What to do?
July 23, 2007
Am I on the verge of making a really stupid decision? Have I learned my lesson from previous incidents enough to make the right decision now?
The situation: I have finally overcome the savings watermark below which I would have been in deep debt once my 0% balance transfer money (that I’d loaned to my brother) came due. Unfortunately, that was very recently, so I’m just a few hundred(?) over that point. Aside from the deep sense of failure that brings, I’ve been feeling ohhh-so-insecure because if anything happens now I haven’t got any real cushion!
Recently, my parents have discussed starting another business which consists of supplying service businesses in a very specific industry. Dad’s friend encouraged him to try this line of work because it can be lucrative enough to produce a living wage, and even if they’re unable to develop the market in our area, his wife owns two of those businesses and would be willing to take the supplies off his hands. He feels that it’s win-win: If it succeeds, good. If it’s too slow? Sell off the merchandise and get out. The capital required to purchase the supplies? Approximately $5-7k.
My brother has nothing to do with this venture, nor will I allow them to involve him in any way, so that’s not a factor. But I don’t have that kind of cash. Or at least, I don’t right now. And I couldn’t even think of putting it on a card yet because I don’t have the money to cover it.
If I don’t come up with the cash, I’m not sure what other funding options they have. None good, I know that much. Dad will take some financially reprehensible cash advance at some ridiculous APR, and I’ll eventually have to help bail them out at a much later (and more expensive) date.
The only option I have to avoid incurring debt is to recall a $5k personal loan I’d made last year. I hesitate because the interest from that loan is reducing the principal of another personal loan Dad owes. It’s my “floater” cushion that I’d really rather not use.
So:
Con: I run the risk of losing that $5k cushion. It took me a LONG time to save that much, can I bear to lose it?
Pro: Alternatively, if the business works out, I would recoup that “investment” and possibly see my parents become more self-sufficient.
I’m finally asking the question that seemed unthinkable before. Not “Can I?” or “How do I?” but “Should I?
(oh Mapgirl, that’s your cue!)
I would want to know more about your parents situation. Why are they starting a business that they don’t seem very confident will succeed instead of just going out and getting jobs? In my opinion when you start a business you should go at it 100% and feel great that you have a strong business plan that will succeed. If you don’t think this is what is going to happen I wouldn’t lend them the money.
Maybe you could help your parents pay for some some of schooling or training to help increase their skills that would help them obtain higher paying jobs?
I would do my homework on the business venture first. If you’re going to invest money and you really don’t know if it’s going to succeed or even if it doesn’t have a good success rate then it’s a very poor investment.
The next question is if your Parent’s don’t have the money why the need to jump to a high APR loan? Why can’t the business wait a month or two?
Remember if your gut is warning you about this then maybe it might be worth listening for a second (even if you don’t listen to it in the end)
If there isn’t a time limit to this, why not get your parents to save the money themselves?
It probably sounds cruel, but I think you need to start taking care of yourself, primarily. Your parents may not have a tonne of money, but they’ve been able to survive all these years, not change much, and so why feel the need to ‘save them’ at all? Sorry!
uh… I think I have to separately post this to my blog. There’s a lot of issues here I don’t think I can adequately address in a lengthy comment.
Can you wait a day or two for a response? If not, email me direct. Ok?
~then things~ My preference is definitely for them to just work regular jobs (with benefits!!) but my dad is adamantly entrepreneurial. He’s got plenty of experience with business, but still has a lot of research left to do.
I’ve actually been looking into childcare classes for my mom, but that’ll have to wait until her health is better.
~Matt~ I use the term investment very loosely. I don’t expect a monetary return on the money, so I guess I should really be calling it a loan. Either way, it’s still money out the door.
You have a great point about waiting. After talking to Pa last night, I’ve come away with a better understanding of what he’s doing to research the market and this isn’t a decision that has to be made overnight. The feeling of being rushed is normally what really throws my instinct into overdrive.
~anon~ I understand the point you’re trying to make, and my only answer is that they were able to survive up until now by working very hard (16-18 hour days, 7 days a week, 16 years) until my mom’s health basically collapsed. She’s both physically and mentally unable to work at even half the capacity she once did. So she would probably survive if I didn’t support her, but I couldn’t say how long she could scrape by. There are days she’s unable to make it through a full day, due to poor health, and so long as I’m able I’m willing to do what it takes to take care of them/her especially.
It’s the least I can do for the person who bore and raised me.
~mapgirl~ I don’t think there’s a huge rush. After talking to my dad, I realize that this isn’t something I have to decide to do immediately.
I say give them the loan. They are ur parents. no matter what people say, money can be earned. If ur dad is asking for it, give it to him.
forget what ‘professionals’ say.