Kids and loans

Not sure if I'm looking for advice, ideas or just support.

We've had a policy (same as mine and hubby's parents had with us) that if one of the kids needs a loan for something specific - first car etc - that we would lend them the money with the rules that it is interest free, must be paid back within 2 years by regular payments and they don't get any more until the first lot is paid off.

Due to a manipulating birth mother, I've got a prickly relationship with one of my stepkids but strangely enough I am the one they come to for financial advice or to ask for the loan. I want to keep a good (or at least, an open communication) relationship with the kids because of their father - hubby - but I'm starting to get a little annoyed.

18 months ago the prickly one asked us for $10,000 to buy herself a reliable car (she put in $5,000). No probs. She was paying us back at $100/wk. 6 months ago she got a job in another city so had to move out of home and rent, so asked if she could defer payments until Jan 2012. Again, no probs.

However, recently she sold the car - no mention of paying us back the balance of the loan out of the money gained, and no mention of restarting payments in January. She has been spending up on gym memberships, clothes, jewellery and living a pretty good life. Tonight I sent her a friendly message asking if, now that January was fast approaching, was she going to pay back in a lump sum or restart her repayments - but I am trepidacious of a miffed "prickly and putting on pressure" reply.

In the meantime - 4 months ago another stepchild asked for a loan for moving costs as she got a really good job interstate and need rental bond, shipping of pets and furniture, with the promise that it would be paid back within 2-3 months. That was 3 months ago and still haven't heard a word or seen a penny. I know things are tough as her partner isn't working, she's repaying hecs and the city they are now in is very very expensive to live in ... and she is under the same "within 2 years" loan rule ... but not a single comment about her making any sort of repayment.

Money isn't something I feel comfortable talking to the kids about due to our civil but tetchy relationships ... and I'm really starting to feel taken for granted and unappreciated over many things.

Am I asking too much of these kids that are in their early 20's - should I just not bother to do anything for them in the future, or even try to maintain friendly and supportive contact when they treat us with so little acknowledgement or respect? Should I just let them be until they are ready to make contact our way?

Or am I being the prickly one, expecting to much?

I'm feeling really peeved for my hubby and rather used. And - no - I haven't had a drop to drink!

My parents lent me money for a small new car when I was 18. At the time I was thrilled beyond belief, as it meant I could step up from my first car that was older than I was, and needed a few small jobs doing.

If I could go back and speak to my 18 year old self, I would say 'don't take the loan and don't buy the new car'. I laboured hard to pay the debt during uni and my first year of full time work. My parents bought cars rarely, but when they did it was always new, "because we don't want to buy someone else's problem". What I didn't realise was the costs of full insurance, dealership servicing, odd size tyres and making payments far exceeded the occasional maintenance on an older car owned outright.

My attitude, based on this experience, is that you either give kids a small loan to bridge a gap (ie less than $1000) and require short term repayment, or you don't loan at all.

The hard part is that financially we have the ability to help them out - like with a house deposit under similar rules (interest free, regular payment - even if just $50/wk - full repayment within 5 years) etc - but with these two negative and unappreciated experiences of significantly smaller amounts I'm really reluctant to go there.

What does your hubby feel about the situation Lizzie?
He probably doesn't want to rock the boat...but that won't earn either of you any respect. Behind your backs they could be encouraged by the birth mother to stall any payments...after all, you can afford it.

Did they go to your for the loan, or only just to you?

In our family I am the one who insists all loans are adhered to. Sometimes one will have an "issue" and we need to skip a payment, but they make do a catch up within a short period.

In the future, you may need to have payments start right away.
The fact she sold the car, which in essence, was your collateral, without paying you back would annoy me.

I'd make them pay..even if you need to renegotiate.Tell them no more loans until it is paid off.

lizzie said:

The hard part is that financially we have the ability to help them out - like with a house deposit under similar rules (interest free, regular payment - even if just $50/wk - full repayment within 5 years) etc - but with these two negative and unappreciated experiences of significantly smaller amounts I'm really reluctant to go there.

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Let me ask you this - does providing this very generous loan service seem to be helping grow into financially responsible adults of good character?

I would give it another 6 months - its not January 2012 yet and the other one only moved 3 months ago - give them a chance!

If you act like the crazy stepmother now you risk ruining the relationships for good.

I know where you're coming from, however give them a chance first.

i totally hear what your saying...
although i have no kids etc i have had mates want to borrow money off you (only small amounts) and then you never see it again or takes ages to get it back

i think a contract or something needs to be written up legally or not so you can refer to what they agreed and are obliged to do

eg the car one
-loan must be paid off by xx date with repayments of $100/week
-if car is sold the remaining amount will be paid out in full

state
-only one loan at a time
and if loan terms arent followed that they may not get another loan

its tough asking for money but if they get grumpy at you then its there loss because they wont get another loan

id wait until jan then ask where the repayments are?

also if they cant make the repayments shouldnt they talk to you about it instead of not paying or saying anything... thats a bit rude IMO

Let me ask you this - does providing this very generous loan service seem to be helping grow into financially responsible adults of good character?

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agreed

You have a right to feel peeved. I think you've been very generous lending the money you have - then to have your generosity go unappreciated is like a slap in the face. As the terms of the loan were clearly spelled out you have every right to ask questions if they are not being met, in my opinion. However, perhaps it may be best if hubby does the asking? I know, I know, a lot of men are not good communicators when it comes to 'family' and 'money' - combine the two and throw in daughters and a divorce and it makes it even tougher!

Best of luck.

gottabespotless said:

I know, I know, a lot of men are not good communicators when it comes to 'family' and 'money' - combine the two and throw in daughters and a divorce and it makes it even tougher!

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He won't even talk to me about it - so no chance in hell of him discussing with the kids.

I haven't said anything to the "moving loan" one as it's only been a few months and I know her situation is tough, and she is a good kid so I'll let it go until I know things are easier - but she was the one who promised the 2-3 timeframe but hasn't made a mention since ... the one who sold the car has me miffed as she had money to pay us back plus twice that left over but hasn't made a comment whilst spending up big.

Does it make them financially responsible? I thought it would, at the same time as helping them out, by having an obligation to make set repayments within a certain timeframe.

Ah well - learning experience.

lizzie said:

Money isn't something I feel comfortable talking to the kids about due to our civil but tetchy relationships ... and I'm really starting to feel taken for granted and unappreciated over many things.

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If money isn't something you feel comfortable talking to them about, then perhaps you shouldn't be loaning them money.

Sounds like you need to work on the relationships with these children. Talk openly, teach and share, then in return they will respect and appreciate you. When it comes to kids, adults have to make the moves to open the line of communication and be willing to listen. Kids will never talk openly and truthfully until they know that there will be no conditions.

lizzie said:

He won't even talk to me about it - so no chance in hell of him discussing with the kids.

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I think this may be where a good part of the problem lies.

Shying away from dealing with it puts you in a weak position and the daughters sense it.

All I think you can do is not loan anymore until it's all paid back (tell them nicely that that's how it will be) and stick to your guns, while working on building a relationship not involving money.

weg said:

I think this may be where a good part of the problem lies.

Shying away from dealing with it puts you in a weak position and the daughters sense it.

All I think you can do is not loan anymore until it's all paid back (tell them nicely that that's how it will be) and stick to your guns, while working on building a relationship not involving money.

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I agree. Honestly, without open communication a family tends towards dysfunctional. Honesty & Integrity should be revered with anything short of that sternly shunned. IMO, you are setting the kids up for failure if you allow them to ignore their debt obligations.

The old cliche of, Easy Come, Easy Go, never loses its relevance. We do not tolerate loss of integrity in our family as it destroys the bond between us.

putting aside the family issues/pressures

thats complete bull
they are taking you for a ride

if you see evidence that they are being frugal and scraping together every single cent, then yes, give them a break, but they see you as a free loan,

do you think if they owed that money on their mobile phone or foxtel they would forget to pay???? ill bet they'll pay right away

best to tell your hubby to tell them to pay up immediately and that its not acceptable to reneg on a loan, without a genuine reason, which I can bet my kidney is not the case

I would leave it as it stands and just remind politely every 3-4 months.
I assume hubby is aware they have borrowed money and its not been returned.

Worse case they don't pay you back and they come asking for more latter you have a valid reason to say no.
Just keep this in mind if they ever come cap in hand for a home deposit etc.

Personally I leave loans to the bank. Unless I am prepared to never see the money again.

Must be paid back. I would look at re-opening discussions about a weekly repayment.

We were lent $10k from my mothers partner to get us across the line for our first property, we paid it back in about a year. He didn't want weekly repayments, or even $1k here and there, he wanted it in one go. (so your felability for weekly repayments is very nice). We were so grateful because the money was for something very beneficial for us that we made sure we honoured it above all else. We paid it back within a year which included a number of other major expenses such as a move from perth to sydney and a new mortgage which we didn't have before.

I hope she tries to pay you back otherwise it could be quite damaging for relationships.

Ouch, The problem here is that you're thinking like an Adult.
Think like a teenager and things become a bit clearer.
Just been given a 10k loan with minimal consequences, not so fussed to repay the loan, its only stepmother.
She's not my real mother what can she do?
They have plenty of Money.
Dad doesn't care, why should I?
Should I make repayments or buy that new dress...

I went through a similar experience with my parents, thankfully I got a slapping around the head.
Personally i'd be laying down the Terms of the agreement and he consequences of not making repayments, the consequences are the key bit.
Show them its moved from personal to business.
Unfortunately to be honest I don't see a way out of this were the relationship between your Step Daughter and you is brought closer, Money divides people most of the time.

Doovalacky has the right idea, Don't lend to family unless you are prepared to give the money away with no hard feelings.

I think Zimby has the best comment here. You are in a catch22 situation. Whatever you do now is not going to make the relationship better and possibly won't get your money back either.
I have the same situation with two of my children. It is painful. The more I talk about the situation with them the more I am seen as a money grabber, mean etc. I will continue to be gently persistent and hope for the best.
It is very hard when your partner is on a different page and avoids confrontation.
I haven't made that mistake with my next two children. They are making their own way in life but they unfortunately think I am mean and tight with my money too. So you see how we parents just can't win sometimes.
Every family dynamic is different so there is not a one size fits all way of operating in this area but if I had been given a manual for my children I know now it would have said "don't loan money to your kids".
Getting a loan from a bank is the best option and if it is unavoidable that you need to be involved then a contract needs to be written first and signed which the children know will stand up in a court of law. (Just a little incentive for them).
It is so sad but some kids are just more narcisstic than others.
If I find the answer Lizzie I will let you know.

Delilah said:

Sounds like you need to work on the relationships with these children. Talk openly, teach and share, then in return they will respect and appreciate you. When it comes to kids, adults have to make the moves to open the line of communication and be willing to listen.

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This is a hard part because they are my "step" children and their mother - who would never lie to them - is a master manu
ipulator.

We have always kept open lines of communication and tried to relate to them, teach them and be loving "parents" - but it was rather hard when someone behind the scenes is distorting the truth and undermining. Something we didn't realise she was doing until the damage was already done.

Anyhow - she has been gently reminded with a soft "lump sum or repayments starting in January as agreed?" reminder ... with her making no commitment either way yet ... see how it goes.

Might just have to write it off as a life lesson - thanks guys for letting me vent, take a deep breath and let it go.

Methinks Belleran and Zimby have it right.

I'd say "We know it is an expensive time of year so we are happy until february that you pay half of the weekly payment that you agreed to that gives you a month before we expect the agreed full weekly payments to start again."

I'd also give them the spreadsheet of payments so they know what is owing and remind them you are not charging interest. You could also say you need the money yourself and if they don't start payments as promised they will need to organize a personal loan to pay you out.

Tricky situation even if you were their mother but being step mum makes it even harder. I see the biggest problem being the fact that Dad has not got involved.

In the interest of keeping tension out of your relationship I would be inclined to ask him again to ask the girls to pay "something" on a regular basis.

If he prefers to forget about it then the only thing you can do is agree that no more money to anyone.

Not much point in working hard to provide for retirement then giving it away to people who don't appreciate it and will only ask for more.

We each have our own life to live, both the good bits and the bad bits. Our kids will actually have a more fulfilling life if they achieve something themselves rather than have it handed to them on a plate.

I helped mine with the deposit for a house, not a loan, and no more until I am not here to spend it.