Family ≠ Money

By: Keun H. Maeng



Some believe money trouble is best resolved with family members. Think again. According to recent studies, intra-family loans can lead to terrible relationships, deeper financial problems and even trouble with the IRS.

Borrowing money from someone very close seems like the most convenient transaction. However, for those people who previously lent money to close family members often complain about the lack of appreciation, delayed payments and strained holiday dinners. Vice versa, the borrowers complain about the lack of trust they receive from the lenders. Just these few possible examples clearly state a point about money association with family relatives: “Don’t do it.”

Even though this advice is indeed a fact, many of us cannot ignore the obligated sympathy that family members unconsciously have. So how can family members ignore the financial struggle that they loved ones might have? Or, in another way, how can there be a friendly transaction without family feud? Luckily, there is a solution to this. CircleLending is a company that was organized to solve this problem. Located in Cambridge, Massachusetts, CircleLeding, with the whole idea of family relationship as priority, charges low interest rate to the borrower, and has a $199 one-time fee, plus $9 a month. According to Asheesh Advani, the CEO of CircleLeding, the company is, in effect, formalizing the world of “informal loans” between family members and friends.

http://articles.moneycentral.msn.com/CollegeAndFamily/RaiseKids/TheRightWayToLoanMoneyToFamilyMembers.aspx

http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P75682.asp

http://www.businessweek.com/smallbiz/content/apr2006/sb20060418_001166.htm?chan=search