Monday, June 25, 2007

Paying Back Family Loans

My mom lent my wife and I $5K to help with the down payment for our home. She didn't draw up any kind of documents, discuss any interest, or even bring up when I should repay her.

She certainly isn't hard up for money. The disparity between me and my parents does a good job of showing the age-wealth gap in this country (more on this later) My parents have basically 20 times my net worth and even in their late 60's are making more than me in income.

Yet despite the ultra-foolhardiness of paying my mom back sooner rather than later, that is what I plan on doing.

Here's my reasons why:

  1. She's my mom: I feel bad not paying her back her money.

  2. I owe them a lot more than $5K- My parents raised me to be the person I am today, none of what I hope to achieve in my life would be possible without them. Additionally, they paid a lot of my college and grad school

  3. Being your own man- Sometimes I think the reason why a generation of my friends in their late 20's have never really grown up is that they are still financially or otherwise tied to their parents (this has a lot to do with the Age-wealth gap and the high costs of college). Even after they turned 18 (the magical adulthood number) they were still financially and socially tethered to their parents for support. Its time for me to finally cut the cord.

  4. It pays to engender good will- While I intend to set out on my own and do it without their help, in life it never pays to burn any bridges you might need later on (this is why I never do the "screw you boss, I'm leaving" speech when I quit a job). Who knows what the future will bring and what kind of help I might need?

1 comment:


Its a really really bad idea to borrow from family members unless you have a really good reason to do it.