NewOikp00

Advice on paying off a family member's debt

I was given a profit sharing bonus today of $4,200 and I'm thinking about using it to pay off my little brother's student loans. He sorta got shafted on college funding. My parents paid for three years of my sister's college before she dropped out. Then gave me around $20,000 over five years for mine. But by time he reached college age my parents were entering retirement so they couldn't afford to help him like us. He went to school for a year before dropping out and racked up around $4,000 in student loan debt. Since then he's worked some crappy dead end jobs and managed to default on them. The credit bureau or whatever agreed to not let this negatively affect his credit as long as he continues to make the minimum payment going forward. He's since managed to start a career for himself doing something he's passionate about. But he isn't making very much money right now and I can tell it's a big stress on his life. He can only afford to make the minimum payments each month. I want to pay off his loans for him since I'm in a much more privileged position than him as an engineer. But I'm unsure how to go about it. I'm not sure paying it off in one lump sum would be the best route because I think this might be a valuable opportunity to help teach him some better finance skills. On the other side of the coin, if I don't pay it off in one lump sum he'll continue to accrue interest on the balance. What do you believe is the best option for me to go about this? He's 22 and is in a volatile place in life where I think learning good finance skills can greatly impact his future economic stability and health. I also wouldn't want my sister or parents to find out about this. As they would both be jealous and find this unfair despite being in significantly better financial situations than him. Demographic: White, Male, 26 TC: $125,000 NW: $62,000 Location: Seattle Occupation: Senior DevOps Engineer (Security, DoD, Infrastructure) #family #debt #financialhealth #positivenetworth #studentloans

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Microsoft gindump Feb 20, 2020

None of the above. Just pay it off. No strings attached. Be a bro, bro.

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Oikp00 OP Feb 20, 2020

This is the idea. But I think that he might not use the opportunity wisely. He hasn't had a financial mentor in life and I don't believe he has good financial skills yet. I think this could be a valuable opportunity to help him build those skills. I worry if I simply pay off his loans lifestyle inflation will eat the freed up money and he won't really be any better off. ($4,000 in debt isn't really anything in the grand scheme of things)

Google promošŸ˜­ Feb 20, 2020

I like this option. Most probably your brother doesn't need a financial lesson. He is just not making enough. If you pay off his loan, he will be in a position to make better decisions himself.

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Oikp00 OP Feb 20, 2020

He's an apprentice aircraft mechanic. He has huge opportunities ahead of him if he sticks this out. His airport just won a contract with the DoD to become a missile launch site. I'm not super close with him. But from my understanding he doesn't have any drug, gambling, etc issues. He's just a little bit depressed/lazy/unmotivated.

Indeed MiaMoney Feb 20, 2020

Paying of the debt is a good deed. By attaching strings to it (No matter how good your intentions be), you are taking the sheen off of your good deed. Have a sit down chat with him, offer to pay it off, see what he has to say about it. Give him general advice that this is a one-time get of jail free card and that hopefully he uses this as an opportunity to keep things headed in the right direction. If things go south later, itā€™s on him, not on you.

Microsoft gindump Feb 20, 2020

Yep. Nailed it.

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corp blah Feb 20, 2020

His TC is... ? Did you account for his COL in your betterment planning. Personally I had to drop college and was told to get a job, but my brother got free higher ed cause of parents. Was bitter for a while. Sounds like you are very judgemental. If I was your bro, it would backfire.

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Oikp00 OP Feb 20, 2020

He earns something like $12/hr and lives in a LCoL area. But he can't afford to rent an apartment near work so he lives with a loser older guy and commutes over an hour one way each day. I understand this seems judgemental. I don't think he's financially irresponsible, just a little naive and careless. I'm only trying to lift him up here. It seems Blind is in favor of doing a No-Strings-Attached payment and I will likely do so.

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corp blah Feb 20, 2020

Sounds like he has his shit together to his best of his ability. I'm not sure how you would expect him to save 100$ at 12$/hour. Skip meals? Listen, no strings comes up as help and would be welcomed, putting strings, from your position, sounds like you want to trample on his shred of dignity. That's why I said it would backfire. Come on.. it's 4000k. Some people blow up that money on šŸ‘› around here.

Netflix the.oa Feb 20, 2020

Pay it off and buy him Dave Ramseyā€™s book. You canā€™t teach him anything heā€™s not willing to learn so Iā€™d be hands off on trying to be the ā€œrich dadā€ mentor that he probably wouldnā€™t want to deal with. The book does wonders and itā€™s very easy to get hooked into it.

Amazon jkdrc Feb 20, 2020

You have good heart stick with it, god bless you!

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Oikp00 OP Feb 20, 2020

I would be interested in seeing more discussion on this from other people if anyone has any opinions. I think that the liberty of escaping debt could do good things for his motivation to achieve continuing financial growth. Rather than feeling overwhelmed by the present situation. This seems a bit like a "Pull Yourself Up by Your Bootstraps" mentality.

Compass hind2020 Feb 20, 2020

If everyone just worked harder then poverty wouldn't exist šŸ¤”

Splunk koolaidd Feb 20, 2020

I wish I had a bro like you. Good stuff my man

Cohesity %$df Feb 20, 2020

Another option is give him a cashier check or money order anonymously. The reason for that is he doesn't know it is from you and would not expect you to give again. At the same time, he won't feel he owns you anything. So, his dignity is intact and doesn't feel like a loser.

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Oikp00 OP Feb 20, 2020

This is a good strategy and I respect the sentiment but $4,000 is a tremendous amount of money to spend with no guarantee of it being used the way I intend.

Cisco Trvth Feb 20, 2020

Pay it off. I had a very similar situation where my younger sibling didnā€™t get assistance like I did yet I have been more fortunate. Keep it between you two though.