Need serious input! Parents asked to borrow $55k

Translash

Translash

Doing evil things...
Joined
Jan 18, 2011
Messages
771
Hi all,

I just want to start out by saying that I'm young (24), immature, and inexperienced in life.

Now that we got that out of the way, I've lived with my parents for several months now because I wanted to study for medical school (I actually missed my chance and will have to try again next year) and needed some help with food/laundry etc. My parents used to love me a lot more back when I was 18/19 because I was accepted into a prestigious combined medical program; but I eventually went down the wrong road and failed out. I have since went back to school and became a physician assistant, which I have been working for the past yr and a half.

We haven't fallen on hard times yet, but my parents are planning to sell the house and get a new one. The thing is, they already have a house locked on to buy. They were short $55,000 so they asked me to lend me the money.

Normally, between loving parents and children, they would lend the money without question (I'm assuming). But the problem is, my mother is the main moneymaker in the family and she holds onto money like it's her life. She's extremely money hungry (she makes me pay for everything which is fine by me but almost all our conversations have something to do with money), and even mentioned before that she wishes to be filthy rich.

I'll be honest, I don't trust my mom. I feel that if I lend her this money, it will never come back to me. I mean, its so easy to say "Oh David, I'll pay you back the money don't worry"....But its FREAKING 55k! It's easy to say it now but when it comes to reality, it will be a lot harder to accomplish.

I have enough money to pay them (given I'll be 75% poorer) but I have a feeling they will make excuses like: "Oh David what about the tuition we paid for your college (which wasn't close to 55k) I'll take this money as payback" yadda yadda yadda. I just don't feel that trust and it's so sad to say this.

I was wondering what you guys think?

edit: by the way, i will not be moving into their new house, I'll be going back to an apartment.
 
Translash said:
I'll be honest, I don't trust my mom. I feel that if I lend her this money, it will never come back to me. I mean, its so easy to say "Oh David, I'll pay you back the money don't worry"....But its FREAKING 55k! It's easy to say it now but when it comes to reality, it will be a lot harder to accomplish.

I have enough money to pay them (given I'll be 75% poorer) but I have a feeling they will make excuses like: "Oh David what about the tuition we paid for your college (which wasn't close to 55k) I'll take this money as payback" yadda yadda yadda. I just don't feel that trust and it's so sad to say this.
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It sounds like you answered your own question.Trust is important.

As a rule I never lend money to family or friends.

I don't envy you.It's a lose lose situation IMO.
 
Yikes.

I don't really know what the law is like over there - but can't you write up a document or something? I realize this would be kind of an awkward conversation... "Sure mom, I'll lend you the money - just sign here." But I don't really see an option if you want to lend them the money and be sure you can get it back. From the description you gave of your mother I'd want some guarantee. Then again, I can't imagine a mother that would borrow $55 000 from her son and make up an excuse to avoid paying it back. Providing she doesn't have a crack habbit or anything...

Sorry I couldn't of more help :(
 
Blood is thicker than money.

This is your parents we are talking about; you lend them the money. (If you had class, you'd give them the money (actually, you would offer the gift and they would insist that it be a loan). But you at least lend them the money).

If it does end up being a loan, then a written promissory note is in order with interest. This way, you will eventually get it back if only from the estate.
 
Or you could insist on being named in the title deeds with % of ownership. (Well, you can over here and common law is fairly similar).

PS: It would mean they'd have to pay you out before they could sell.
 
This is why I'm asking here, because I WANT to give them the money. I really do. Thanks for input so far guys.
 
parbajtor said:
Or you could insist on being named in the title deeds with % of ownership. (Well, you can over here and common law is fairly similar).

PS: It would mean they'd have to pay you out before they could sell.
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I think you'd then be reponsible for a fraction of the property tax too.
 
Translash said:
This is why I'm asking here, because I WANT to give them the money. I really do. Thanks for input so far guys.
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Good.

If it is to be a loan, then for a few hundred bucks, a lawyer can write out a nice promissory note. Remember, you're not lending on a trip to Vegas; you're lending on a hard asset. Even if they never pay you a cent, when they die, you will have the note and the estate will have the asset and the estate will pay you. (Oh, and if you are a heir, the estate will settle with you as creditor before probate, so your inheritance won't be effected by the loan. Let us say, just for illustration, that, at the time of their death, the note with accumulated interest is worth $75,000. Let us say that they leave an estate totaling $775,000. Let us say that they leave $100,000 in other debt. Let us say that you are 50% heir (perhaps you have a sibling and named as equal heirs). The estate executor will first disburse $100,000 to pay the other debts and give you $75,000 to settle your note leaving $600,000. You will receive $300,000 of that. So, you will get a total of $375,000 while your sibling receives $300,000. You got your money back.)

The lawyer can build in some other safeguards for you.
 
You need a lawyer, plain and simple. $55K is life-changing money to most people, not something you should trust to a bunch of strangers on the web.
 
You WANT to give them the $. That is noble and generous, even if it is giving to your parents. You should ask yourself several other questions though in considering whether to actually give them the money regardless of what you want to do.

1. To what extent will giving them the money make things more difficult for you (financially, getting back into school, paying bills, starting a family, feeling comfortable)? As a parent, I would never ask my children to sacrifice solely for my betterment, especially if we are talking about a large purchase that is NOT NEEDED. This larger house I presume is a want, not a need. And actually, I feel as though it's the other way around--parents should sacrifice for their kids' betterment.

2. If you give them the money, how prepared are you to forgive and forget if you never get it back REGARDLESS of their intentions to pay it back? Will you be bitter? Will it (could it) ruin your relationship with any other folks in the family? ("You lent mom all that $, but what about me and my new baby? Not even $1,000?", or "Why do you keep pestering your parents for the $, jerk?") Also, keep in mind that some folks lose a lot of money through no real fault of their own or because they made some poor choices that seemed like good choices at the time, but really are not good choices.

3. If you do not give them the $, how will your mom react? Will she still love you and show affection for you or will she be distant and cold? The fact is that whether you give her the $ or not, her feelings for you and the way she acts toward you should not change based upon your choice. She is your mom for God sakes! If you think her feelings will change if you don't give her the $, then as hard as it is, you have to consider the possibility that she cares more about the $ and herself tan she does about you and your boundaries.

4. If after lending your mom the $, she decides down the road to go get a new car and plops down $25 k in a down payment instead of paying you that $25k, how will you feel? Overlooked? Unloved?

As someone has suggested, you could use the legal system to increase the likelihood that you will get paid back, but there is still no guarantee. Can you say bankruptcy? Also, the mere suggestion of doing something like that suggests mildly that perhaps you don't fully trust her or her ability to pay you back. After all, and again, she is your mom! Why wouldn't she pay you back???

In marriage, sex, kids, and $ are the big three reasons people get divorced. Those things greatly complicate relationships and can easily tear a marriage apart. Do you really want to introduce $ into the relationship between you and your mom? Really??? It is indeed a lose-lose situation, but if it was me, I just could not do it under the circumstances. Yet, if they were different--say your folks might lose their home or they needed $ to eat--then I'd be all in regardless of the amount involved. But this is a want--nothing more, nothing less. Steer clear.
 
If you were married, what do you think your young wife would say? Look at the big picture. Would a young wife just starting out want to live in an apartment for the next xx years because you gave away the money for a downpayment for your house so your parents, after having children move out, decided to upgrade instead of economize in hard times with you paying their way instead of a bank?

Also, it might be an idea to keep your financial info a little closer to the vest. To be able to pretend you're poor or investments locked up long term can be an advantage.

That being said if your parents paid for your education, you should have already made a plan to pay them back...at least in part.
 
Buying real estate at a time when property values are declining is extremely risky. So is loaning money to relatives, however dear. Sounds like you and your parents could benefit from advice from a licensed and independent financial adviser (i.e.,not a bank).
 
Take your money, move into a place of your own, pay them back the money they gave you for tuition that you wasted and then decide. If she is nickel and diming you now, it will not change when she owes you 55k. If it was a real reason they needed money then it would make sense, ie medical costs, lost job etc. But just to move to a bigger fancier house. Give them their wish of a bigger house by giving them the room you are taking up in theirs and then they will have the extra space and you will have a place of your own be it ever so humble.
 
It was their decision to lock onto the new hose, not yours. That is a very unwise move. Nobody in their right mind would have said that was a good idea.
This will not turn out well for you if you go through with it and it will seriously harm your future relationship with your parents.
So, do yourself and your parents a huge favor and tell them to pass on the new house until the old one sells like all financially responsible people would do.
Good luck!!
 
I can't imagine my parents borrowing money from me. They are still in the same starter house they bought nearly 40 years ago.

Sure puts you in an bad position.
 
Hi guys, my parents arent moving into a new "fancier" house. They are moving into a smaller house with lower taxes. Our house is too expensive to maintain. thanks for all the input though. I am still thinking about it. But yea they didnt even sell the one we have now and already are buying a new one. Don't know why...
 
One thing I learned a long time ago is never loan money to a family member. If you do, consider it a gift.

When I was a teenager, one of my sisters wanted me to loan her $5000. My mother told me not to do it. She said that I would never see it again. She was right.
Years later, that sister loaned some money to my other sister. Guess what. She never saw it again.
 
UffDa said:
One thing I learned a long time ago is never loan money to a family member. If you do, consider it a gift...
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I am not nearly as old as UffDa (few are :p), but this is something I also learned a long time ago. Loan money to family (and most friends) only if you can afford to give it away without any expected return. And... consider carefully any hard feelings that will come about if/when the loan is not repaid. Yours and theirs. Will they avoid you? Will you feel the need to remind them every time you talk?
 
JTR357 said:
It sounds like you answered your own question.Trust is important.

As a rule I never lend money to family or friends.

I don't envy you.It's a lose lose situation IMO.
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Agreed. I think you know how you feel. There is nothing wrong with saying no if you don't feel good about the situation. You are young and just starting out, and your parents shouldn't hold it against you for not wanting to tie-down or possibly lose so much money. If they have a problem with that, then you'll have to work through it, and that might take time and be painful, but so be it. I'd say don't do it unless you really feel comfortable with it. There are a lot of things that can go south with a home purchase.

Jordan
 
I'll echo what others have said, only "loan" it if you can afford to gift it.

But nothing changes the fact that they are doing it wrong...basically they are asking you to cover for their mistakes and in my experience it should be the other way around if anything.
 
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