Here is a conversation I have all the time:
Me: Tell me about your debt.
Person: Well, I owe $5,000 in medical bills, I have two credit cards totaling $15,000, my mortgage is $89,000, and my student loans are $27,000.
Me: Alright, let’s start-
Person: Oh! I also owe $3,500 to my Grandma, but it’s not a priority to pay back. She said I can take all the time I need.
I can’t even tell you how often this situation has played out. Anyone I’ve encountered who owes money to family always keeps it on the back burner. It’s rarely, if ever, a part of their debt pay down process. Why is this? People say it’s because there is no interest rate and no scheduled payments, but I think it’s because family loans often get forgiven out of guilt. There is an understanding that the money may get paid back eventually, but not any time soon. I shouldn’t have to say this, but that’s not cool.
Money owed is money owed. You can’t have a serious debt pay down plan in place if it doesn’t include all debts. Including anything owed to friends or family.
I laid out a plan for paying off debt owed to family in this segment from Fox59. Check it out here:
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.
One thought on “Paying back family should be a priority”
I would never lend money to my family or a friend, or accept part-responsibility for their debt. I have given gifts in the past, wouldn’t even do that now, people who can’t work or manage their money don’t generally deserve help, let’s face it- most of us who consider ourselves grown-ups would not ask for or accept financial handouts even in extremis. Learn to live frugally is the best advice for people, if I can forgo designer clothing and hair stylists etc so can they! Last time I bailed out a friend ( who was about to get her electricity cut off ) she went on a cruise next month. One time my church had a collection for a woman who had said she was struggling financially- I gave of course, under pressure, but it didn’t escape me how perfectly dressed, made up and coiffed she always was- when I spend zero dollars on any of those unnecessary products.
It’s harder with your children somehow, we brought them into such an obnoxious world of excessive consumerism and they have been brainwashed into believing that life isn’t worth living without an iphone and x-box live. And since many of the things they crave are mis-sold or bait-and-switch never-ending expense, we get dragged into the manipulation.
Parents who ban tv, go to the library for limited computer time and do not allow electronic gadgets will have the advantage in future, wish I had my time over.