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Borrowing Family Members--Break The Bond

December 5, 2011

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It took a lot of sacrificing, but you saved $1,000 in three months. Not so fast. Your sister called and she's $300 short on rent. Your cousin and best friend told you he owes $400 in unpaid parking tickets. Your brother moved back in with your parents and household utility costs increased by $250 a month.

You are a nice guy. You cannot say "no" to family and friends in need. Someday you may need their help. These are the excuses you use to allow family and friends to run through your savings. However, you secretly wish your family and friends took better financial care of themselves.

The best thing you can do for the perpetual borrowers in your life is:

  1. Know how much you can afford to loan (or give) family and friends before they ask
  2. Decide under which circumstances you will provide financial help to family and friends
  3. Commit to not loaning to family and friends who have not repaid previous loans
  4. Help family and friends find alternatives to borrowing money

    • offer assistance in locating a primary or second job (e.g., preparing resume, providing bus pass)
    • offer to help them find ways to cut their expenses (e.g., cigarettes, cable, mobile phone)

  5. Offer non-cash goods such as food and clothing
  6. Encourage family and friends to save once they cut expenses

Helping family and friends when they are in real need and you are in a position to help is a good thing. Never being able to save for a rainy day because of helping family and friends is not good for anyone. This behavior becomes a vicious cycle of everyone borrowing and no one saving.
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