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Ask Dave

Paying Dad Back

It's a nice idea that Bob's father has to help him with their mortgage, but not a smart one.

QUESTION: Bob’s father-in-law wants to help them with the mortgage. They owe $50,000 on the house and Dad wants to pay it off, and Bob can pay him back. They have borrowed money in the past from him and never had a problem. Still, Dave says to stay far away from this.

ANSWER: Not in a million years. It’s a very nice thing to do, and you would be paying him a higher interest rate than the bank would, and it seems like a win-win. But he left out the fact that this is a spiritual issue. The borrower is slave to the lender, and Thanksgiving dinner tastes different when you are eating with someone to whom you owe money.

If I were in his shoes, I might give my kids the money to pay it off and deduct it from their inheritance so their sibling didn’t feel cheated. But a gift is different than a debt because there are no strings attached. When money is borrowed, you worry about what they are going to think when you buy new carpet.