Is it a bad idea to lend money to family members?
My brother needs to borrow $2,000 and I have it to spare. But everyone says lending money to family ruins relationships. Should I lend it, give it as a gift, or say no? If I do lend it, should we write up something in writing even though it's family? How do I handle this without causing a fight?
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3 Answers
My parents told me the same thing and they were right. But everyone's situation is different. Run the numbers for your specific situation before making a decision. There are good calculators online that account for all the variables.
The simplest advice I ever got was: spend less than you earn and invest the difference. Sounds obvious but most Americans don't do it. Track every dollar you spend for a month — you'll be shocked where your money goes.
Make a budget and actually stick to it. Boring advice, I know, but it works. The envelope method helped my family — cash in labeled envelopes for groceries, gas, fun money. When the envelope is empty, you're done spending in that category.
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