Loaning Money to Family Members: Just Say No!

In some areas of the world, taking care of family is extremely important. In the United States, we think that we would like to take care of our immediate family for sure, and help out our extended family when we can. In many other cultures, families are much more focused on helping one another than we are in the United States. In places such as Mexico, it’s not uncommon for someone to by an uncle or a niece a car if they do not have one. There are no judgments, but it’s really interesting to see the difference between families in different parts of the world.

It’s going to happen at one point or another in your life, a family member is going to need some sort of help financially. They won’t have the money, and will ask you for some help. It could be for any number of reasons, such as a job layoff, a medical problem, an automobile that needs repairing, they want to start a small business, and it could be dozens of different things. You like this person well enough, and don’t doubt their intention to pay the bill back, but you have a bad feeling about it. What do you do?

Your bad feeling is certainly not without warrant. When you loan money to someone, your relationship will change with them. This is nothing that neither of you intentionally do, but somehow it turns into a master-slave relationship in almost every case. The person borrowing money will feel as if they are inferior to the person lending the money. And what happens if the person who borrowed the money can’t pay it back? There will be all sorts of shame and guilt, and often times the person lending that money will think of the other person as a dead beat. This is not a good situation to put your self in, if a family member is asking you for money, chances are they already went to a bank and were turned down.

Let’s say that you genuinely want to help this person. The cause is worthy and they honestly do not have the money. If you can spare the money without being crunched financially, then go ahead and just give them the money. If you do give them the money, make sure you are serious and tell them that they haven’t found the gravy train, and that this is a one time deal. Let them know that they need to build up an emergency fund to take care of these things in the future, and that they should not coming running to you because they did something stupid again. You might feel like you are a bad person when telling them that, but it is the best thing for them.

If you would feel a financial crunch by, let’s face it, you just don’t have the money. There’s nothing wrong with admitting that the money isn’t there and you cannot be a blessing to them. You’d like to help them, but you can’t, and that’s that. You don’t’ have to feel bad or immoral about it at all.

Here’s the moral of the story. Loaning money to family members is just a bad idea. Your relationship will change even if you think it will not. There’s a very good chance they will end up not paying, and the relationship will be in serious jeopardy. Help them if you can, but don’t loan them money.

I’m Drowing in Student Loan Debt

The Rising Cost of Higher Education

It’s no secret that a college education isn’t cheap. With an average rate of $7,605 per semester for in-state tuition and fees alone, it sometimes seems like a taking out a loan is the only option for students to finish their degree. As a student at Texas A&M University, a moderately-priced state school, I can personally vouch for the crippling nature of student loan debt.

The problem with student loan debt is that much of it is applied to many more costs than tuition alone. Each semester, I spend around $10,000 to attend Texas A&M – and those living on-campus easily drop more. After my annual tuition bill and fees, I am obligated to pay for textbooks, which can easily run into the $500’s; rent and utilities, which usually costs me around $2,000 to $3,000 a semester; and all other bi-monthly expenditures such as my phone bill, groceries, insurance, car, and gas costs. And I attend a relatively low priced school in a decent housing market!

Taking out loans to pay for day-to-day expenditures, as many students are forced to do, is what really costs college kids a fortune in debt. With accumulating interest on loans and often virtually no way to save money while in college, a $2500 rent fee per semester can easily grow into a $4 or $5k expenditure; a $50 grocery bill can soon become a $300 repayment in the future. Young professionals and recent graduates might easily crumble under interest rates and find themselves in much worse financial situations than they were in college. In today’s unstable economy, these cash-strapped baccalaureates find themselves trapped again and again in a vicious cycle of debt.

Even in the best of economic situations, taking a student loan out to attend college is a precarious (although sometimes necessary) decision. I am one of the most money-savvy students I know (I once spent three months without toilet paper – using tissues to save on wiping costs!) I still face a flat repayment fee of over $20k when I graduate – without interest. The hard truth is that many majors and professions (mine included) simply will not pay enough to get the bills paid off in time, drowning recent graduates in a bottomless ocean of debt. If I follow my dream to become an English professor — going to grad school to earn my doctorate rather than immediately entering the job market – I could face hundreds of thousands of dollars in loan costs, a bill that my projected first-year pay of around $30k couldn’t hope to begin to cover.

Though society reams those who don’t attend college, the crippling nature of loan debt almost makes me reconsider my dream of becoming a professor and opt out for a cheaper, better-paying field. With college costs climbing every year, it doesn’t look like there is much financial hope in the future for those pursuing higher education – in the light of the current nature of student loans, I advise everyone to hold on to their toilet paper.