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Update on Bum & the $15k Loan
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March 10th, 2010Family, PF Lessons, debtRecap
In January, I made the decision to lend my parent Bum (who is no Bum!) $15k to pay off some credit card debt. I believe that since I asked and accepted financial assistance from Bum for my 1L and 2L year for some living expenses I contributed to the debt. But, the biggest culprit was my older sibling the Other Child who refuses to get a real world job and is going after his entrepreneurial dreams while Bum picks up the check. I tried conditioning the loan on Bum cutting out the Other Child financially but Bum was having none of that so the $15k was a no-strings-attached unsecured interest free personal loan.
The only drawback to the loan was that I was not willing to wait around for my $15k to be repaid. I wanted an aggressive repayment plan since Bum wasn’t willing to cut the Other Child out. I lend the money this January. I specified that I wanted my first payment of $5k on March 31, next $5k on June 31, and the next $5k on October 31 and oh maybe a nice little “gratuity” in December for being so so considerate.
At the end of my post I asked my readers whether now that I have paid off the $15k in credit card debt, whether Bum will save the money to repay me or whether the increased cash flow means more money will end up going to the Other Child. Guess what happened? Bum is doing both. Yes, both!
Bum Spends More on the Other Child
Bum is spending approximately $1,000-$1,200 per month on the Other Child for residential rent, office space rent, student loan payments, car insurance, food, gas, cell phone etc… It started with $500-$700 and now it is almost double. So, readers who predicted the Other Child will really benefit from this move were correct. The Other Child is benefitting like crazy. Its entire lifestyle is subsidized by Bum.
Bum is Saving More
But, Bum is also saving money. In fact, Bum already has my payment of $5k saved up that is due on March 31. I think the high interest credit card debt was a huge burden on Bum and making it all go away in one swoop was a good thing and it is enabling Bum to save more (and spend more on the Other Child). So, right now things are looking good but nothing is final until the $5k hits my bank account on the 31st.
So, in this transaction everyone wins except for Bum.
- The Other Child gets more financial support and can continue working on its entrepreneurial venture.
- The credit card companies got their payment.
- I will (likely) get all my money back and I am expecting a little extra in the form of a gift.
- Bum gets to continue supporting a grown adult, live an even more frugal lifestyle, work harder and longer, forego fully contributing to the 401(k) etc… Poor Bum.
And on top of all this, I went to visit Bum this past weekend and dropped a huge bomb about my career. More to come on that.
Tags: 000, Bum, Family Loan, Loan of $15, Loan to Parent, Other Child
12 responses to “Update on Bum & the $15k Loan” 
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Actually, Bum doesn’t entirely lose. Bum may not materially benefit and does lose money in the whole transaction but Bum does get some peace of mind knowing that Bum is doing whatever possible to support Other Child as Bum clearly feels is necessary. At least there’s that.
It’s just too bad you can’t convince Bum to cut back to previous levels of support in order to save for retirement.
Revanche´s last blog ..Joining Gymboree was not part of my master plan
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Ah the sacrifice of what a parent would do for us. So basically, you are lending Bum the $15K to help pay for your older sibling’s living expense. Technically, you are supporting your older sibling.
moneyhoneysf´s last blog ..February 2010 Net Worth Update -
I can’t help but wonder, when I read these posts about Bum and OC, if it would be better for everyone involved if you didn’t actually know how Bum spends their money. You made the loan, you expect to get paid bac, do you think that it would at all help help you to not resent OC as much if you didn’t know everything about their finances?
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@Revanche
Yes, Bum does get the peace of mind knowing that they are doing everything for Bum’s eldest child. And I know that peace of mind and feeling as if one is fulfilling a responsibility is huge to Bum.@ MoneyHoneySF
I wouldn’t say I am supportin the Other Child’s life style because I am pretty sure I will get my money back.@ Kate
Aaa…the fun of being a family is the sharing! Also, I wouldn’t say that I resent the Other Child. I dislike the Other Child and the dependency Bum is enabling. -
I’m so glad that the loan seems to be going smoothly!
I wonder if Other Child might do better if they were forced to deal with usual start-up conditions. From what I’ve seen in school private equity wise, it seems like most successful start-ups grow from a mixture of passion, overtime hours, and a sheer need for success… that your Bum is paying for OFFICE SPACE is ridiculous!
Caity´s last blog ..Buying -
@Caity
I think the OC should struggle a little too and be like other entreprenuers and work to save up for the business. -
Bum actually sounds pretty smart!
I think he wanted to avoid the interest payment to the credit card company. Based on what you have wrote in the past, I’m sure he’s doing okay career wise…
I think you’re loan will be a big gain for you. I think his logic is that he’d rather give you the gift than the credit card company(s)…
Hopefully the “Other Child’s” business start to take off, that would relieve a lot of the financial burden off of your “Bum”…
I’m sure he loves the both of you, sounds like you got a pretty decend parent over all
Good luck to you and your family, these are rough time (I hope they lighten up soon!).
Don@Moneyreasons.com´s last blog ..What I Have Learned To Date From Blogging! -
A bomb on BUM? Say that 3 times fast!!
Wow, I don’t understand why BUM can’t cut the Other Child off? I think if the Other Child is over 22 and done with College that Child needs to be cut off. He can live with BUM, but needs to contribute to some expenses. I mean, BUM can’t even claim him on her taxes!!! Why would she continue to let him be a “dependent?”
Investing Newbie´s last blog ..I’m a Bi-Monthly! You? -
@Money Reasons
Bum is definitely an awesome parent! Bum loves us both very much and is willing to support both of us toward our goals. I am pretty lucky in the respect.@Investing
LOL! I did try saying it 3 times fast and I got “bombumbombumbombum”!The Other Child doesn’t live with Bum, the OC is on its own. I think as a parent you want to see your kids succeed depserately that you are willing to do everything in your power to help them do that. Bum also feels its Bum’s responsibility so that adds to it.
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@Investing Newbie: I don’t think it’s a mindset you can understand if you don’t have it. Period. I don’t have it, but my parents do, and I can’t say for sure that I never would have had it before experiencing the effects of their decisions to enable.
Obviously, for a time I enabled as well before learning that I truly was not ok with how I was conducting my business. I think it’s hard to say how you’ll react in that situation until you have your own child, though, as I really didn’t think my parents were the type to enable unto … who knows what.
Revanche´s last blog ..An ideal Sunday -
I can’t help but wonder, when I read these posts about Bum and OC, if it would be better for everyone involved if you didn’t actually know how Bum spends their money. You made the loan, you expect to get paid bac, do you think that it would at all help help you to not resent OC as much if you didn’t know everything about their finances?
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And miss all the mini-fights and bickering that makes my family so fun? No way!
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Revanche March 10th, 2010 at 16:48