Comments on: When Is A Gift More Than A Gift? [Part 2]

By: Carl

Carl — Wed, 24 Oct 2007 18:19:22 +0000

I guess it depends on how you see money and family. For me, I was raised with the ideal that your money was the family’s money and that everything you do is to benefit the family.

So my parents “loaning” me money isn’t really giving it to me, rather they are simply investing it for the family, for future generations.

By: Richard

Richard — Wed, 24 Oct 2007 15:10:59 +0000

Tim asked the question when does being a parent end and I think that is the most valid question. When does being a parent end? If you read “The Millionaire Next Door” I think you’ll see how constant gifts that large can be detrimental to the ones receiving the gift. People get accustomed to accepting gifts as in the case of your friend. It becomes financial life support. If your friend’s parents died or suddenly stopped gifting, could your friends stop their spending habits and learn to live off only their income? Put the situation in reverse. What if when you give gifts to your children that they became dependent on them and could no longer live on just their income alone. Would you still feel obligated to continue giving? When does being a parent end?

I believe that I am the person I am today because I have had to struggle. It builds character. I intend to follow the thought process of one of my favorite people Warren Buffett. His kids and grandkids never got any monetary assistance from him and I would argue that the money, which will be donated to the Bill and Melinda Gates Foundation, will be better put to use because of it. I, like him, would rather make a larger impact on the world and make it a better place than to just give the money to my kids and have them spend it away.

By: plonkee

plonkee — Wed, 24 Oct 2007 12:35:53 +0000

@Saladdin:
I can only assume that someone who wouldn’t help their parents either directly or indirectly if they were in trouble just doesn’t have a good relationship with them. Which is fine – we can’t all get on well with people that we’re related to.
But it brings me back to my main point. I would try to help out my parents or siblings if I could even though, in particular, my siblings have never given me anything of serious monetary value – regardless of whether they could ever do the same thing for me in return.

@Anthony:
I agree that lack of access to friends/family that can help you hinders social mobility, but I don’t see how not accessing offered gifts helps anyone else move up the social ladder. Things like access to grants for college would help those whose families can’t, as does access to credit (including microcredit where relevant).

By: Anthony

Anthony — Wed, 24 Oct 2007 01:22:49 +0000

I sympathize with Saladdin’s feelings about having your *own* accomplishments and not feeling like an outside variable played a part in your success. This goes to self esteem and I believe it to be a good attitude to have. Some children grow up as spoiled brats with sky-high expectations of how others should work to benefit them, and those kids most likely grow up to be selfish and ungrateful partners in their relationships & friendships.

For those who borrow from parents or friends, I think that’s fine, but that’s not a privilege not all others have access to, and you are the beneficiary of a system that rewards availability of wealth with more wealth. The lack of family/friend benefactors is a hindrance to upward social mobility for the lower classes.

I applaud Saladdin for his attitude. There’s nothing wrong with his philosophy.

By: Dave

Dave — Tue, 23 Oct 2007 23:29:59 +0000

Saladdin>

Thanks for the response actually. And I’ve no problems about holding my questions till the end, because I am curious about your mind set. Don’t worry, not reading into it good or bad just simple curiosity. The why’s that influence a persons thoughts hook me like that.

By: saladdin

saladdin — Tue, 23 Oct 2007 21:08:52 +0000

Dave,
Thanks for the question. Because you asked me a direct question I will answer. The answer is that I would not help either of them in any way, directly or indirectly.

I am trying to stay out of the conversations here because I want everyone to read Tim’s and my emails without trying to influence anyone. I will not defend myself but am willing to explain my points to anyone who asks directly. I have no problem answering questions directed specifically at me.

Thanks for reading my long emails.

saladdin

By: Tim

Tim — Tue, 23 Oct 2007 20:45:25 +0000

In addition, my father worked three jobs, and my wife’s family started out with absolutely nothing.

By: Tim

Tim — Tue, 23 Oct 2007 20:42:45 +0000

Bob, for the most part of our lives, we did not have significant means. We were lower middle to middle class families.

By: monkeymonk

monkeymonk — Tue, 23 Oct 2007 20:13:07 +0000

Sorry math and memory are lousy. We didn’t rip our parents off. Each got a check for a little over $11,000 which reduced our profit down to 118,000. Still not bad for an initial payment of $8,000.

By: monkeymonk

monkeymonk — Tue, 23 Oct 2007 20:07:19 +0000

When my wife and I bought our 1st condo back in 2000 we talked both of our parents into each “loaning” us $10,000 for the $28,000 down payment. The deal was that we would pay them back at 5% interest per year after we had eventually sold the property (like a CD invested in your children). We paid the additional $8,000 and were responisible for all our monthly payments.

Two years later we sold the condo for a profit of $140,000 (we were incredibly lucky since the housing boom was in full swing). Each of our parents got a check for a little over $5,500 and we banked the rest of the $129,000 in profit. We could never have afforded the entire down payment at the time without them.

This just shows how leverage can be such a powerful force. We had only $8,000 and were able to turn it into nearly $130,000 in just two years.

By: Dave

Dave — Tue, 23 Oct 2007 19:24:45 +0000

Bob and Plonkee nail it with the relationship angle. I do wonder, If Saladdin is reading, if your parents had a sudden run of bad luck. I mean really bad luck. Blew thru any and all saving plus insurnace type of bad. What would you do? Would you help them out? How about expecting anything in return?

By: Foobarista

Foobarista — Tue, 23 Oct 2007 19:06:03 +0000

The question of a down-payment “gift” from parents to children is somewhat different from gifts or “bequests” between friends. I come from the school that says that money and friendship should rarely mix, after having been burned several times by this in the past. I’ll help out in true “act of God” emergencies, but I refuse to become a sugar daddy to someone’s spending habits.

Large “life-starter” gifts from parents to children are extremely common outside the US, and among many cultural groups in the US. Some richer families regard this as an advance on an inheritance, while others have an implied quid pro quo where the children are expected to take care of the parents when they get old, so the children get jump-started financially by the parents when they’re young.

By: Bob

Bob — Tue, 23 Oct 2007 18:16:02 +0000

I have to say, I agree with Tim for the most part. Especially on the reciprocity matter.

Some gifts are just gifts. If the gift is from a close friend or family, I would attempt to help them if their financial situation turned dire, not because of the gift but because of my relationship. Conversly, I would feel little compunction to present financial aid to someone who I did not have a relationship with just because of a previous gift – although this would be an unlikely situation.

It does seem that these two come from very different backgrounds. Tim, appearantly coming from a family where purchasing multiple $1m homes is not a hardship, has a much different take on the gift than Saladdin. Gifts like that would be much easier to receive than a gift from a party in a more tenous position.

By: plonkee

plonkee — Tue, 23 Oct 2007 18:11:54 +0000

The thing about relationships, is that you are obliged to help people if you can, simply because they are your friends, not because they once gave you a gift. The strings exist because the relationships do, not because of the gifts.

A real gift doesn’t demand reciprocity, if you give something away, you don’t get to ask for it back. If I have a relationship with someone and they are in trouble, I would help them if I could regardless of whether they gave me a gift or not.

A really large gift causes problems, I grant you. Giving large gifts with strings – I will give you this college education if you will then study – is acceptable if the strings are explicit, fair and reasonable, but if they are not explicit or are a form of blackmail, then they shouldn’t be accepted. The reason that large gifts cause problems is that they are often unaffordable and people don’t want to admit that.

Someone giving you something very valuable does bind you tightly to them, which is why such gifts mostly be given and received by people who are bound that tight together anyway.