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Remember when I wrote about not loaning money to friends and family? Well, I did and guess what?

They're not talking to me and I never got my money back.

All is Quiet on the Family Front

I have particular relative who's had money troubles before. It's been a rough couple of years for various reasons – unemployment, school (getting the financial aid together), medical issues, and just stuff.

He moved last year before the baby was born to get a fresh start and his stuff together.

Long story short, after a few bumps in the road, I didn't hear from him about money (which was a big change, but we thought it was a good sign).Loaning money to family and friends can be a minefield.Get tips on how you can protect yourself and help out your loved ones.

My husband and I knew that he was living on a tight budget (he complained a bit, but didn't ask for money). He was staying with relatives and all of his essentials were covered.

When he did call from time to time, he'd mention how school was going (financial aid was being processed and he was starting the winter semester) and things he was doing to get his finances together.

Things seemed to be heading in the right direction – until I got a phone call.

Emergency, Need Money Now! (Sort of)

It's the morning and I'm getting work done at the home office (the baby is napping!) and I get a phone call from him.

By the tone of his voice he's obviously upset. He tells me he's stranded – he needs to get to school for mid-terms and he has no bus fare. He's broke and he was basically venting.

I tried to calm him down and work through his options, including calling the professor and explaining the situation. All of my suggestions are dismissed -won't work.

He didn't ask for money, but I get what he's hinting at. Being that my work time is limited with having the baby around, I ask him what he wants me to do.

He then asks if I can help and send some money through Western Union – just enough to tide him over to next paycheck.

He needed it right away since class was in the afternoon and the bus ride would be long.

I told him no, it would extremely difficult to get the baby ready and drive over to Western Union in time.

Frustrated, he hung up the phone. I felt bad I couldn't help, but at the same time I knew that it was too last minute for me.

Loaning Money to Family… Not a Good Idea

The next night I'm with my family relaxing a bit when I get another phone call from him.

He missed one mid-term and his roommate (a relative) doesn't have money to loan him.

He calls and ask for help. At night. For tomorrow. (Ok, you may be wondering why I didn't dismiss this right away when he called again, but when you're in the moment and a loved one is tugging at you emotionally, it's tough to think objectively.)

He tells me MoneyGram is around the corner and for $5 (not true true if you're sending instant money!) I could send over bus fare money.

I again asked him about his finances. He told me times were every tight and he was scrapping by.

I decided to help out and he was happy so he hung up. At this point something bothered me and I decided to call the other relative.

Something Doesn't Seem Right….

Some people may wonder why ask a third party but my reasons basically boiled down to:

  • I've been lied to before my this particular family member – about money and other things.
  • He has a history of money mismanagement.
  • His description of the financial situation with his roommate didn't make sense based on what his roommate said to me a month ago.

So the gist was I didn't trust him. Now if things were as my relative said, then not only would I have sent money for bus fare, but also for some other essentials.

My gut was telling me that something wasn't right. When I spoke to the other relative, it was confirmed – there was enough money, but some of it was spent unwisely (partying earlier that month).

At this point three people were upset – myself and two relatives. The situation however was still that my relative needed bus fare to keep his grades up and to get his financial aid package.

Thanks for the Money (Without the Thanks)

I agreed to send him money (as a loan) via MoneyGram and he went up to pay it. Keeping this story short, there were a few hiccups with the electronic payments system, but he did get cash sent.

Fun part now – he saw how much I sent and COMPLAINED! He thought I would send more.

At this point, I was done. The next evening I received a text from him about how I ruined his life and how he was over everybody.

I haven't heard from him since. I've let go the anger, but the hurt is still around. He has since gotten his financial aid and could've paid me back, but he hasn't. The amount sent was small (I wanted to help, but not jeopardize my family's finances).

If there is a point to this story I guess  it's that loaning money to loved ones sometimes puts you at risk both financially and emotionally.

Be careful how you do it. I have other relative who have had genuine emergencies and I was honored to help them out and they paid me back, even though I never asked them to (I typically send money as gifts).

Thoughts on Loaning to Family

I'd like to hear from you. If you've loaned money to your friends or family, did you ever have a time silence?

Were you able to reconcile it? If so, did you have to make the call or did the relative make it?


About Elle Martinez

Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..

26 comments add your comment

  1. Too bad. Reading this, there were a lot of flags along the way. The stories just seemed fishy, I guess. Well, hopefully lesson learned though I would probably write off the money you did send at this point.

    • Yeah, now that it’s been over I can look back more objectively.Since I wanted to help, but didn’t want to mess up our own finances,the amount I loaned was small.

  2. I only loan to immediate family members who have a proven financial track record (you could call it an internal credit score) and even then, I only loan as much as I am willing to wait a long time to recoup or even never get back should financial disaster strike. To me relationships are more important than money, so even if they couldn’t pay back, I’d just write it off as a loss and still love ’em anyway. Money is replaceable, family isn’t.

    • Thanks Josh, I feel the same way. Family can’t be replaced. Hopefully I’ll hear from him soon even if it’s just to say hi. As for the money, it’s gone in my mind.

  3. Hard lesson to learn but at least you figured it out. I think it is OK to GIVE money to relatives as long as you don’t expect it back. Actually setting up a loan may work in some cases but most likely will end up with hurt feelings.

    • I usually give money as gifts, but this was a case of where I think having a loan was my way of letting him know that I’m not an ATM.

  4. That’s too bad, and it happens too easily where family is concerned. I haven’t loaned any money to family or friends because of this. In fact, my mom told me to never lend money to my youngre brother because he’s on a similar journey. I hope you and your relative can work through this and establish some kind of relationship later.

  5. I am sorry for your situation. That is a very hard place to be in and it is really not fair to you. My view on this is that I don’t loan money to friends or family but I will give it to them if I feel there is a real need. This way if I get all or some of it back it is a bonus not a problem. I hope that one day when this relative matures and realizes the importance of family that he will take the initiative to make things right.

  6. Thank you very much for the post. It is nice to hear that I am not the only one who has experienced issues. I had a similar situation in the past, with similar results. The total amount wouldn’t have affected our overall budget, but it was the principle of not paying us back. The relative’s husband didn’t seem to have any issue with not paying us back, but the relative felt uncomfortable and it seemed that the focus of most conversations centered around the loan. We ended up getting “paid back” by having no birthday or Christmas gifts for over a year. This was uncomfortable, so we just ended up forgiving the rest of the balance. It taught me a lesson that either we just gift the money if we feel inclined, or we don’t give money at all. Loans create a “borrower is slave to the lender” situation within the family, which is more uncomfortable than not having the money. Thanks again!

    • Sorry you went through that stress Adam. It is more the principle than the money. I think I’ll go back to my gift policy and only for emergencies.

  7. I’ve loaned to family before, but never in amounts that I wasn’t willing to lose. All my family experiences turned out ok. I lent to a friend once and it was bumpy. However, I don’t usually run into these situations. I suppose, for the most part, I’m not the person people tend to hit up for cash.

  8. Well this situation just sucks. He is a user, plain and simple, and you got cought in the crossfire. Sorry. 🙁 I have loaned money to family and friends and even acquaintances before, but I guess I’ve gotten lucky and helped out the ones that also help themselves and pay back loans. I am really sorry your family member is stuck in the “selfish brat” mode.

    • I appreciate the support. In most cases when family has needed help, I haven’t had any problems. Hopefully things will get better between the two of us.

  9. That really sucks. Very sorry to hear about the rift. I have never loaned anyone money (just spotted, I guess) nor have I been asked. However, my mother has lost a close familial relationship over a loan.

  10. Ugh, I hope to never be in that kind of a situation because I almost already know that I would definitely try and help out. You did the best you could. I’m sure when he gets older and wisens up, he’ll come around.

  11. How much was loaned out? Perhaps he will eventually pay you back. Otherwise, there are these Goon Services you can hire…….

    • The money wasn’t a big amount.It just hurts that he reacted that way. Good news though – I did hear from him finally. We’ll see what happens next.

  12. The good thing about this situation is that you’re now freed from ever having to help him with money again. First because he didn’t pay you back, and second because he was rude enough to complain when you’re out late at night sending him money!

    It’s VERY difficult to say no to a family member in need. I’ve loaned out money several times, and while I usually got it back, it didn’t always happen that way. I don’t think there’s anything wrong with having compassion for someone – especially a relative – but you’ve done what you could in this particular situation.

  13. No one picks their family members, and sometimes there are deadbeats in the mix. These folks are like the saying about boat ownership, “a hole in the water that you throw money in”. Few of them ever turn their lives around and can stand on their own, because it is easier to be a parasite. Do NOT be a host! They are beyond our help and will drain us dry if allowed.