So my brother in law wants to "borrow" some money...

So here’s the situation: my brother in-law has been in dire financial straits recently. I don’t know the particulars… too much debt? cash flow problem? unwise spending? Could be any of them, all of them, or something else altogether. I do know that he wouldn’t be asking for a loan if he didn’t feel that he had a good reason. Within the past several months my wife and I have “lent” him money a number of times (probably around $300 total in that time period) and have anonymously given his family another $200. I put “lent” in quotes because we know it’s really unlikely that he’ll be able to pay us back.

He called our house this evening and left a message on our voicemail asking if we’d call him back. We’re not sure why he called but think there’s a good possibility he called because of financial problems.

My thought processes go something like this…

“My family had some hard times at one point and we wouldn’t have been able to make it without the help of my wifes parents… surely we can help others now that we’re doing better financially”

“That would be a nice… but where does it end? We’re really just giving him the money, not lending it to him… when do we say no? When we don’t have any excess money beyond what we’ve set aside for bills n’ such? Or at some other time as we’re trying to save for a car right now?”

“Do we ask him why he needs the money?”

“No, he wouldn’t ask unless he had a good and sufficient reason…”

“But I’m not really sure about that am I?”

blah, blah, blah…

So give me some advice teeming millions. Whats the right course of action here?

Grim

I’d think the best course of action would be to call back and find out if your hunch is correct.

If the hunch is correct:

  • hey, if you don’t have the money to stuff down the bunny-hole (aka, the brother-in-law), you simply don’t have the money. You’ve got a life, too.

OrcaChow,

Well… I have extra money and I don’t have extra money. This might make you say “Huh?” but it goes something like this:

I owe some hundreds of dollars on the discover card, another some hundreds in medical bills (cast on my daughters arm), another hundred or so on taxes, and have other expenses which we need to pay for but not necesarily right away (I promised my wife we’d finally do something about the lawn this year and we probably need another car by the end of the summer)…

I, of course, don’t have money to pay for all of this stuff right now. But I can pay for credit card, medical bills and taxes over the next month to six weeks or so without too much difficulty. What this means on the bottom line is that I could “lend” some money because my cashflow can handle it but it will extend the amount of time it takes to pay the other stuff.

Called him back, no answer… I’ll try him again later.

Grim

I would call him back and ask him for money, anything he could spare. “I know it’s asking a lot, but things have been really rough lately, blah, blah, blah”. That would sort of head him off at the pass.

Sounds like there’s an awful lot you haven’t been told. It can be humiliating, needing to ask financial help at all. But in fairness to you and your family, how dire is DIRE and what led up to it? I mean, your needs are being driven by unexpected medical bills, paying down credit card debt and saving to replace your car. It isn’t unrealistic to ask what went kaphlooey, causing his money woes.

What’s at risk? There’s a difference between defaulting on a mortagage, going without utilities, etc.

This is anecdotal but a good pal has the most irresponsible brother ever born: quits jobs, runs up debt, always in a jam, etc. She and her parents recognized pattern and stopped bailing him out. It was rough on everyone but it broke the cycle. Tough love. He’s pushing 40 but finally growing up but they had to let him hit the wall before he learned.

Good luck, no matter what.

Veb

Grim_Beaker

Similar situation happened to me. At the point I was out about $1000 (spanning 6 months) I told this person this is how I would help. I would run their financial life. Created a realistic budget for them, stopped them from wasting money (I am confident they thought I was being draconian), got a joint checking account with them, Showed them where their money was being wasted, and generally taught them how to have a financial life. After a little more than a year, they had money in the bank, were contributing to their retirement plan, out of debt, and paying all their bills on time.

Was I a controlling SOB? Yes.
Are they better off for it? Yes
Would it work for everyone? NO

Good Luck,

It would be OK for you to ask ‘What happened to the money I already lent to you?’. The phrase ‘No questions asked’ does not belong in a situation where someone is asking for your money.

He’s family, so you can’t let him go hungry or sleep on the street. But you don’t have to cover for his mistakes and lapses in judgement.

IMHO, if someone borrows your hard-earned dollars, you have a bit of licence to look into their lives.

Well, this is a tough one, but if your wife’s parents helped you guys out when things were tough, why can’t your brother-in-law go to them? I guess you could help him out, but you’ll have to stop at some point if he does not make any effort to pay you back. Set a limit.
I can relate to both sides of this topic, though, and it’s a touchy situation that requires care and honesty. I think you have a right to know what the money is for and how he intends to spend it. Where has the rest of his money gone? Does he have a stable job? There are things to consider here. Like I said, this is a tough one. Good luck.

If he’s come to you for money several times, the odds are good that you don’t just have the fish he needs, you’re a better fisherman. I suggest you help him figure out why he’s continually in this situation, and help him get out of it. Perhaps he needs to budget better, perhaps he needs to give up that thirst for cocaine and hookers, perhaps by no fault of his own, he’s had some unlucky expenses come up. Whatever the case, it’s in his best interest, (as well as everybody he hits up for money) to help him become a more financially-savvy person.

And if that’s a little embarassing for him, well so be it. He put himself in this spot, it’s likely a little spanking could be good for him as well.

Well, I’m leery of mixing money and family just like I’m leery of mixing money and friendship. I have learned the hard way. However, I know my parents successfully borrowed money from my grandma for their mortgage when they were first married–but they both entered a set agreement, instead of just a casual arrangement. Those experiences drive my advice.

Overall, I think you don’t want to get into a situation where he feels eternally beholden to you, slinking around trying to find ways to express gratitude (or avoiding you because he’s ashamed that he owes you).

If you feel that giving him (or loaning him) money is unavoidable, this is what I’d do. I’d make it as upfront and businesslike as possible. If it’s a gift, I’d give it to him and tell him you consider it a gift. Tell him that instead of gratitude, you’d simply like him to promise that when things get better for him, he will someday help out someone else in need, or will make a donation to charity. You don’t need to know about it, you just want to know he’ll do it someday. Then never bring it up again. You have just given him a way to save face, because on some day in the future (even if it never really happens), he’s agreed to be just as generous.

If, instead, you’d like to make it a loan, say something like “I know you and I will both feel better about this if we handle this like two businessmen. You don’t want to feel guilty, and I don’t want to resent you if we get short of funds in the future. I’m happy to do this, without interest, but let’s make sure those feelings don’t interfere with our relationship. What do you say we draw up a repayment plan starting X months from now? That would be ideal for us because we have some expenses we need to meet at that time. How do you feel about an arrangement where you sent us a check for (some amount) every month after that point?” Let him have some input on the arrangement so he can be successful in paying you back. I’d get the agreement notarized, ideally, but maybe he’d find that insulting.

Grim, how did we get the same brother-in-law? Gee, it really is a small world …
Seriously, I hope we’re not in the same situation, because my b-i-l seems to be an inveterate leech. For years we literally had no money to give him, and he somehow managed to survive. Recently we’ve been able to send him a hundred here and a hundred there, and he’s been a constant open hand since then, with weekly pleas for salvation.

I agree with spooje and others – He’s now into you for $3,000 and wants more, which gives you a right to ask him what’s going on. You don’t have to be a jerk about it, but it’s quite possible that there may be ways that you can help him without opening your checkbook.

And if you do loan him more money, I also agree with Cranky – it’s a business transaction, try to do it with paper.

All of this, of course, depends on your wife – this is your wife’s brother, yes? It’s important to remember that he and your wife go back a long way. It’s your money, but it’s her sibling. This stuff can get complex. Whatever your feelings about him may be, keep the lines of communication open with her. This kind of money/family stuff can be rough on a relationship.