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A recent call from a relative this week reminded me how much things have changed over the last month.
It's not a big deal, but my view on bailing out family with money has become more solidified.
Let me first explain the conversation that started it over a month ago.
Can You Help Me Out? Please?
I was working at the home office getting ready to pick up my husband and then pick up my car that was in the shop for repairs.
I received a phone call from a relative of mine and they wanted to check up on me and see how everything was going. After some small talk, my relative asked me if I could help out with their cell phone bill.
I hesitated for a couple of reasons. First, we bought them the cell phone and paid for the first month to help them get on their feet.
When I picked it up I told them that they were responsible for it from now on. It's not a fancy phone, but it has everything they need and some – phone, text, and internet. It's a prepaid phone and we got a great deal on it.
Second, this is really between my relative and my husband. I'm picky about the video games I like to play and so the games he was offering didn't interest me.
I told him to call my husband and personally ask him if he's interested in buying the games.
He then told me that he wanted me to feel my husband out and text him if he was interested, then he would call and formally ask.
Upset that he can't even do his own work, I told him that I wouldn't. He needed to do it himself.
Twenty minutes later when I was talking to my husband, I caved and asked him if he would be interested in buying some video games.
He said he wasn't and I texted my relative back.
*Sighs* I'm a sucker.
I realized then that I was enabling instead of helping my relative.
Why You Don't Feel Like Talking with Your Spouse
There are a few reasons I can think of why you don't want to talk to your spouse about your family and money.
There in no particular order, just listing them as I think about it.
It'll put a strain on your own finances.
Money and marriage is a delicate subject for some.
Are you in a financial position to help out? If it's a significant amount, then it can seem like even more of a burden to bear.
It'll put a strain on your marriage.
Have you two been working hard on getting out of debt, taking on side jobs or extra projects?
Have you cut down on your family spending to build your debt snowball.
How would your spouse feel if their hard-earned money is being used to bail out your family? Will it start a fight?
It's not really an emergency.
Admit it – even though you feel bad and want to help out of a sense of family, in your heart you know it's not an emergency.
That relative always calls when they have ‘no other options' which seems to be the same time every month or so.
Family screwed up big time.
Is it really is an emergency? Or has your relative messed up with their finances?
Let's take a scenario where they refinanced that house a few times, cashing out, but not using that money to pay down debt.
The market turns and now they are underwater. They need help to make the mortgage this month.
What do you do?
As you figure out why you don't want to do this, make sure that you keep communication open and honest between you and your spouse.
No matter what you decide with family, you two will have to live with the consequences together so make it a little bit easier and stay on the same page.
Being Objective with Family & Money
Let's be honest upfront – it's almost impossible to be completely objective when dealing with family and money.
The next best solution is asking some hard questions and really paying attention to the answers.
- Are you their emergency fund? Have you noticed that they constantly go to you to get financial help? If so, then you’re their emergency fund. You should really examine if they’re having emergencies or if they have bad money management.
- Do you have an emergency fund? If you can’t take care of yourself, then bailing out family and friends puts you in a very dangerous situation.
- Can you really afford to help them? You may have some savings tucked away, but can you afford never seeing that money again?
- How does your spouse feel? Don't guess on this one. Sit down and talk about it together. If it's your side of the family they may be able to give you an insightful perspective. If it's their family, ask them how they feel about the situation. You may not agree with their response, but you at least have a starting point to discuss this.
I should also add if you feel that your family or your spouse's family is trying to guilt-trip you or put pressure on you two to make a decision right away, please voice your concerns.
No one should push you to feel bad about this delicate situation.
Shifting the Perspective with Lending
So far I've been talking about reacting to either family's request for help. That's only part of the conversation.
While not being a jerk about it, you do have the right to ask the hard questions to get an idea of how committed they are to getting their finances squared away.
- How did you get into this mess? It might seem rude, but if they are asking for your money, you should see if they can admit what the problem is. Do they see the pattern of running out of money before the month ends? Do they have a long term cash flow issue?
- Where do you keep your savings? Emergency funds are not something just for the wealthy. Do they even have a savings account? (I found out that my relative doesn't. His checking and savings were closed when they were in the negative too long.)
- What's the plan to pay me back? I know, it's tough to ask that, but it's necessary. Why should you do all the heavy lifting? Instead, have them take ownership of their problems.
If you decide to loan them money (that's a judgment call for you and your spouse to make, not me) then the last thing you need to ask them is to give you an agreement in writing before handing over the money.
Avoid any confusion or miscommunication by stating the loan amount, the due date, and the payment plan.
Yes, a payment plan.
You’re more likely to see your money again if you treat this professionally. If they object to this simple request, then you may not want to give out a loan.
You’re probably giving them a better deal than any bank would and you’re willing to work out a manageable plan, so what’s their problem?
My Take on Lending Family Money
Over the four years we've been married, I've shifted from bailing out family during emergencies immediately to being more cautious.
I have no problem helping my loved ones during tough times when something unexpected happens. However, I've come to see for myself that not everything is an emergency.
When we give money, it may not be the amount that family needs, but it's an amount that won't cause us to resent a family member if they don't pay us back.
It's simply a gift from us to them.
Thoughts on Bailing Out Family
Have you've been trapped by guilt to give money to family even if it wasn't a good idea?
How did your spouse react? Do you have any advice on how to handle this delicate situation?