Sunday, December 16, 2007

Family loans and stress.

My Family hung out yesterday and the first thing my Mom said to me was, "I decided to make that loan from last year a gift so don't worry about paying it back, ok?"

No, Mom, not ok.

Backstory: I borrowed $1500 from the parents last January when I moved into my first apartment. Little did they know, ALL five of my credit cards were maxed out. I also owed another family member $1700, but I paid that back this June.

I have borrowed money from them before, but not this much. I know it's a lousy excuse, but I find it hard to talk with them about payment plans and deadlines because they are really laid back and say, "Oh, just wait til you have it and give it to us all at once. No rush."

I was really just trying to be smart and throw my money at the high interest rate stuff first and then pay them back next summer and add some interest or give them a thank you gift with it also. I'm not sure what my parents are thinking, but I'm guessing that they think I'm in bad shape and I feel like a jerk!

I got my mom to agree to "revisit" the five years!

I'm really uncomfortable with this whole thing and think that maybe I should just pay my family next week, push my credit card payoff back by two months, pick up shifts at the second job, and try to put as few xmas purchases as possible on plastic.

Suggestions? Would you let someone "forgive and forget" a loan?


Bouncing Back said...

It's always hard to borrow or lend money from family, I did once and the dynamics with it were very weird. I had even set up a repayment plan with them (each month pay back a set amount). I was in a much better place financially then than I am now and my family member could not believe I expected a regular repayment schedule. I did not charge interest, I set a very low repayment amount spread out over a number of months, but asked that a money order, bank check or cash be given to me each due date. My family member told other relatives I was being unreasonable with my requests. You would have thought I was a loan shark.

Me personally, I would set up a repayment plan for your parents and treat it as part of your budget. Maybe earmark your second job funds to paying off the family loan? Lower your Christmas budget? (I would not put holiday presents on plastic if it can be helped).

I would not worry what your parents think of you, I would just pay them back and tell them thank you for your generosity and understanding, but I need to pay you back, it's a loan, not a gift.

Dump the Debt said...

Thats a tough one. I always prefer to pay it back. I would set up a repayment plan as bouncing back said. That way you won't have it eating away at you whenever you see your mom. Even though she said it was a gift.

I would pay it bac even if for your own piece of mind. i think you'll be glad you did.

Vicki said...

Mark Twain's bankruptcy forgave some debts, but he could not forgive himself. He changed his spending ways and. in his own time, paid back every debt. That's integrity.

I think you have it, too.