Money Matters: The Bank of Dad

If you've ever heard me talk about money for any length of time, you've undoubtedly heard me mention owing my father money. Surely you've wondered how I've managed to go this long without being cut off, or what on earth I possibly could have purchased that requires me to make continuous payments to him for large sums of money for so many years after I've been "on my own".

I sent this to Dad.
To date, these are the payments I can remember for which I've owed him money over the years:
  • Car Insurance - The bill shows up to his house, he writes the check for the sake of convenience, and he bills me later.
  • Car Repairs - Dads take care of cars. This is the rule.
  • Vehicle Registration - See above. This will always be the rule.
  • Cell Phone - It would be financially irresponsible of me to not take advantage of the costs savings acquired by staying on the family plan. 
  • Investment Account - A monthly payment has been autodrafted from his account for years to contribute to what used to be UTMA custodial accounts for my brother and for me. He's been charging me for it monthly since I started working. In December 2014, I finally got papers signed over to have my account fully in my name, as well as to have contributions come from my bank account. Merry Christmas, Dad! Now, if only I could get my brother to do the same....
  • Apartment Rental Insurance - I don't remember the why on this one, just that I forgot to have the CC on file changed to my card for about two years after first purchasing a plan. Dad never complained-- he just charged me for it-- $50.50 every quarter. :) 
  • First month's rent/utilities/security deposits - When I moved out, I was poor. He paid the upfront stuff, and billed me.
  • Secondary Credit Card on his account - When I graduated from college, any credit card for which I got approved had such a low credit limit ($500?), I wouldn't have even been able to purchase a flight home from Mexico if need be. Solution? Dad got a secondary card on his account, in my name, that I could use with no international transaction fees. Monthly, he'd send me a spreadsheet with my charges, and I'd have mom withdraw money from my account in the States and pay him back. (Except at the end when I started taking trips and charging more than I made. Bad, dumb idea. Fortunately, the Bank of Dad didn't charge interest.) This card has since expired. Now he's the one with a secondary card on my United account. (EARN ME MILES, DAD!)
As you can see, many things have occurred in which Dad helped me out, and then never forced me to pay him back in a hurry. Even after I moved to Texas and started making money, he wouldn't let me pay him back for a lot of the things for several months, because my parents wanted me to build up a savings fund in case something happened. This worked out for the best, as my car died two months into moving here and I needed to make repairs and buy a new car in a hurry.

My parents have instilled in me some pretty awesome ways of thinking when it comes to money. Always tithe, always save, always avoid paying interest when possible. All the times Dad has helped me out has helped us do that. Never take out money from your 401(k). Also, get a 401(k). I'm pretty blessed that I was able to finish college and my year as a Fulbright scholar without credit card debt, and when the time came I knew better than to buy more car than I could afford, which would have left me with an impossible car note. By giving me the start my parents did, I've been able to build a really solid knowledge of personal finance -- Dad even asks me for tax planning advice!

In the event you are in a situation to borrow money from family, here are a few suggestions to be less terrible than me:
  1. Be upfront with your lender about when you realistically expect to pay off your loan. Make a plan and stick to it!
  2. Budget for those payments! Treat it like a bill. Make scheduled payments if your bank allows it.
  3. If your Dad lender forgets to send you a monthly spreadsheet with the charges you've incurred, ask for it. (Hey, Daddy, can you send me the latest balance?) Don't be "that guy" and assume you don't have to pay up just because he doesn't ask for it.
At times my Dad loan balance has gotten to zero and past it - once or twice he's even owed me money! Though the recurring expenses have decreased, our arrangement has been maintained. Just this week, I finally set up a recurring payment on my bank account, so he should start getting a monthly check for my cell phone bill soon. Much love!

- #hartzogswag