149 – REBROADCAST: Why You Should Never Loan Money To Family and Friends

This is a special rebroadcast of show #111, originally aired on October 15, 2016.

We all want to help when someone is in trouble. But helping someone out of financial trouble can come with unexpected costs and consequences. It is for that reason that I strongly advise against ever loaning money to family and friends.

On today's show we hear three stories:

Mabel is a widow who chose to help her adult son who was struggling financially after a divorce. In the end, Mabel ended up maxing out her own line of credit and was having trouble keeping up with her own rent and debt payments. Larry loaned his son money for a down payment on a new home. Unfortunately, Larry's son separated from his wife who received the house as part of the separation agreement.  Larry's down payment went to his son's ex-spouse. Amanda's parents gave her the 5% down payment she needed to enter the housing market. Unfortunately Amanda quickly found out she couldn't keep up with the bills associated with her new house. Maintenance, a job loss and a flooded basement resulted in her selling the home for less than she owed including some additional credit she incurred trying to keep up.

What's common about all these stories we heard on today's podcast is that in each case, loaning money to someone to 'help out' ended up with very bad consequences for everyone involved.