Everyone in my family owns a home, of at least 1500 square feet.
No, they’re not all paid off, and yes, I’m an outsider for not owning one, and more importantly, not wanting to own one.
They all understand in my mother’s words, that I’m a “hippie-yuppie consultant who sleeps on the floor, wanders and doesn’t want to settle down“, but they don’t quite get why, because they have a rough idea that I make a lot of money*, but aren’t sure if my loans are cleared yet.
*I don’t tell my family my financial details such as what I earn and more importantly (don’t) SPEND… because they are sure to feel 1000x more assured that in case anything happens to them, I’ll bail them out.
This just breeds laziness and carelessness in money management, especially if you consider that every member in my family makes over $80,000 a year each, except for my father.
Think of it like economic outpatient care (EOC), when parents subsidize their kids’ unaffordable lifestyles well into adulthood, but in reverse.
They are also absolutely SURE that when I have kids, I’m going to want to buy a home.
As if having a kid would immediately make me want to instinctively fork over a 20% down payment for a McMansion and be saddled with a house debt for the next 20 years.
So it never makes any sense to me when my siblings are so into buying homes and upgrading them.
I just don’t get it, mostly because they can’t afford it.
It’s one thing to be able to afford it and build a billion dollar home like Ambani, but they aren’t billionaires.
Let’s take one side of the family for example.
(Small disclaimer: I am about to throw around some big numbers here. No disrespect meant to smaller incomes, I am talking in context of just this one situation.)
Their household income was $400,000** 2 years ago, which is way more money than any family needs.
They are not “poor” or “struggling” by any freaking means
** I don’t have updated numbers. We aren’t exactly the sharing, touchy-feely types who disclose information like that to each other. I only found out by accident, because they were bragging and trying to impress us.
We just did the obligatory “OOO” and “AAAH”, but secretly feel that it isn’t all it’s cracked up to be. Notes on that to follow.
$125,000 of it, is “stable” income, meaning it’s a salaried job at 40 hours a week.
The rest at $275,000 is variable, business income at its peak, which isn’t a lot if you consider how much they give up to get it.
One of the Dalai Lama’s 18 rules for living is:
Judge your success by what you had to give up in order to get it.
Consider that a normal work week is 40 hours, but for that business, they work double that.
So that $275,000 income is really halved, to $137,500.
This is why we’re not impressed with the $275,000 number as a success of theirs.
I also know that last year, the business suffered, and I am not sure they even pulled in close to that amount. A fraction, to be sure.
Did I mention that they also spend like rockstars?
So we’ve established that it’s around $400,000 for their income (as far as I know). That means they SHOULD be able to afford a house at $800,000 if you double their income. ***
*** Bear with me here, I know it isn’t realistic, seeing as the bulk of it isn’t a stable income.
They just bought a McMansion at $1 million.
And here comes the kicker right in the face:
So why the hell did they have to borrow $250,000 from my parents?
I get that my mom is not exactly Mrs. Finance here, but she was under the impression that my brother took that money out of their home equity (which by the way, they’re almost done with, yay parents!!) to help them invest it.
It wasn’t until I checked their statements that I saw that $250,000 missing from their investments.
Where was the money? What investments? I don’t see a statement, Mom.
Then I decided that I’d head back and straighten this out, sibling-a-sibling with my brother, and figure this mess out.
Contract delay after contract delay (I keep getting extended!), I finally thought: Why not shoot an email out to him? Give him a chance to explain what is going on. Maybe there’s a good reason for all of this.
BF however, did not share my optimism. He had a gut feeling the money was borrowed like a “free” line of credit from my parents, and none of it was invested as my mom believed.
Unfortunately, BF was right.
THEY BORROWED THE MONEY AS THE DOWN PAYMENT ON THEIR McMANSION!!!!
*facepalm*
My first reaction was: Are you serious? How can this be? Why would he lie to them? 🙁
BF was more like this:
Why are you so trusting? You know your family is all messed up with money.
They’re good people, but they just don’t know what a dollar is.
He knew that you could just take a look at their statements and basically figure out something was wrong. He can’t fool you. Your parents however….
So there you have it.
He borrowed $250,000, while earning $400,000 (supposedly) as a peak income, to put down as a down payment on their current, million dollar McMansion.
He promises to pay them back within 3 years. I’m skeptical. They really are the Joneses.
If you can’t afford it, don’t buy it. If you don’t need a McMansion and most importantly, it is out of your financial grasp, then don’t buy it.
Don’t take money from your ageing parents to fund your image-conscious lifestyle. That is just utter crap and I’m sad, disappointed and angry.
Am I the only one in my family who gets this?
Even my parents are not blameless in this. They spend like crazy, they think we kids are their retirement funds, and they don’t watch their money.
I have a feeling my dad knew, but didn’t want to say it to my face. He knew my brother borrowed the money not to invest, but for his own use.
That is really crap, because all of the siblings should have a say in terms of allowing other siblings to “borrow” from our parents, seeing as we should look out for their best interests.
MY PLAN OF ACTION GOING FORWARD
- Gathering all of my mom’s statements as much as I can, to piece a history together
- Need to know if it was $250,000 starting, or if there was MORE that was borrowed
- Need to map out all the payments made each month/year and calculate the rate of their return
- Need to show him the stats and say: You say 4 years? I say you’re full of crap.
There is no way they’re clearing that $250,000 balance in 4 years.
That’s $62,500 net a year. And considering their spending habits, I highly doubt they’re able to bank $62,500 a year even on the kind of income they make.
Their spending is the culprit here. Not their earnings. They can only see what they earn. They never see that what they spend is the problem.
Besides, if they could bank that kind of money, they wouldn’t have needed to borrow it from my parents in the first place.
And there’s my sad conclusion to what happened to my parents’ finances.
EXTRA READING:
- The Cup of Life by Single Mom, Rich Mom (love her!)
Just a girl trying to find a balance between being a Shopaholic and a Saver.
I cleared $60,000 in 18 months earning $65,000 gross/year.
Now I am self-employed, and you can read more about 
You don’t know how much I can relate to this article. It’s taken right out of my own life ! No one understands why i live the way I do, and that I will eventually “come to my senses and see the value of owning a nice big house” etc. etc. This is why I don’t hang out with family members any more. Thanks for sharing your story. Nice to hear I am not only on this!
This problem is so common! Our friends make no where near this much, but spend way more than they earn.
We just had a nice wedding after saving for two years and spending hours on the internet researching how to make it work.
Our friends now feel their wedding should be the same “niceness.” However we make other life choices they don’t. Live in a cheaper flat, don’t have iphones, don’t eat out every lunch and dinner 4 times a week, and don’t have all the newest things.
It scares me to think where they will be in 5 years.
whoa! That’s just not right for your brother to borrow that much from your parents – or anything at all really if he’s making as much as you think he is. I know that my and my husband’s family is also oblivious to financial matters (the exception is my mom and stepdad- the uber frugalites).
As much as I’d like to own a home someday, I don’t expect my parents to fork over my 20% down payment. Especially at the expense of their retirement! Your brother has no shame.
WOW!!! Sounds like my family. My bro makes a nice 6 figure salary but is in debt up to his eyeballs. He continually borrows money from my parents. My sis is always trying to find ways to get my parents to pay for more things they “need” and my parents do it. I just live as an example and figure karma will get them…what goes around comes around.
yikes, how are you going to address this with your brother?
What does your brother spend his money on (besides furniture)?
new to your blogs (fellow minimalist, self employed gal), and this one really resonates with me.
our circumstances are a bit different. Dh and I are into simplicity and minimalism, living within our means, and focusing on happiness and quality of life.
our families are just terrible with money. my sister and her husband earn 6 times what we currently earn, live in a city that costs 3 times less than our city, and are always “broke.” I have no idea why, except the spending.
my parents earn 9 times what we earn, and are always broke.
my ILs are expert savers (and cheap! not frugal, often stupid and cheap), and they chastise us for our way of life, while simultaneously throwing $250,000 up my SIL’s ex-boyfriend’s nose (he’s an addict, so is she, they are trying to save her, so in so doing. . .).
DH and I do not ask for money, except at the holidays — to buy what we want or need, or to save it for a trip or whatever other thing that makes us happy. But they don’t like to give us money-as-gifts, so we get objects that we don’t want that we have to re-home.
It is truly a cultural divide. And truly frustrating.
I think my parents are a bit worried about my wandering. They keep pushing me to buy a house but I don’t know where I want to settle and whether I want a house house or an apartment-type. Plus it’s too much maintenance!
What are you going to do about your brother paying them back?
I definitely want to own a home one day when I can afford it. I can’t imagine living in apartments for the rest of my life. I don’t need a macmansion but a decent sized house would be nice. I’m sorry to hear what happened with your brother and your parents. It’s just really sad. Your parents really need to get educated about finances and stop allowing your siblings to push them around.
Maybe its a cultural thing? I know awhile back you said your family immigrated from another country, and so maybe in that culture the parents expect the kids to take care of them in old age? But I don’t get why you feel the need to hide how much you earn. I mean, you can always tell your family “no.” You really need to stand up for your parents and tell your siblings no.
They need to stop pushing your parents around and your parents need to stand up for themselves too. Sorry I’m not mad at you, I just think it’s really sad when adult children take advantage of their own parents. I mean really. :-/
When I hear stories like this, I never want to have kids. I don’t understand how anyone could do that to their parents you know? :-/
Yikes. Discussing personal finances is a pretty taboo subject around my family too. But it doesn’t really make sense to hide all these facts because who else can you trust with all of this information besides the people that are closest to you? Hope you can dig out the truth
It’s terrible that your sibling would mislead your parents like that. I hope it is a good sign about your parents’ financial situation that they can be missing $250,000 and not notice it. Congrats on being the only one on top of everything in your family. It can’t be easy.
Oh wow, that’s a very sad story 🙁
House buying can be a good investment in hedging against cost of living increases. We spent $175K in 1999, and the mortgage then was slightly more than rent on a similar home, within about $20. Now rent is $150 per week more than our mortgage at least, to live where we do – in neither a posh or poor area. So even without eventually owning it as an asset we are ahead week to week in an amount that makes a significant difference to our budget.
The thing is, the mortgage from the very start was under 30% of my partner’s wage, we had two wages for 3 years, then back to one when we had kids, but that one wage has gone up in the meantime. The house rices have quadrupled but as long as we need a house to live in that’s not here or there is it, its the “if not a mortgage secured at 1999 prices, then we’d be renting” equation that counts. There are economically rational ways to be a renter or a homeowner. Even if your brother manages to pour all his money into the house debt, pay back your parents, pay back the bank, you can’t use the money in the house for anything else except impressing the Joneses right?
It isn’t your business but if you can protect your parents by having your eye on the ball for them, without causing family drama, that is a very loving thing to do for them. I think you are extremely wise not to disclose your financial status.
I really enjoy reading your articles because I can totally relate to you and your family. My sister also borrowed money from my mom for a downpayment on a house, told her that the money would be returned to them by the end of that month and it’s been six months now. The worse thing is that my parents had to borrow it from their equity on their house. I hate it that my sister is so irresponsible and she is 10 years older than me and has three children! She should be more responsible than this.
Uh oh. I think I told you so already, so I won’t say it again. It set warning bells off in my head the first time you mentioned it – only because I’ve seen the same thing happen in my own family. Strangely enough for just about the same amount of money… Fortunately my dad can absorb the loss – and it’s reflected in his will (I think). Be prepared for a schism of epic proportions in your family though. It’s this kind of thing that rips families apart.
My god…how anyone can do that to their parents just boggles the mind. How anyone can need to borrow any money when raking in that kind of dough ALSO boggles the mind. Don’t be surprised if your brother gets defensive if/when you bring this up to him.
Maybe there is more to the story, but I agree that he shouldn’t have borrowed 250k for the down payment. If they are making that much money, why can’t they save up for the down payment?
If they are making 400k, they are completely justify to buy a 1M McMansion. They should just do it themselves instead of borrowing from family. 🙂
Wow, that is intense. There’s always one sibling like that, isn’t there? I could never, ever ask my parents to loan me that amount of money.. that’s just way too much!
Wow! I can’t believe that your brother would do such a thing.
I hope that you can help your parents sort this out. Even though the money was between your parents and your brother, I think that the responsibility falls upon all the siblings to take care of the parents. I mean, if anything happened and your parents needed the money right away, then what? Your brother’s got it tied up in his McMansion, but everyone has to come together to sort it out, right? I find it terribly sad that your brother would take advantage of your parents like that.
Wow, when I think of those numbers my mind is boggled. I’m glad I don’t need so much! One thing I have noticed is when some have parents or other family to depend upon they use that as an excuse to not take care of themselves, along the lines of “oh, Mom will help me if I need it.”
Seriously, it doesn’t matter if it was 250,000 or 250–what matters is that the parents were decieved so that the son could live the expansive life he desires.
I hope that the situation resolves itself, but you may want to stay out of it to avoid hard feelings, difficult as that may be.
Stay out of it. It’s not your business anyway. It’s between your parents and your brother…
ok ok I have to reply to this. for the sake of her own fiances and well-being, she cannot stay out of this. in 20 years, which child do you think the parents are going to turn to when they need help, financial or others, after years of bad decisions and being taken advantage of by their other kids?
stay out of it? hardly. small example from my own life:
my mother recently called me to borrow money, as she was short a few hundred dollars that month. i then find out that for the past 2 years, my adult brother has not been contributing rent to their apartment. as you can see, i was indirectly being affected by my brother’s lack of financial consideration for my mother.
Wow. This really is a can’t-believe-it-could-really-happen-story… as @93e1cae8f1a04fd66865c4423705031b:disqus said, it does seem like they’re in over their heads. I hope it’s fixable in some way or another, but it seems like that’s a long shot right?
When I read stories like these I feel really blessed both my parents have financial sense and I never really have to worry about money. My father always likes to quote a Dutch saying, which translates as “when you pay off your debts, you won’t get any poorer”. And my mother has told me several times to never borrow money except a mortgage for a house.
What is the Dutch saying you’re refering to? (It doesn’t ring a bell)
It is “Wie zijn schulden betaalt, verarmt niet”.
I am sorry your family sounds a lot like mine. My mom is very attached to her “things” and spends like crazy. My dad is the saver. Me I am a bit like both but, now that i have a child I am starting to save a lot more than I used to. My mom has her “McMansion” not sure of square footage but for one person it is a lot of space that she is not even renting out. She has 3 bedroom, 2 bath, formal dining area, 2 living rooms, kitchen, you get the idea. Me my personal dream home is about 750-800 sq.ft. 900 tops from small house.com.
Not sure how you should handle the situation but, good luck with whatever you do. Just remember to not let your family “borrow” money from you unless it is an emergency.
I’m sorry that your family is doing that, but I’m glad you are protecting your own finances.
I say call a family pop-wow and confront them all!!! Frankly stuff like this can not be swept under the rug. Especially if your other siblings don’t know about it. Plus I would tell them you are not their retirement option and to sort there stuff out. My mom says it to be all the time joking but I often wonder if she actually believes it. One of these days I will have to straiten her out… after we get our ‘principle residence’ sold in about 5 years.
The thing is when your parent die and your brother tries to claim his share of the estate your going to have big issues and it will only serve to rip the siblings apart. This is why you need to get it out in the open when your parents are alive.
Grin and bear it. That’s about all I can say. Mixing family and money is a horrible idea and I’m just sorry you even found yourself involved in this situation.
Holy moly! I am feeling all sorts of emotions regarding this situation! Your sibling used their money to buy a house without their knowledge! This is beyond something I can imagine…especially since they supposedly make $400,000. I think they are lying or over their heads. Borrowing such a large sum from ones parents tells me that they have financial problems. I’m afraid this is only the tip of the iceberg. Sorry to hear about these turn of events.