It can be tempting to reach out to the family when you need a loan. However, such loans can quickly become invasive. You may feel like the debt continues long past the payoff. If you are in a position to lend money to a family member, consider instead of giving them a gift and asking them to pay it forward to get it completely out of your head.
You Can Protect Your Privacy
One of the biggest hassles of borrowing from a loved one, no matter how well-intentioned, is that they may feel entitled to be in your business. Even after paying off the loan, you may feel indebted to those family members.
Protecting your privacy, especially as you get older, will make every family gathering easier to manage. Not everyone in our family would be a chosen connection. Tangling up finances and family is never a healthy choice.
You Can Move if Needed
One of the most common reasons for a personal loan is to cover moving costs. If you need to borrow to find a better job, better schools for your family, or a better environment to build your business, your family may struggle to understand your need to relocate.
Borrowing from a family member may leave you feeling tethered to their geographical location. With a personal loan in your name only, you have the freedom and flexibility to do what is best for you and yours.
Don’t Stick With a Handshake
If you have a family member who you believe can just lend you the money, collect the payments, and move forward, make sure you do the paperwork before collecting the money. This paperwork can protect both parties when it’s time to consider taxes as well.
For those who are really in a tough spot and lucky enough to have a family member who can help, you may do better to accept another form of help. For example, you may be able to move in with a family member for a year to save on rent. If you’re younger and fitter than your family member, you can
- mow the lawn
- shovel the driveway
- clean the gutters
Both parties will get the help they need, you can improve your relationship, and you can save cash and pay down your debt.
According to Lantern by SoFi, many people get personal loans to consolidate credit card debt. Do you have a frugal family member who often has a piece of financial advice? Instead of asking them to borrow some money, you could seek their advice for managing your expense and budget in disciplined order.
You may have a family member who has gotten themselves out of a financial hole by rotating through 0% APY credit cards to consolidate and kill their debt. You may have a family member who lives on several different side hustles. Digging into financial changes you can make based on the example of these folks could be the best way to wipe out your debt.