Loan or gift?
October 22, 2016 9:57 PM Subscribe
Someone we met earlier this year needs help. He has asked for a loan but we can easily afford to give the money to him. We're not sure whether it's better to lend it to him or just make it a gift.
During a recent trip to Indonesia we befriended a husband and wife who make a living as musicians. They invited us into their home where we met his mother and three-year-old daughter and had lunch. The husband was in an accident last year and underwent a semi-botched surgery which he paid for by taking out a loan. He needs another operation and has been unable to save up for it.
His only guitar—upon which their livelihood depends—was falling apart and he was considering selling his motorcycle to pay for repairs. My wife and I decided to buy them a new guitar as a gift, and it took some effort to get him to accept it (basically, we agreed that he would have use of the guitar until I came back to claim it, although I have no intention of doing so).
Last week his house partially collapsed, so his mother and daughter are living elsewhere for safety until he can repair the damage. And now the bank is calling in his medical loan, which amounts to ~USD1100.00. He asked via email if he could borrow it from us. I didn't respond until the next day, by which time he had sent a couple more emails saying to please forget that he had asked, that he regretted it and felt that we must think he was taking advantage of us. I told him not to worry about it, but that my wife and I had to discuss it. We don't feel that he's trying to milk us.
We have been extremely fortunate and $1100.00 is a trivial expense. Our concern is that if we lend it to him and he can't repay it, the relationship could become awkward. On the other hand, another gift will probably be difficult for him to accept and could create a different sort of stress. We really like them and will probably return to their country at some point, so we want to preserve the friendship. They're a young family just starting out and we're retired, but we struggled when we were their age and want to help them without creating dependency.
So: a no-interest, no-deadline loan or an outright gift?
During a recent trip to Indonesia we befriended a husband and wife who make a living as musicians. They invited us into their home where we met his mother and three-year-old daughter and had lunch. The husband was in an accident last year and underwent a semi-botched surgery which he paid for by taking out a loan. He needs another operation and has been unable to save up for it.
His only guitar—upon which their livelihood depends—was falling apart and he was considering selling his motorcycle to pay for repairs. My wife and I decided to buy them a new guitar as a gift, and it took some effort to get him to accept it (basically, we agreed that he would have use of the guitar until I came back to claim it, although I have no intention of doing so).
Last week his house partially collapsed, so his mother and daughter are living elsewhere for safety until he can repair the damage. And now the bank is calling in his medical loan, which amounts to ~USD1100.00. He asked via email if he could borrow it from us. I didn't respond until the next day, by which time he had sent a couple more emails saying to please forget that he had asked, that he regretted it and felt that we must think he was taking advantage of us. I told him not to worry about it, but that my wife and I had to discuss it. We don't feel that he's trying to milk us.
We have been extremely fortunate and $1100.00 is a trivial expense. Our concern is that if we lend it to him and he can't repay it, the relationship could become awkward. On the other hand, another gift will probably be difficult for him to accept and could create a different sort of stress. We really like them and will probably return to their country at some point, so we want to preserve the friendship. They're a young family just starting out and we're retired, but we struggled when we were their age and want to help them without creating dependency.
So: a no-interest, no-deadline loan or an outright gift?
There is another way. Ask him to pay it forward to his own family. Give him the money and then ask him to pay it back by starting some some savings for his family. That way, he is both (semi) obligated to 'repay' the loan, but he is repaying it to himself so he has some buffer.
posted by Thella at 10:18 PM on October 22, 2016 [10 favorites]
posted by Thella at 10:18 PM on October 22, 2016 [10 favorites]
In the past, I have asked friends they repay a loan from me to a charity when they are in a position to do so.
posted by frumiousb at 10:38 PM on October 22, 2016 [2 favorites]
posted by frumiousb at 10:38 PM on October 22, 2016 [2 favorites]
Best answer: I would frame this as your way of paying forward the help that you got as young couple - reference examples of the help you received, while you can't pay those people back, you would feel that it would honor their memory if he would allow you to pay it forward, accept this money now while they need it and then, in the future, when his family is comfortably established, to find other, young family and pay back the loan by paying it forward.
posted by metahawk at 11:46 PM on October 22, 2016 [26 favorites]
posted by metahawk at 11:46 PM on October 22, 2016 [26 favorites]
I'm lucky enough to be very close with an extremely fortunate and generous couple who does this sort of stuff fairly regularly. They appear to have concluded, after lots of experience, that the way to go is outright gift. And I'm pretty sure that whenever someone tries to repay them anyway, they pass it on via charity or another person in need.
posted by Mizu at 12:17 AM on October 23, 2016 [2 favorites]
posted by Mizu at 12:17 AM on October 23, 2016 [2 favorites]
Offer it as a loan, but privately consider it a gift.
As in, if he never pays you back then it's not an issue because it was a gift.
If he does try to pay you back, then you can decide whether or not you want to accept it. It would probably make his day to have the loan written off. Or, as someone else suggested, you could make him pay it forwards.
posted by mr_silver at 1:22 AM on October 23, 2016 [5 favorites]
As in, if he never pays you back then it's not an issue because it was a gift.
If he does try to pay you back, then you can decide whether or not you want to accept it. It would probably make his day to have the loan written off. Or, as someone else suggested, you could make him pay it forwards.
posted by mr_silver at 1:22 AM on October 23, 2016 [5 favorites]
Best answer: Thella's suggestion here is great. Because the asymmetry between what $1100 means to you (e.g. camping holiday vs staying in hotels) and what it means to your friend (life and death) is huge, there's no way you can make it a loan. But there's no way you can stay peers if it's just a gift.
One more thing I'd say: make it clear that you don't want him bothering about showing to you he's paying it forward: you trust him to do so appropriately and any effort he spends thinking about how to show you he's paying it forward would better be spent actually paying it forward.
And make it clear that it is, to your mind, a sacrifice, but exactly the same type of sacrifice as spending a weekend driving 4 hours to see a friend in hospital when you wanted to see a gig locally. i.e. That you're not doing this out of some saviour complex, you're doing it because his pain hurts you.
posted by ambrosen at 2:29 AM on October 23, 2016 [11 favorites]
One more thing I'd say: make it clear that you don't want him bothering about showing to you he's paying it forward: you trust him to do so appropriately and any effort he spends thinking about how to show you he's paying it forward would better be spent actually paying it forward.
And make it clear that it is, to your mind, a sacrifice, but exactly the same type of sacrifice as spending a weekend driving 4 hours to see a friend in hospital when you wanted to see a gig locally. i.e. That you're not doing this out of some saviour complex, you're doing it because his pain hurts you.
posted by ambrosen at 2:29 AM on October 23, 2016 [11 favorites]
Frame it as a loan but make it very clear you don't expect it back unless they become well off enough to afford it comfortably. This will probably never happen so you can just forget about it.
posted by intensitymultiply at 4:28 AM on October 23, 2016
posted by intensitymultiply at 4:28 AM on October 23, 2016
I think either a gift or a loan is a kind gesture. Not to be the only cynical person in the crowd, but it seems like this family is prone to disaster. Perhaps give some thought to what you wish your initial response had been if this becomes a recurring request for funds. If the idea of a series of ongoing gifts doesn't bother you, make it a gift. If you think being seen as an easy source of free money will wear on you over time, make it a loan.
posted by cecic at 4:31 AM on October 23, 2016 [4 favorites]
posted by cecic at 4:31 AM on October 23, 2016 [4 favorites]
If he's a musician, maybe there's another way you could help? Perhaps he could record a collection of Indonesian folksongs which could be sold/distributed outside Indonesia. Or, a gig playing outside of Indonesia. Or teaching Indonesian guitar songs over Skype to any American guitar students. So many possibilities.
posted by aielen at 4:43 AM on October 23, 2016 [1 favorite]
posted by aielen at 4:43 AM on October 23, 2016 [1 favorite]
If it makes him feel better, to preserve his pride and dignity let him call it a loan, and tell him that you don't expect him to repay you: he can, as others say, pay it forward. But to yourselves, know that it's a gift.
posted by easily confused at 5:34 AM on October 23, 2016
posted by easily confused at 5:34 AM on October 23, 2016
Mod note: This is an answer from an anonymous commenter.
Gift.posted by cortex (staff) at 7:45 AM on October 23, 2016
Discuss between yourselves in advance where your line is and stick to it. So, for example, you may decide that you only give one gift and that's it, or perhaps you reckon a a certain percentage of your income each year that you are prepared to give away.
We are in a similar position to you, in that we live in a country with some poverty, but earn good (international) wages and we go by both these. One gift per person, and a yearly limit to the total amount.
Best answer: Gift. There's too much fallout from a loan. It's not that a gift is totally unproblematic; people may feel they owe you something, or that you are judging them for their decisions later.
ambrosen's comment reminded me of something my father said once. People are always prepared to ask you to do all kinds of things that take up your time and energy. But when it comes to help with money, they are too proud to ask, or to accept. My father knew what he was talking about-- he took on the partial support of some family friends after a divorce and while the mother got on her feet. We're talking college and graduate school support for her, as well as stuff for the kids. Enough money that we were told we had to budget differently and wouldn't be getting as many gifts and things. The relationship with the other family never suffered seriously, I don't think, because my father was able to convey it was his pleasure-- that in fact they were making him happy by letting him do it-- and that of course you do things like that if you can.
posted by BibiRose at 10:14 AM on October 23, 2016
ambrosen's comment reminded me of something my father said once. People are always prepared to ask you to do all kinds of things that take up your time and energy. But when it comes to help with money, they are too proud to ask, or to accept. My father knew what he was talking about-- he took on the partial support of some family friends after a divorce and while the mother got on her feet. We're talking college and graduate school support for her, as well as stuff for the kids. Enough money that we were told we had to budget differently and wouldn't be getting as many gifts and things. The relationship with the other family never suffered seriously, I don't think, because my father was able to convey it was his pleasure-- that in fact they were making him happy by letting him do it-- and that of course you do things like that if you can.
posted by BibiRose at 10:14 AM on October 23, 2016
If you can afford it, make it a gift, with the explanation that you have been helped in your past by those who care about you and so you are doing the same.
While the idea of saying it is a loan, only to later refuse repayment... while that may work in a situation where you have access to similar incomes or resources, in this situation where the disparity is so pronounced, I would hate for the "debtors" pride/responsibility/face to put them in the situation of their unwittingly replaying the short story The Necklace.
posted by blueberry at 10:29 AM on October 23, 2016 [1 favorite]
While the idea of saying it is a loan, only to later refuse repayment... while that may work in a situation where you have access to similar incomes or resources, in this situation where the disparity is so pronounced, I would hate for the "debtors" pride/responsibility/face to put them in the situation of their unwittingly replaying the short story The Necklace.
posted by blueberry at 10:29 AM on October 23, 2016 [1 favorite]
Gift. Don't say it's a loan, it will stress them out and make them sacrifice. And if you can afford it, my inclination would be to give about 50% more than the amount they strictly need, and let them get their feet back.
posted by pseudostrabismus at 11:11 AM on October 23, 2016 [4 favorites]
posted by pseudostrabismus at 11:11 AM on October 23, 2016 [4 favorites]
Make it a gift. Don't even mention the word "loan." If I were in those dire straits, the last thing on my mind would be paying it back, or even begin to *know* how to pay it back. Like psuedostrabismus says, don't stress them further.
posted by BostonTerrier at 12:14 PM on October 23, 2016 [1 favorite]
posted by BostonTerrier at 12:14 PM on October 23, 2016 [1 favorite]
Definitely agreeing with those saying to ask them to pay it forward when they have the means to do so. I'd much rather see my money continue to be used to help others than to get it back in this sort of situation.
posted by Aleyn at 1:25 PM on October 23, 2016 [1 favorite]
posted by Aleyn at 1:25 PM on October 23, 2016 [1 favorite]
Nthing the pay it forward idea, and talking about the times people helped you and asked you to pay it forward. Make it up if you have to.
posted by Chrysalis at 7:30 PM on October 23, 2016 [1 favorite]
posted by Chrysalis at 7:30 PM on October 23, 2016 [1 favorite]
He wants to make it a loan so that he doesn't feel like he is taking charity. It's not about you.
You need to point out that you're not just giving him money, you're helping a friend. You don't have the skills or the time to make a new guitar. If you did, you would have happily made him one and he would have happily accepted right? (Point this out to him) Likewise, you're not a doctor and you don't have the skills to help fix his house. You want to help your friend but you don't have the skills or the time to do so. What you do have is money, so money is the thing you want to contribute to help. Explain that to him and hopefully he'll see that it's not about him, but about YOU and your need to help.
That's the rationalization that I had to come up with when I father-in-law gave me money to help finish my basement. I had no problem at all asking my dad (who used to build houses for a living) to donate a few thousand bucks worth of labor. While I don't doubt my FIL's work ethic or willingness to help, I do doubt his ability and didn't want his labor but felt awkward about taking his money. Then I realized that he probably felt awkward about me getting all this help from my family and he had nothing else to contribute. So I took the cash and told him exactly how I would be putting it to use (spray foam insulation instead of rigid closed-cell panels). The real benefit being that I got to hire out the insulation and it let me start framing sooner. The part where I talked about what his money did/will do for me was what he bought with that money, he was delighted to hear about it.
The problem, basically, is that you're both being a little too selfless and it creates a serious but objectively kind of silly problem. Make it clear that, by accepting this as a gift, HE is doing the favor for YOU.
posted by VTX at 9:09 AM on October 24, 2016
You need to point out that you're not just giving him money, you're helping a friend. You don't have the skills or the time to make a new guitar. If you did, you would have happily made him one and he would have happily accepted right? (Point this out to him) Likewise, you're not a doctor and you don't have the skills to help fix his house. You want to help your friend but you don't have the skills or the time to do so. What you do have is money, so money is the thing you want to contribute to help. Explain that to him and hopefully he'll see that it's not about him, but about YOU and your need to help.
That's the rationalization that I had to come up with when I father-in-law gave me money to help finish my basement. I had no problem at all asking my dad (who used to build houses for a living) to donate a few thousand bucks worth of labor. While I don't doubt my FIL's work ethic or willingness to help, I do doubt his ability and didn't want his labor but felt awkward about taking his money. Then I realized that he probably felt awkward about me getting all this help from my family and he had nothing else to contribute. So I took the cash and told him exactly how I would be putting it to use (spray foam insulation instead of rigid closed-cell panels). The real benefit being that I got to hire out the insulation and it let me start framing sooner. The part where I talked about what his money did/will do for me was what he bought with that money, he was delighted to hear about it.
The problem, basically, is that you're both being a little too selfless and it creates a serious but objectively kind of silly problem. Make it clear that, by accepting this as a gift, HE is doing the favor for YOU.
posted by VTX at 9:09 AM on October 24, 2016
Response by poster: Thanks, all. We're using the "pay it forward" approach.
posted by Skaffen-Amtiskaw at 9:40 PM on October 24, 2016 [4 favorites]
posted by Skaffen-Amtiskaw at 9:40 PM on October 24, 2016 [4 favorites]
This thread is closed to new comments.
It seems that this has always worked better.
posted by HuronBob at 10:04 PM on October 22, 2016 [43 favorites]