Personal finance guru Dave Ramsey has some tough love to give well-intentioned people who lend money to friends and relatives.
That message is simple – don’t do it.
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“Hundreds of times, I’ve seen relationships strained and sometimes destroyed from loaning money,” Ramsey said on his September 2 radio broadcast. “We all have, but we continue to believe the myth that a loan to a loved one is a blessing. It isn’t — it’s a curse. Don’t put that burden on any relationship you care about.”
Ramsey spoke up about lending money to personal connections in response to a caller wondering if accepting $100,000 from relatives to buy a new home was a good idea.
“You aren’t going to like my answer,” Ramsey said. “I would recommend you don’t take out a loan from your in-laws. The borrower is the slave to the lender, and when you owe your father-in-law money, Thanksgiving dinner tastes different.”
Borrowing money from a relative is a big reason why family members don’t speak to each other, Ramsey noted.
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“(The relatives) are probably kind and not controlling people,” he added. “But that will all change the first time you miss a payment. And suddenly, where you went on vacation and the brand of your kids’ clothes matters.”
“They’re looking at every decision you make on money in terms of whether they get paid or not.”
Ramsey said that personal relationships after a loan from a relative or a close friend, will change.
“You’re going to feel it,” he said. And for that reason, Ramsey said “I will not loan money to my children — ever.”
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