Friday, October 7, 2011

Taking loans from family members

I'd like to talk today about a topic that I've often had come up from my friends (and even some of my relatives).

Should I take a loan from a family member, Jack? They really want to help me, and I really need the money!

There are a few questions we have to ask ourselves:

1) How badly do you need the money?

Are you so broke you can't buy food, or are you just paying off your credit card enough to let you get another double-fudge mocha-chino?

2) How long until you will be able to pay back the loan?

If you have no idea when you will be able to pay the person back, then you should seriously review your reasoning behind considering this a loan, and not a forced 'gift' from a relative.

3) What is the money for?

Do you need the money to purchase something you don't need, like a new TV, or a high-end coffee-maker? Then you don't need that money, you need to grow some will-power.

4) Does the person you are taking the loan from need the money more then you?

I have seen people take a 'loan' from a parent that didn't have two pennies to rub together, and was hair-deep in debt. The person taking the loan didn't even flinch when they spent the considerable wad of loaned cash at the bar, treating all her friends to cocktails and martinis.

But Jack! I really want the new (Consumer garbage) now! It's only (Inflated price), and I can't live without it! Daddy will pay for it from his RRSP!

Grow the hell up.

You are an adult now, or soon will be. You've got to belly-up to the reality that you're rarely going to be able to afford everything you want.

You've also got to accept that by being so spineless, you're influencing people to be just like you.

Your relatives don't need to lose more money. They likely had to endure some sort of hardship for it, whether it was working for 20 years straight, or inheriting it from a loved one.

And just think, if your children grow up to be just like you, eventually, you'll be on the receiving end of these same pathetic cries for money.

Key Points:
- Be responsible.
- Don't pull others down into your pit of debt.
- Consider other people's situations.
- Don't spend money when it's not nessicary.
- Grow some willpower.


  1. Ha!

    My sister is visiting for the weekend with a friend, and I can tell her friend isn't much for the frugal lifestyle. She wouldn't be a fan of your "key points"

  2. Big J,

    People will act however they believe is best - if you sister's friend isn't the 'frugal' type, then that's fine.

    Just make sure she patronizes the establishments I've invested in - at least someone will *make* some money from her actions!