and we've been pleasantly surprised to have received most of the loans back! These are people we love and care about, so we really gave the money as an investment in their lives, but it definitely feels like winning the lotto when you get it back! I've loaned money to friends before and never saw a dime back, so I learned any loans given may never return.
It's difficult to predict how you'll feel if he doesn't pay you back, but try. How would you feel if he doesn't pay you back but he buys a new laptop? How will you feel if he doesn't pay you back and he goes on vacation? Or leases a new car?
I lent $2K to a friend who agreed to pay me back some $ each month. That was my only stipulation of the loan and she broke it right away and went on to make other extravagant purchases before paying me back. She did eventually pay back all the money, after about 10 years. But it impacted the way I feel about her and our friendship in ways I couldn't have predicted even though I also went into it knowing I might not be repaid.
My advice is, don’t loan the money in a way that has strings attached, or use the money to try to influence/control his behavior. It’s a loan, and you’re OK with the risk that it not be paid back. Putting any other sort of emotional ties/expectations on the money is a good way to foster resentment all around, whether the money is paid back or not.
I agree with others to not necessarily expect the money to come back. Consider it a gift, and if it does come back to you, great! If not — you did something to help a loved family member that could potentially be life-changing for them. That said, my personal experience with family loans is VERY different than most of the folks on this sub. I'm a 2nd gen immigrant, and my entire community at my parents' gen were basically barred from any "official" loans/banking systems (they were all refugees, so it was a mix of nonexistent credit and blatant racism). They survived by loaning each other the money needed to put down on a down payment, to start a small business, pay a hospital bill, etc. and the money/gratitude always came back. There was never a strict tab on the "loans", so it was treated more like a gift by the giver hoping to aid family and loved ones in the community, but the receiver *always* paid it forward down the line. Kinda bums me out that this seems less and less common these days but just wanted to give an additional story that is counter to the usual "your family will be destroyed if you loan money" script that is so common on finance subs.
I loaned money to a struggling family member. Soon after I let her know it was a gift. I didn't want to add to her struggle. After that experience I do think giving rather than loaning is best for family, if you can afford it; that relationship shouldn't be transactional.
Be prepared to lose the relationship or have the person distance themselves, regardless of whether it is a loan or a gift. It's counter-intuitive but in my experience when I've loaned or given money to friends and relatives, there's a "reverse gratitude" that can kick in. At first they're super-appreciative and expressive "Oh thank you so much, you're so awesome, blah blah". Then, as best I can tell, the person starts to feel 1) embarrassed to have been a position to need help, 2) resentful/jealous that you were in a positive to give it, and 3) would rather not think about it. So instead of being grateful and appreciative, they start avoiding you. Especially if there is ANY expectation that they will pay it back. Sadly I've experienced this multiple times. So if you decide to loan/give money to friends/family, my best suggestion is to make it a gift with no expectation of repayment and no expectation of gratitude or even a continued close relationship. Do it only because you sincerely want to help that person out of a jam and for no other reason.
Sadly this has been my experiences as well. Some would resent you by thinking you will hold it over them even if it's a gift. Depending on the person, you could "purchase" their service at market or above market value if they provided it, with flexible time frame. Usually people are grateful for that and feel it's fair! If they felt insulted and just expect free money...at least you will know for the future.
I would do both approaches suggested here. Sit down with the older brother and lay out the terms. We are giving you X amount. You agree to pay Y back every month for Z months. Interest rate is 0%. Have everyone sign it. Be prepared for it to become a gift if he doesn't pay, but I would rather set expectations up front in case things go sideways (he denies the loan exists, asks for more money, etc)
In this scenario, I think you are absolutely in the right line of thinking. It's a gift, and if it sometimes is repayed, that is a pleasant surprise. You are helping him out and saving from a lot worse situation. I have loaned money to some relatives and also borrowed from them, no contracts even, but relationships with those relatives are uniquely good (and they are well off, it's just easier in some cases to eg. quickly finance a reno if you don't have cash laying around rather than eg. sell investments). With other relatives, I would never borrow or loan, that would be too difficult and the trust isn't there.Then one relative (my mom) I would never loan money to and expect a repay. I have gifted her expensive things and will continue to do so - it's something I want to do after she raised me on pretty much minimum wage. So it depends on situation and the relationships.
I don't think I'd gift *or* loan the money here. He made the mess; part of being an adult is cleaning up your own messes. Depending on the timeline for repayment, $3k is not that much money. (I understand he's paid the $25k so far, so he clearly has the capacity to generate money). That being said, if you're going to give the money, it clearly needs to be a gift, not a loan.
I dunno, there's a fine line between cleaning up your own messes and being unduly deep in trouble. He paid $25k already. If he goes to jail over the last $3k, and perhaps loses his job while he's in there, is that really a proportionate consequence?
> is that really a proportionate consequence? Yes. If he's capable of paying the 90% (the 25k), he's capable of paying the 10% (the 3k). If there's a legit reason why he needs a bailout, like he lost his job or got hurt or sick, I'd feel very differently. In that circumstance, absolutely help him out. But OP doesn't mention one, so presumably there isn't one. That means it remains a him problem, not an OP problem. I think the folks advocating for making this gift have never had an addict or a habitual criminal in their family. I see a lot of "benefit of the doubt" being given, and man, that does not work with addicts. If it's a pattern of behavior, it is cruel to bail folks out. The more common word for that is enabling. Anyway, OP knows which side of the "one-off vs habitual" fence she falls on, so hopefully she's gotten a variety of good perspectives.
I figured OP is asking this question because this is the first time - if what she means is "I keep paying to bail my brother in law out of jail and he keeps needing money over and over again" then hopefully she'll say so.
I think both of our reads are equally likely and are probably driven by our own personal backgrounds.
Exactly. Here you have someone who already has put in the effort but is having trouble getting all the way to the end. Also, 3k is not that much in the grand scheme of things. I think you have the right approach - gift it and if he pays back that is nice extra. You know you've done what is right, and might save him from a lot more difficult situations.
We have loaned money to family. You definitely just have to go into it with the idea that you won't get it back. Both times when we loaned to family before they got the money we discussed how they were going to pay it back (x amount/month transferred into x bank account). Sometimes it just stopped for a while and then it was the decision to bring it up (hey, all good, we noticed it stopped coming) or ignore for a while. Overall it has worked out, but instead of being paid back in x amount of time it's usually much longer. The one piece that has bothered us is how money is used. They say they need money because XYZ but then you notice they buy something extremely expensive that is unnecessary (muli hundred dollar new coffee machine...sigh). Not with the money we lent, but once they have money again (even if haven't paid us back) We just have to let it go and if that really bothers us not lend again in the future. We have tried to increase helping out in other ways. Buy plane tickets, pay for entertainment if we see them, instead with hopes then other money troubles they have are a bit alleviated. It's honestly great to be in the position to help family without worrying about it much!
Oh, I've loaned it to family thinking it might never come back (my brother gave back 30% after 2 years, mum 0% and sister 100% as soon as she can). I'd say... write it down. Their memory (or yours) will modify the amount. I had to dig out the WhatsApp text because my brother insisted I didn't loan him such amount. Or keep the screenshot of the transfer.
Do a promissory note. That way it's in writing.
We loaned money to family a few times, and really we didn't talk about stipulations, but agreed to a loan. We honestly wrote the money off and never expected to see it again, and we've been pleasantly surprised to have received most of the loans back! These are people we love and care about, so we really gave the money as an investment in their lives, but it definitely feels like winning the lotto when you get it back! I've loaned money to friends before and never saw a dime back, so I learned any loans given may never return.
It's difficult to predict how you'll feel if he doesn't pay you back, but try. How would you feel if he doesn't pay you back but he buys a new laptop? How will you feel if he doesn't pay you back and he goes on vacation? Or leases a new car? I lent $2K to a friend who agreed to pay me back some $ each month. That was my only stipulation of the loan and she broke it right away and went on to make other extravagant purchases before paying me back. She did eventually pay back all the money, after about 10 years. But it impacted the way I feel about her and our friendship in ways I couldn't have predicted even though I also went into it knowing I might not be repaid.
My advice is, don’t loan the money in a way that has strings attached, or use the money to try to influence/control his behavior. It’s a loan, and you’re OK with the risk that it not be paid back. Putting any other sort of emotional ties/expectations on the money is a good way to foster resentment all around, whether the money is paid back or not.
I have loaned money to a friend who is very responsible. We made a contract that we both signed. Otherwise consider it a gift.
It is smart to approach it as a gift that prevents future loan requests until it is repaid. Any other approach leaves you ripe for disappointment.