For those of you on pins and needles just waiting for an update on that $14,000 Mom & Dad Loan dilemma, (you know who you 3 are), wait no longer…
I took it!
And then I turned around and gave it right back!
Truth be told, this was one of the hardest decisions I’ve had to make in quite some time, and after two months of going back and forth I finally made the decision to accept this blessing, only to receive a separate – even better! – blessing which completely changed everything.
For those new to the site, back in January we sold our house that we’d been dying to get rid of for years (see here), but in doing so we knew we were going to take a big cash hit when all was said and done. That hit came out to about $14,000, right before we were about to invest another $25,000 into our SEP IRA to max out retirement savings for the year. Both of which we knew about going into it and were braced for, but sill didn’t change the fact our cash reserves would take a significant plunge all at once – almost wiping away our entire savings.
When my parents found out about this, they graciously offered to loan us $14,000 (interest-free) to help shore up savings until we filled it back up. The idea was to pay them back the $900 saved each month from offloading the house, thereby wiping away the loan in approximately 15 months. They’d get to feel good about helping out their son, and their son would rest easier knowing there was money to tap in an event of an emergency. A great offer indeed, however it also meant going right back into debt again after just clearing $300,000 in mortgages off the books.
I blogged about whether to take it or not, and interestingly about 90% of people who chimed in *online* said a “hell no” to going into debt and to basically man up and hustle ourselves back to savings again, while those who sent their opinions via *email* (people who signed up to get these articles in their inbox – you can do so here too if you want!) said to graciously accept it. That family is there to help, and if we had a good relationship – which we do – then why wouldn’t we take it if it helps us out and we know for a fact we could pay it back in time?
The dilemma aside, I found THIS part the most fascinating! Why was it that the public opinions skewed so anti-debt and towards technically “the better answer,” while those in private were cool with going for it?
Was it the stigma of debt moving people in one direction online, and the more intimate (and not public) relationship people have with email prone to more emotional leanings without fear of retribution? Or was it something else entirely and just mere coincidence?
I don’t know how to figure that out short of polling people who spoke up and asking them to be open about it (any takers?? :)), but deep down I was having these almost exact struggles internally and felt the publicity of it definitely played a part.
The “financial blogger” side of me wanted to politely decline and move on as all debt = bad and what type of role model would I be to promote such a thing?, but the conservative family man side of me, with a wife who told me repeatedly that she does, in fact, want us to take the money to be safe, was urging me to just accept it and sign on the dotted line.
This was the reason it took me two months to finally make a decision. And it didn’t help that I didn’t know what I wanted, personally, myself!
As you know now, however, I sided with my wife and security over “the right way” to go – the whole time dreading having to write this post :) Even though yes, it’s our lives and our money and we can do whatever we want with it, it was still hard to ignore the points that many of you made in that original article. Though I must say, I came close to running with the idea of keeping the loan close by and ready to be activated at any point shall the need/emergency arise! That was a great middle ground, and we thought long on that one.
So how did we go from taking out this $14,000 loan, to giving it right back shortly after? Well, as the spiritual people like to say out there – the world has a funny way of working out sometimes :)
While we were so focused on selling our own house and getting our finances in order, my wife’s parents were doing the same and happened to close on their house within weeks of our own. The whole time, unbeknownst to us, planning on using part of the proceeds to help out the families of their half dozen children! So as you can imagine, we were quite shocked when they handed us a check for $10,000 this weekend as we were saying our goodbyes on Easter – wow. Talk about a gift!
I of course felt a tinge of guilt at accepting this wonderful blessing as well, but that was short lived when I recalled a post by the Financial Samurai wondering why people are so ashamed of inheriting money?
“The only reason why you’d be ashamed of inheriting your parent’s or grandparent’s money is if you DISHONOR their money by spending it frivolously on stupid things… Nobody asks for an inheritance. It just happens.”
A great reminder indeed that there’s nothing wrong with accepting gifts. And while this one wasn’t an inheritance per se, I’d like to think paying off debt would certainly fall under the category of honoring one’s money :)
All this to say that we ALL struggle with financial decisions from time to time – even people who work in the industry – and the best we can do is simply the best we can do.
We’ll get some right, and we’ll get some wrong, but as long as we stay as true to ourselves as possible and do what’s right for us at that *very given moment* in time – even if we’re unsure! – we can be proud that we did the best we could. And fortunately most mistakes can be corrected later anyways :)
Thanks for reading along! Hope this helps some of you with your own decisions!