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Don’t Lend Money That You Want Back
Q: Should I loan money to my mother-in-law?
My mother-in-law has asked my husband and me for a loan of $13,000 so she can afford to stay in her house (she needs the money to pay off her second mortgage so she can refinance. If she does not refinance she cannot afford to stay in the house). My husband would like to lend it to her provided she and he meet together with a credit counselor.
This whole thing makes me very nervous, but I understand family ties and wanting to do the right thing. We do have the money to lend without tapping into our “emergency” fund, but it will dry up our “normal” savings (but we’re not saving for anything special). What should we keep in mind as we discuss this? Do we need to set up a payment plan with her? I would like to, but would that be rude since she is family? She has said if we do not loan her the money she will have to take it from her retirement account, which also makes me nervous (she is 55). I don’t know what to do! I would love your insight.