Photo: Flickr / raemin
No one likes a mooch, but things get complicated when it’s a relative. According to Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial, it’s becoming more common for siblings to shack up when a financial emergency occurs.
Typically, this is brought on by a job loss, but more often than not it’s divorce. Makes sense: Divorce isn’t cheap, and bouncing back emotionally and financially after a breakup can take some some time, especially when children, bad credit or selling a home is involved.
So what can you do when your sibling moves in and expects you to cover the rent? Here, de Baca shares her tips for coping and keeping your bond intact:
Speak up. “Everyone has a different threshold for when they feel taken advantage of, but as soon as you sense (your sibling) isn’t being appreciative or doing anything to change their situation, then it’s time to set boundaries,” de Baca said. Take the supportive tact and tell him that you understand he’s going through a rough patch, but have needs as well and can’t afford to support him.
A good way to tell when things have gotten out of control is when you’re no longer able to set aside money for retirement or emergency savings each month. It’s also a problem if your discretionary income has become all but nonexistent since the sibling moved in.
Set a timeline for them to move out. Just as you’d do with your jobless millennial, setting a timeline is key for motivating both of you to work toward goals. You want: your sibling to get off the couch; he (should) want to find a job and start over. Be honest about setting a timeframe that will work for both of you.
Never expect loans to be repaid. “Treat a loan like it’s a gift,” said de Baca, before adding that not doing so will only set you up for disappointment. “If you get repaid, great, but don’t hold out for it. It usually won’t happen in families.”
If you lend money, make it official. Everything should be put in writing, from the amount of the loan and any interest it carries, to the time it was made and when it’ll be repaid. “Make it as business-like as possible,” de Baca said, adding that everyone should sign an agreement rather than have a discussion in the hallway. “You should act like a banker and keep track of everything.”
Follow-up. No agreement is worth its salt unless the person holding the pocketbook follows up. Don’t be afraid to call up and remind your sibling to pay bills on time, or that he only has two weeks before it’s time to pack up and move out.