Should I take a loan from my boss?

March 9, 2011 8:41 AM

I'm strapped for cash, and am saving up money to move to a cheaper place in a few months. My boss has offered to personally loan me money to help me move. Should I take him up on his offer?

Why I can't move now, and the current plan for saving enough money to move:

I'm a young professional in publishing, a field that pays extremely poorly at my job level, but in a job that I love. Because of recent changes in my personal circumstances, I can no longer afford my current apartment. I can cover the rent and utilities, but must scrimp and save in every other area to do so. I am doing things like washing my clothes in my bathroom and line drying them, making all meals at home, and comparison shopping and using coupons for my groceries in order to stay within my income—this kind of saving is not optional for me at this point. I don't have any unnecessary utilities or monthly expenses (no cable TV, no phone, no Netflix or anything like that) that I can cut, and I am not spending money on anything but necessities (absolutely no funds on entertainment, or eating out, and so forth). Any money not going to rent and necessities is being saved toward moving. Finding a roommate to move into my apartment is prohibited in my circumstances (and that prohibition is within the bounds of New York roommate law—I’ve consulted with a tenants rights attorney).

I want to be absolutely clear: I am at a state of maximum economy at this point. Until I move somewhere cheaper, there is nowhere else that I can save.

In order to move, I need to break my lease, which does not expire until August 2012. As specified in my lease, the fee for early termination of the lease is equal to one month's rent. To move to another apartment here in New York City, I will also likely need to have money on hand for a) two months rent + security deposit for a new apartment, b) broker fees if necessary, and c) moving itself (whether it's a rental truck or a moving service). In order to save the minimum amount of cash needed on hand to move (i.e., cash for the lease breaking fee, no-fee apartment that only requires one month's rent up front, security deposit, and truck rental), at my current rate of savings (which unfortunately has no room for increasing) I need to wait until July or August to move, and later if I can’t find an apartment without a fee or that requires more than one month’s rent upfront.

Also, despite working pretty much non-stop each day from 9 to 7 or 7:30, I happen to be quite behind at my work. In a conversation about this with my boss this morning, we discussed the various things that are behind the pileup. He asked me if there was anything going on outside work that was contributing, and I told him that yes, there was. Under normal circumstances, with this kind of work backlog, I would just buckle down and spend as much time in the office as possible, buying meals rather than making them, and doing laundry in my building’s coin machines or having it done by the Laundromat to save time. But I can’t do that right now. Because of all the things I’m doing to save money, I don’t have time to work more. My annual review (when raises are discussed) isn’t until July.

The question itself:

My boss has offered to personally loan me an as yet unspecified amount of money to help cover the cost of moving so that I could move at the end of April instead of in July or August. If I take him up on it, and use some of the savings from rent to spend more time at the office rather than immediately turning all of the savings back toward the loan each month, I’d be able to pay him back in about four to six months (or as little as one or two if my current landlord returns my security deposit quickly—but I'm not taking anything for granted). He’d have a better performing employee, and I would have a lot more breathing room financially.

I’m very tempted to take his offer. We have a very good working relationship. I have seen him make loans of this sort with authors, and those have worked out fine. It seems likely to me that if we set up a payment schedule, and have a signed agreement regarding the terms of the loan, that this could be a great opportunity for me. But I also know that personal loans are tricky, especially when there is a relationship between the parties, whether familial or otherwise. Is it possible to do this in a way that works out for all parties, or do I just need to keep on course with my original plan? If I do take his offer, what do I need to do to ensure that I handle this properly, and that the loan doesn’t blow up in my face? The loan would need to cover at least $1800 for a move in April to actually happen. If I'm going to do this, how should I discuss specific amounts with him?

I can be reached at [e-mail]

posted by anonymous to human relations (19 answers total)

IANYL but this sounds fine to me, if you are confident you can repay timely. I'd suggest you put the whole arrangement in writing, with all terms (amounts loaned, dates for repayment, absence of interest, remedies in case of default, etc.) clearly, and that both of you sign off on it. Also, the obvious warning: you are carrying some extra risk here if you don't repay, because I'm pretty sure your good working relationship would deteriorate fast.
posted by bearwife at 8:46 AM on March 9, 2011 [2 favorites]

In a conversation about this with my boss this morning, we discussed the various things that are behind the pileup. He asked me if there was anything going on outside work that was contributing, and I told him that yes, there was.

This part suggests to me that your boss is thinking, "I like this guy, he does his work well, and I need him to be able to actually do all the things I need him to do. It is worth it to me to loan him some money if it means that he'll be able to do his job."

So I'd take him up on it, keeping in mind everything bearwife said above. Make a formal, written agreement, borrow the money, and get yourself to a cheaper place as soon as possible.
posted by phunniemee at 8:52 AM on March 9, 2011 [2 favorites]

Oh, man. The publishing business sucks. You are being exploited. You work 10 hours a day already. If you are salaried, as your question suggests, you are in no way obligated to spend even more time at work. By all means make sure your time at the office is as efficient as possible (not spent reading Metafilter like me!), but if that doesn't get the job done, your boss needs to look into additional hands. Freelancers and temps can be hired to pitch in on nearly any job, including yours. Which brings me to a suggestion:

Pick up some freelance work. If your company prohibits hiring in-house people for additional freelance gigs (not all do), ask your friends at other houses. Surely there must be a few folks who used to work with you and moved on? Ask them. Virtually anyone who works in publishing is qualified to do proofreading. It's not highly lucrative, but you could certainly earn a couple thousand faster than you can save it by not going to the laundromat.

As to your actual question, I don't think there's anything ethically wrong with your accepting a loan from your boss, but putting yourself in debt to your employer constrains your choices in a way you might want to think twice about. Will you have to stay at your (underpaid, long-hours) job until the load is paid off? What if something better comes your way? Will your choices be scrutinzed? (What's anonymous doing going out to lunch when she still owes me money?)

If you must take a loan to make the move happen, can any family members help? What about a personal loan from a credit union? Even a credit card might be better than this arrangement.

Finally, it might help to take another look at your moving plan: If you get an apartment by yourself you're on the hook for 2 months + security + broker. What about looking for a someone who needs a roommate? Or a sublet? Your startup costs will be much lower and you can get out of the expensive place sooner.
posted by libraryhead at 9:07 AM on March 9, 2011 [2 favorites]

I have an argument against taking the loan.

By taking the loan, you are confirming your framing of the problem: The reason you have a backlog of work is apparently that you're not able to do more than 15 hours of overtime in a week. I don't suppose you are paid overtime - but you are working 15 hours of time over and above what you're normally expected to do.

In fact, the real problem is either in your boss's scheduling or in your performance. How did things get this bad in the first place?

By framing the issue as "In order to do this job properly I need to work 70hr weeks regularly - how can we make this happen?", then you are masking the underlying issues. You are also putting yourself on the hook for more incredibly long hours every time there is a scheduling problem, or every time you have some solvable difficulty in getting the work done fast enough.
posted by emilyw at 9:08 AM on March 9, 2011 [12 favorites]

I wouldn't take it. The 4-6 months it could take you to pay him back is potentially 4-6 months you won't be able to take an even better opportunity should one come along because you'll feel and be obligated to your current employer. That's 4-6 months for your working relationship to not turn out so great after all - money does that to relationships of all kinds. If you take this loan, you'll have more than money to pay back. You've already got a plan for saving up. Stick with it and find ways to add to your savings. Freelancing, a second job, a loan from someone who isn't your boss, etc.
posted by katillathehun at 9:31 AM on March 9, 2011 [1 favorite]

While as a boss I lent money to an employee, I think it is a mistake to take the loan. While I agree your boss is saying that he trusts you and thinks you do a good job, you will be in an even more subservient position if you do this than you are now. You will never be able to say, "No, I cannot do that tonight, I have plans." or something similar. I think you would be better served by finding a different source of the loan or waiting.
posted by JohnnyGunn at 9:31 AM on March 9, 2011 [1 favorite]

Or, what I would ask for would be more of a bonus to do this in the form of a forgivable loan that vests or forgives if you stay a certain amount of time such as a year.
posted by JohnnyGunn at 9:32 AM on March 9, 2011

I'm going to chime in against taking the loan. Even if your boss is the most wonderful, altruistic, and honest person in the world, the actual cost (to you, personally and psychologically) of taking a loan from a boss is too much.

As others have said, you'd feel way too beholden to him, even if he wasn't the type to take advantage of it. And you'd always be second-guessing any decisions you make regarding how you spend your time and your money away from work.
posted by amyms at 9:52 AM on March 9, 2011 [1 favorite]

Brainstorming off of Johnny Gunn's idea of a bonus... Is your boss able to authorize something like a "relocation stipend" (i.e. money for moving expenses) that you don't have to pay back?
posted by amyms at 9:59 AM on March 9, 2011

You are working extremely long hours, cannot finish your work, and the solution is being framed as you owing your boss more time and more money.

You are going to owe your boss money in order to work for him.

I realize you don't have the time or space or freedom to step back and view this for what it is - an offer to become bonded labour - but that, in fact, is your situation. You are going to have less freedom, not more.

I am deeply suspicious of any boss who, when presented with the problem "I can't finish my work because I can only work 70-hour weeks because I'm spending time on cooking and laundry because I can't live on my paycheck otherwise" has the immediate thought that making you owe him money is the answer.

You have a right to cook meals and do laundry, do you understand that? Because apparently, your boss doesn't.

I'm sorry to put this to you when you are already operating with no margin for error. I presume you don't have time to look for a better paying job and/or there aren't any such jobs available to you. But I do not trust your boss. You can't read his intentions, so saying "yeah okay he's offering me indentured servitude but he's a really nice guy" is not good enough. The important part of that sentence is the part where he's offering you indentured servitude.

I strongly encourage you to use your considerable clarity and analytical skills to think of another plan, whether it's a plan to find a different job or a plan to get the money from another source. At a minimum I would show your boss that you are already being as productive as humanly possible and that your workload needs to be reduced.
posted by tel3path at 10:08 AM on March 9, 2011 [5 favorites]

I disagree with tel3path, the op is living outside his means because of an apartment he is renting. His situation sucks, but its not his boss's fault that he arrived there.

In fact your boss has offered you a personal loan. So he is going to go out on a limb so that he can keep him from loosing his job. This seems like a really nice thing to offer. If it was the company offering a loan, I would view this differently.

I would take the loan, but only if:

1. It was ALL in writing. And a decent timeline was set up. (if you need 4 months ask for 6)

2. You have a discussion of how this will effect your work life, with your boss. Its a loan, not a slavery contract, make sure you are both on the same page.

3. You have the means to repay it.

4 You do not plan on leaving the company during the timeline for repayment.

5. You have considered bank loans. There are some good bank loans and credit cards that are free for the first year.
posted by Felex at 10:27 AM on March 9, 2011

Oddly enough, I've worked at three different companies over the years where the boss had made a loan to an employee. The first time I encountered it I was surprised, but then again my previous job had been at a large, impersonal corporation, not a four-person office. Anyway, in each case the repayment plan involved deducting a small amount from the person's regular paycheck (in one case I remember it was $5 per week for a $2,000 loan) until the loan was paid off. And in each case the employee eventually left the company without having fully paid off the loan. AND in each case the boss never pursued the matter, he just wrote it off. So I dunno - do small business owners get some sort of tax benefit or something from writing off bad loans? It just seemed like a strange coincidence to see this happen at three different places.

The OP, even though you love your job, I'd be concerned about a boss who is encouraging you to work more than the 70 hours per week you're already putting in. I had a job for a small company once where the boss seemed very nice at first and very accommodating, but after a while he'd tell me things like "if you're ever here working very late and the weather is bad, you're welcome to spend the night. The sofa in the fax room folds out, and that way you can work as long as you want." This is the type of boss who is never going to hire extra bodies to help you out, he is going to work you until you drop.
posted by Oriole Adams at 11:02 AM on March 9, 2011

Emilyw is giving some very sound advice, imho.

Beyond that, I'd encourage you look at an alternative means of finding a loan. Your local credit union or bank may be willing to give you a "line of credit" to pay relocation costs to a cheaper place now at a reasonable interest rate.

If your boss wants to help, a better alternative to a personal loan might be to ask for a letter stating the that you could include with your loan application, stating that he/she wants to employ you long term.
posted by susanvance at 11:07 AM on March 9, 2011

The type of person to whom it's even conceptually possible for someone working 10-hour days to be "behind" in their work is the type of person who will take a mile when given an inch. Maybe publishing is one of those unfortunate industries where that kind of behavior is the norm; if so, that sucks, but still, literally owing money to your boss is a pretty extreme power imbalance.
posted by equalpants at 11:14 AM on March 9, 2011 [1 favorite]

"This is the type of boss who is never going to hire extra bodies to help you out, he is going to work you until you drop."

Please understand that "work until you drop" is not a figure of speech.

I passed out from exhaustion after a period of overwork, and I hit my head on a marble mantelpiece on the way down.

I was extremely lucky to escape serious injury other than concussion, and a black eye for two months afterwards. But it brought home to me that, if I'd been equally and oppositely unlucky, I could have been a case of "working myself to death".

Your boss has plans for you to work more. This won't be good for you. At all.

The fact that your apartment is too expensive for you is completely beside the point here.
posted by tel3path at 11:20 AM on March 9, 2011 [2 favorites]

Can you find someone to take over your lease (thereby avoiding the leasebreaking fee) and then move in with roommates? There's got to be a better solution than borrowing money from your boss. Borrowing money from your boss just allows him to think "it's okay for me to work this guy more than 70 hours a week and pay him so little he can't afford a netflix subscription or to do his own laundry." It also gives you a financial relationship with your boss that is awkward and uncomfortable and has the potential to get ugly.
posted by bananafish at 11:45 AM on March 9, 2011

From the OP:

Thanks for your answers, everyone. It seems that the overwhelming response is a) This is probably a bad idea, and even if it doesn't turn out horribly there are other better ways of moving soon and b) You are already working ridiculous hours, and even if you're behind you shouldn't need to work more. So, for starters, I'm not going to take the loan. I'm also going to think about whether or not it's worth it to me to stick with this job, even though (when I'm not in this sort of situation) I enjoy it very much. Also, not that it materially affects this conversation, but it's a little jarring to see myself referred to as a man, so I'd like to clarify: I'm a woman.

posted by jessamyn at 12:55 PM on March 9, 2011 [1 favorite]

I'm not sure where everyone is getting this 70-hour workweek from. The OP said that his or her workday typically ends at 7 or 7:30. That's... not that unusual, and it translates into a 50-55 hour workweek, which is unpleasant, but again, really not that unusual for an entry-level job in a competitive field.

OP, have you talked to your landlord about this? What if you were able to find a new tenant for the apartment, thus saving him the hassle - maybe he'd let you out of the lease without a penalty then. After all, he can raise the rent more on a new tenant than he could if you stuck around, so it might work out better for him. You could also try to find a roommate or someone who's looking for a roommate in the place you're moving to - this would cut down on or eliminate a lot of the expenses you've mentioned. And, this should go without saying, but you should move to another borough. You may still need to take that loan from your boss, but these things might help you shrink it, which is good because, while I don't think taking a loan from your boss is a terrible idea, you want to be able to pay it back as quickly as possible.
posted by Ragged Richard at 1:05 PM on March 9, 2011

In Brooklyn/Queens you can probably find a place for only rent + one month, and you should be able to easily avoid a broker's fee. Do more intensive research on PadMapper and shift your budget downwards if reasonable. Your work seems unstable anyway so you really need savings and to be able to survive on Unemployment Insurance in your new place.

Research subletting and assigning your lease. Super easy to find short term renters willing to pay up-front for the summer months. They have loans or parental support for an unpaid internship. You can potentially do this without breaking your lease in any way. If so, and you could move sooner, yay.

Ask anyone else for a loan--your job is a big ball of stress already. What if you get seriously ill? A family member? The company goes down and you get laid off? Your security deposit never comes back? Your building catches on fire? 6 months is not much time for that kind of emergency.

(On preview, I'm preaching to the choir.)
posted by the young rope-rider at 1:35 PM on March 9, 2011