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I’ve gotten some interesting questions from readers, both through the Contact Me page and through the mega thread of topics you guys have suggested I cover (for those who have a burning topic suggestion, feel free to leave a note over here – I check it regularly for new post ideas). Here are a few that are more focused on the intersection between money and relationships. In other words, juicy, juicy stuff.
Loans To Family and Friends
My sister just bought a house and has approached me to borrow $15k for renovations. My boyfriend and I are saving up to put a down payment on our own place. We don’t plan to buy for another few years and she says she can pay me back by the end of the year when she gets her bonus. Is this a terrible idea? Do I need to do anything to protect myself if we go ahead with the loan?
The wording of your note suggests you have strong reservations, and I think they are warranted. I don’t know your sister personally, but in general I view mixing money and family/friends as bad practice. There is very little upside and a whole lot of downside.
If she were truly creditworthy, she could get the money she needs through a home equity loan through the bank or a P2P lending site such as Lending Club. Imagine for a moment what it would do to your relationship if she were late paying back the loan, or if she never paid it back at all. Why put that on the line when there are legitimate, formal avenues for her to get what she needs?
Equally important: her need is not urgent. If she cannot raise the funds, she will still have shelter and all her other necessities.
The rule I try to follow is to only give money to family and friends as a gift. If the amount I’m contemplating is not an amount I would be comfortable gifting to them, I say no.
I know there are a few emergency scenarios that may justify muddying up the waters with a loan between family, but I don’t think this is one of them.
Broaching The Subject
You are very much entitled to say kindly to her that you are just not comfortable with her request. You can be as detailed or as brief as you desire, but I have generally found brief answers focused on my views to be better than sharing external reasons. For example, if you say you’re afraid it will slow down your own goal for that money, she may try to “solve” that for you with her line of thinking. Instead, you can say that you do not like to mix your financial life with your personal life because you have heard it leads to tense relationships. If she asks for more, you can keep repeating this and show how even this conversation is an example of mixing money causing tension in the relationship.
I have given multiple-thousand-dollar gifts, but never a loan, and I can say that at least for me it has been one of the best money strategies I’ve put into place when it comes to relationships. I hope you do what is most comfortable for you.
Weddings And Dating For the FIRE-Minded
What was it like dating on a budget and finding someone similarly minded? What was your wedding like?
Let me start by admitting that dating in NYC sucks. Not because of any frugality angle, but because there is just so much noise in trying to find the right person. I had been on dates with incredibly high income earners who were totally into themselves and super spendy, or super focused on money as a status symbol rather than as a means to freedom. I met my now-husband at a friend’s party, and that meant he and I were way more compatible off the bat than most of my disastrous online dating and ‘being asked out in public’ attempts I’d made.
Dating on A Budget
The actual dating on a budget part was tons of fun! We met when I was 22 and we are both kind of nerdy and into cerebral activities. A great night together was playing strategy board games (less Clue or Monopoly, more 2-3 hour games like Agricola or Terra Mystica) or catching an amateur improv performance. We did a lot of dates where we just walked around a neighborhood and picked up a snack or two along the way. That meant dates for us were usually under $10 total, and not even on purpose. It was just what we both liked to do.
We started within the same ballpark in our beliefs, but we’ve definitely grown towards each other on these issues in the years we’ve been together. I’ve seen many relationships of my girlfriends fall apart because they were so different to begin with on issues like these. That’s not to say that it won’t work, but it has certainly been a consistent point of contention years out for some of them
Our wedding? I originally wanted to go to the courthouse and out to dinner with just our immediate family. My belief at the time was (and still is) that the wedding does not equal the marriage. And wouldn’t it be great to save thousands of dollars from a wedding to put down towards some step in your collective future, like a down payment on a house? My husband really wanted to be able to invite some of his friends, and his belief on hosting etiquette was that we should provide a sit-down meal and booze. He also felt strongly that it should be directly in the City to minimize our guests’ travel time, so saving money by having it at a remote location was out.
We ended up with a 45-50 person wedding on a Sunday afternoon at the NY Botanical Garden.
We got a sweet, sweet deal as the caterer was just changing hands and the minimum guests required was waived as they tried to build up business. Our cake was included,and we negotiated out ridiculous costs such as a $3 per person ceremony fee and a cake cutting fee. I got freebies thrown in like trams to pick up our guests (we the marrying couple got a little golf cart and driver. Driving around the park in the little golf cart was so clutch!).
One thing I’m glad I did was to get out of the traditional wedding vendor bubble and avoid the wedding premium. Our florist was a vendor who wasn’t known for weddings but whom I’d used for birthday bouquets before. We spent $500 for all our flowers whereas the cheapest vendor in the online wedding directories I was using was asking $1,500-$2,000 minimum. I wish I were making those figures up.
All told, it costs us $19,000 including the dress, rings, everything for the event, and the husband and best man’s tuxes Reuters say the average wedding in NYC is $65,824, so I guess we did alright. I won’t kid myself though; it’s still a heck of a lot of money for one day. Surprisingly, I don’t regret a penny of it! Because the thing I had forgotten to take into account was how deliriously happy it would make my parents and his parents and my tiny, 93 year-old grandma who permed her hair especially for the event (it turned out horrible but through some last minute intervention by my mother, it looked alright). It ended up being the right decision for us and I still pull out the ole wedding photo book every 6 months and think about those memories.
For anyone in the throes of wedding, I highly recommend A Practical Wedding. They are a fantastic site full of thoughtful readers, and they will be a total lifeline when you’re under pressure from all sides to spend on monogrammed napkins and personalized coasters and matching bridesmaid hairpins. The stuff they wrote in 2012-2014 is especially good.
I know I’m not the only FIRE-minded person to tackle these issues! Any stories about negotiating your own family/friend money issues, or planning a wedding without breaking the bank? Share your perspective below. And if you have your own Reader Mailbag question, shoot me a note on the Contact Me page.