When things get tough financially, the path of least resistance is to seek help from people you know love you: family. But I’m here to warn you…this is a horrible idea.
Although a family member may have the ability to help you out when you’re in a bind and may even want to help you out, you shouldn’t go that route. When you borrow from a family member, you change the dynamic of that relationship. No longer is it a parent-child or sibling-sibling relationship but now it becomes a borrower-lender relationship. And I don’t know about you, but I don’t get together with my mortgage company to exchange Christmas presents!
When you borrow from a family member, you’re also less likely to stick to the terms of the loan. If you couldn’t make a payment one month, you wouldn’t think anything of it because they’re family. They’ll understand right?! But you couldn’t pull that stunt with a bank. You would have late fees and penalties to remind you not to do that again.
If you’re really in a tough position financially and a family member wants to help out, the only way I would agree to it would be if it’s a gift. No repayment necessary. Now if you’re on the giving end and you want to help out a family member in need, make sure you’re actually helping them and not simply enabling their poor money decisions.
But the bottom line is if you have to borrow money, don’t borrow it from a friend or family member. You’ll ruin that relationship.
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