I began traveling the world in 1996. Over the years I visited places like Belgium, Germany, France, Canada, Australia, and even the Philippines.
I spent a semester studying abroad in London, England during my junior year in college.
For extra money, I worked in the library and whatever local odd jobs I could. While studying in London, I worked illegally as an apprentice to an antique dealer.
She would pick up junk furniture from the street. Then she would clean, paint them, or lacquer them, and sell them for outrageous prices.
I would save money for months from my small paychecks to go on my little adventurous.
That is the crux of responsible personal finance. You must pay for what you what or save for it.
Somewhere along the way, after college, I forgot that.
I graduated college and was getting married. So, for some reason, instead of maturing, I only thought about what I wanted.
Not what I needed to do to get what I wanted.
The cost of living in New York City, where I am from, is unforgivably high.
I borrowed money from every relative I had to get an apartment and start life as a married man.
Less than a decade later I was divorced, unemployed, diagnosed with cancer (caught early and dealt with) homeless, and back living with my mother.
I may owe my relatives and some friends maybe $3,000. That may not sound like a lot of money, but it is to people on average and fixed incomes.
I owe them a lot of money and I don’t know when I can pay them back.
Don’t lend money to relatives and don’t ask for money. It changes relationships. And you could put your relatives in financial jeopardy if you don’t live up to your end of the bargain.
The Toll of Family Loans
The average family loan is about $3,300. Meanwhile, people in the same family loan about $184 billion to each other annually.
If you ask a relative to cosign a loan, and then renege on paying, then your relative will be stuck with the full amount.
Their credit score could devastated. Creditors could initiate legal action against them to be repaid.
There are so many consequences, bad ones, that could befall relatives trying to help you when you ask for money.
Don’t Do It. But If You Do…
Here is a great resource with tips on how to lend money between relatives.
Like, get terms in writing, charge interest, lend only what is feasibly affordable, and, consider all tax implications.
Loans between family members must be treated as a business transaction, not a favor between relatives.
That is the only way to ensure proper and timely repayment and the non-destruction of family ties over money.
My warning to you is that if you need constant financial replenishment from friends and relatives to survive in the world, then you’ll never be able to make it on your own.
If you can’t afford an apartment, car, investment, or other financial opportunity, then wait, save more money, and try again in the future.
You must pay your own way as you go along in life. Remember, you are responsible for your own financial destiny.
No one else is.
Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.