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Bum Gets a $15k Bailout
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February 4th, 2010Family, PF Lessons, debtDecember 2009
I finish all my exams and arrived home for my winter break. The very next day, I start my holiday job at the big box retail store. The Other Child (OC), my older sibling, was back at home because the OC quit a training program/job after six months and was about to launch an entrepreneurial effort. The OC spend all its time at home researching and doing various things for this new business. You know, the business that was going to be the one that succeeds.
Bum my parent and I spoke again about the loan. Bum was not going to cut off the Other Child completely as I desired before the OC’s business took off…which could be a number of years. But, after having a $0 tuition bill for the last two semesters I would have to pay $9k in tuition for my final semester of law school. That was going to hurt me financially. But, I can’t stand by and do nothing while Bum struggled with credit card debt.
I decided to help Bum out by giving a loan of $15,000 without any of the earlier conditions for three reasons.
(1) I would regret not helping Bum
I knew I could never forgive myself if I stood by and didn’t help Bum in Bum’s hour of need. Thirty-years from now when I look back I knew for sure that I would regret not loaning Bum the money. I have to take some responsibility for the debt that Bum is in because I spent Bum’s money without care and did not take the adult decision of letting go of the financial umbilical cord when I was capable of doing so.
(2) I wouldn’t have my current savings without Bum
I wouldn’t have the hefty savings that I have now if not for Bum’s help with expenses my first year of law school that included everything except for tuition and rent such as groceries, eating out, cell bill, textbooks and supplements, clothes, gas, car insurance etc… My second year, Bum helped me with all this plus rent. Bum had easily spent $15k on me in the last two years while all the money I earned working during the summer went straight to my savings untouched. September 2009 was the first time in my life when I had paid for 90% of my expenses. Bum still pays for my cell because I am in the family plan and Bum has paid for my car insurance up to February 11.
(3) I am Bum’s Safety Net.
The Other Child’s safety net was Bum. But, Bum’s safety net is me. And my safety net is my savings. Bum knew that I was sitting on some significant savings and we both looked at it as an emergency fund that could be tapped if necessary. I encouraged this view in some ways and have always told Bum that I would support Bum if some form of emergency came up. I was thinking it would be in the form of some terrible accident and not credit card debt.
I know that Bum’s retirement savings are nowhere near robust as I would like them to be because Bum helped with both of our educational and living expenses instead of maxing out retirement contributions. Although Bum has never asked me for this nor hinted at it, I expect and will provide no-strings-attached financial support for Bum in the future. I wasn’t expecting the opportunity to arrive so soon.
And as Bum’s financial back-up, safety net, personal bank etc… I wrote the check for $15k and established a schedule for payment.
Now that Bum doesn’t have a credit card balance due everymonth, do you think Bum will put that money towards paying back the loan or will it go towards the Other Child? Let me know.
Tags: Bum, Family, Loan, Other Child
12 responses to “Bum Gets a $15k Bailout” 
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I would guess the “OC”. Families are somewhat predictable when it comes to there kids. I don’t think I would take from one child to subsidize the other less responsible child though. But talking to people at work about distributing money for stock purchases, my viewpoint is not shared on these matters…
Kudos to you for helping your parent out!!!
I’m sure it was painful, especially when you are starting out and still young!
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@MoneyReasons
It was hard to write that check but what made it easier was knowing that Bum’s help the last two years really allowed me to save up that amount. And of course, I would regret it big time if I didn’t step in and do something.
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I suppose that when you say that this money was actually accumulated because of Bum, it almost sounds like a payback.
In a way, it reminds me of when I was dating my ex (of 4 years) and couldn’t stand to see him paying interest on his credit cards so I paid off a card worth about $2,000. After breaking up, we remained friends and I didn’t really expect to get the money back for a while… until he inherited over $100,000.
It upset me when he spent the money on things without a though about giving me back the money I gave him. It took my asking him a few months later to even get a promise to return some of the money back (which I haven’t received). What I’ve learned from the situation is that people don’t necessarily look at money the way that I do (honoring the importance) and in letting go of it, I’m letting go of control of the situation.
I suppose the situation is now in Bum’s hands, hopefully Bum will not disappoint you too much and create conflict in the relationship.
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@ThrifyLittleBlog
Yes, Bum’s help was crucial to me maintaining a very high savings level. So, in some way its a payback but I need it back. I know Bum will pay the money back–its just that Bum may not keep the schedule I gave Bum and it may take a little longer.
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Jane:
I hope I’m wrong but I’m afraid you may get a lesson in “Don’t lend money to friends and family!” My bet… You will see some payments for some time and then the excuses will begin. Even if Bum helped you out that does not mean Bum was making sound financial choices then and does not mean Bum will make sound financial choices now. I hope, really hope, it works out. But I would ask, is this helping Bum or is this a bailout for Bum?
btw.. kudos to your commitment to school! If you are ever near Hayfield (Telegraph Rd.) the best Chinese dish in the country is Crystal Chicken at House of Dynasty!
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@LeanLifeCoach
It was a bailout more so than helping because I eliminated Bum’s debt very quickly and none of my earlier conditions were agreed to. Let’s hope the extra money won’t end up going to finance the Other Child’s life/entreprenurial venture.
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*sigh* Honestly, with the refusal to consider cutting off OC, you’re going to see OC take advantage of Bum even more. Especially if OC knows what happened. And OC may well start on you if OC doesn’t already know better … even IF OC already knows better it could happen.
That’s why no one I’m related to knows that I have savings up the wazoo. (Which is a question of yours I still have to answer. Will soon.)
Until there are no more bailouts, OC will continue to tap off Bum.
FWIW, I’ve been there and I’ve done the same thing. I understand the choice and don’t disagree. But a cutoff has to happen lest your maintaining Bum’s safety net is abused by OC. I can already see that the entrepreneurial effort could be one way OC abuses Bum’s freed up money. Best of luck!
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@AGaiShanLife
I’ve asked Bum to keep the loan confidential so the OC does not know. This will make it easier for Bum to set the extra cash aside. The OC knows I will never ever lend money to the OC. Nada. Nothing. Zilch.
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I’m going to say odds are the money is going to be going towards OC.
However, I think you did the right thing. As you say, part of the reason this happened is because Bum was helping you out at his/her own expense, and it only seems right to ‘pay it back’ at this time. I hope you’re going to be okay without that 15k though – it could take a while to be repaid.
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@eemusings
I think I will be okay without that $15k because I do have a nice emergency fund. Sure, it would have been nice to have it on hand and I will miss the interest but I thought helping Bum out in this situation was very important for me.
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I understand why you ended up giving Bum the money, especially when you consider that you wouldn’t have the money if it weren’t for Bum in the first place. However, I have a hard and fast rule about “loaning” money to friends and family: I consider it a gift and don’t give it away if I can’t live without it. I hope Bum pays you back, but I hope you’ll be fine even if you never see a dime. Good luck, I do hope the money helps Bum out.
Kate´s last blog ..No Weigh In This Week
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@Kate
I felt obligated to give the money since Bum helped me out so much. I will be okay if I don’t see the $15k back. If it was something that I really needed and I didn’t end up getting it back then that would have an adverse effect on our relationship.
Don@MoneyReasons February 5th, 2010 at 10:02