Considerations
Here are five things to consider before taking out a loan from the Bank of Mom and Dad.
Is Your Family Borrowing Friendly?
This should be considered both from a relationship aspect and a financial aspect. Relationship-wise, this can be a tricky territory. There is the question of whether your relative is the kind who would lend you cash without emotional “payment” in guilt, never-ending reminders, or unreasonable demands. For example, if they help pay for IVF, will they then feel they have the right to dictate your treatment choices? When and whether you can stop treatments? How to stay healthy during pregnancy? And, later, how you should parent? Another relationship issue is how you and your partner feel about asking. For example, if his parents are financially capable of giving, and she thinks they should ask, but he isn’t comfortable asking… well, you can see how this can get complicated. Do you not want to ask simply out of pride? Or is it a matter of not wanting relationship tension? Giving up a little pride may be worthwhile, but adding tension to a relationship may not be worth the cost. The most important thing is you as a couple must agree. If you can’t agree, don’t pursue it. Infertility is stressful for couples, and you don’t need this additional stress.
Can They Afford It?
The other big question is whether your family can afford to help you. You might think that if they don’t have the cash, they won’t offer it, but there are parents who will take loans they can’t afford to help their children. You don’t want this either. If for example, they take out a home equity loan to lend cash to you, and then you can’t pay them back as planned, and then your parents can’t afford the debt payments, your parents may lose their home. Is that really worth the risk?
Do They Understand Treatment Success Rates?
Be sure they understand that fertility treatments aren’t guaranteed. Don’t promise them a grandchild, nephew, or niece. You should be hopeful, but you want them to understand that having had the chance was important, and not have all the focus on the potential baby. Emphasize this frequently. If they lend you cash, be sure to thank them for giving you the chance. Trust me, this will eliminate or at least decrease some future grief if treatments fail.
Is There a Possibility of Splitting up the Burden?
If you have more than one set of parents or siblings to ask, you may ask if they’d all consider splitting the burden. For example, if you can ask your parents on both sides, and at least one other relative on both sides to help, then including your contribution, $25,000 split five ways is $5,000 per family. Or if you have a large family, the parents can make the biggest contributions, and the cousins and siblings can make smaller ones. This is very tricky relationship-wise, since now not only might you get one relative unhappy with you, but a group of relatives, who can then gossip about it together, which can then escalate all the emotions involved. Proceed with this idea cautiously.
Arranging a Reasonable Payback Plan
Whether you borrow from one family member or several, having a reasonable payback plan from the start is very important. Even if the family member says something like, “We’ll figure this out later, don’t worry about it,” don’t wait until later to figure it out. It should take no longer than half an hour to come up with a plan. Lack of a plan may lead to tension and misunderstandings later. Things to consider include:
By what date do you agree to pay the debt off? Be sure it’s a date you can commit to with all your other expenses and debts. If money has been borrowed from multiple family members, who will get paid back first? In what order will pay back take place? Is any part of this loan a gift? If they say, “You don’t have to pay it all back,” clarify upfront how much is a gift and how much is a loan. What if you can’t pay them one month? Or if the original agreed-upon payments are later to high for you to afford? What if you get money back through an IVF refund program? Do your parents expect to get their loan paid back first, or can you pay off your other debts first? What will the monthly payments be? Something reasonable for your budget. Of course, if you need to adjust it later, you can discuss it with your family. But even if you have to start low – like $50 per month – until you get past the highest expenses of treatment, start with something. When will you start paying them back? As soon as they lend you the money? On a certain month? Decide on a date. Will there be interest? If yes, at what rate, and how will it be determined?
Whatever the answers are to the above questions, write it all down, and email a copy of the agreements to each other.
Track What’s Been Borrowed and Paid Back
Giving your parents receipts for loan payments may sound like overkill, but it’s not. With each payment, be sure to send a self-written invoice that includes:
How much you still oweHow much you’re paying for this check or bank transferHow much you’ve paid off so far
If you owe multiple family members money, it may help to appoint one trusted family member (not yourself) to track repayments and who is next in line to get paid back. You may also want to check out Lending Karma, which is a website that helps track loans between friends and family.
