With housing foreclosures and consumer debt at all time highs, there may be someone close to you who needs financial help. So what do you do? This is not an easy decision to make. Perhaps that person has had a spotless credit record and has been hit by a storm of events — a lost job or sudden medical bills. It could also be someone you love who has not had the best financial record and a jump in their monthly payment has sent them over the edge.
It was Shakespeare who wrote, “Never a borrower nor a lender be,” and he definitely had a point. Money can have a way of messing up relationships, even when there are the best intentions to repay.
Here are some questions to think about before you lend a hand:
Can you discuss money honestly? Money is a big window into a person’s life. The topic of money can bring guilt, resentment and even anger. This discussion might cause you to see them differently or they may feel that you would know too much about them.
Would you co-sign for a loan? Sometimes we feel it is easier to co-sign and allow someone to borrow instead of giving them the money. When you co-sign a note for someone, you are allowing them to borrow beyond their ability to repay. That is why the lender wants you on the hook.
Can you afford this to be a gift? Anytime you help someone financially, it’s wise to consider the possibility of never seeing the money again.
Is there other help you can offer besides money? Depending on the circumstance, you may offer donated items or some other relevant support besides cash.
How does your spouse/partner feel about you offering help? In the best of relationships, couples sometimes fight over the help and support one might offer their friends or members of their family. Be cautious and discuss this issue before an offer of help is made.
For more information contact Rebecca Robins, CPA/PFS, CFP™, CA Insurance Lic#0D75745 at 661-222-2331, located at 25129 The Old Road, Suite 105 in Stevenson Ranch. Securities offered through Associated Securities Corp. (ASC), member FINRA/SIPC. Advisory services offered through Associated Planners Investment Advisory, Inc (APIA), ASC, David S. Reinders, CFP, Inc., Registered Investment Advisors. David S. Reinders, CFP, Inc. is not affiliated with ASC or APIA.