Additional Coverage:
- I’m a millionaire and had a rift with a family member over a $1,000 loan. It wasn’t about the money. (businessinsider.com)
Lending Money to Loved Ones? A Financial Therapist Shares Her Personal Journey and Key Takeaways
Local financial expert Joy Slabaugh, a seasoned financial planner turned therapist, offers a candid look into the complexities of lending money to family, drawing from her own experience with a $1,000 loan to a relative.
Slabaugh, who specializes in helping high-net-worth individuals navigate the emotional landscape of their finances, recounts the immediate “guilt and dread” she felt when a relative approached her for a loan in 2018. Despite her extensive financial resources and expertise, she acknowledged the inherent difficulties that arise when money intertwines with personal relationships.
“As a financial planner professional turned financial therapist, I specialize in wealth alignment – helping ultra-high-net-worth individuals and couples transform money from a source of stress into one of connection, impact, and lasting fulfillment,” Slabaugh explained. Yet, this personal request brought her face-to-face with the very emotional “land mines” she helps her clients avoid.
A Professional and Personal Approach
Recognizing that the $1,000 wouldn’t significantly impact her own finances but could greatly assist her family member, Slabaugh decided to proceed with caution, prioritizing the protection of their relationship.
Her first step was to formalize the loan. They agreed on monthly interest-only payments of $100, with the principal due three months later.
Slabaugh, meticulous in her approach, even had her relative sign paperwork outlining the repayment terms. “Although it may seem overly formal to some, I asked my relative to sign the paperwork outlining the repayment terms we had agreed upon.
I’ve seen too many family rifts erupt when expectations aren’t clearly spelled out,” she noted.
Simultaneously, Slabaugh made a crucial private mental shift: she decided to treat the loan as a gift. “I didn’t tell my family member this; it was something I did for myself. That way, if they never paid me back, I wouldn’t hold any resentment,” she revealed.
However, she admits to overlooking one uncomfortable feeling: the fear of enabling unhealthy behavior. Caught up in the guilt of their financial disparity, she struggled to confront this concern at the time.
When Expectations Diverge
Initially, things went smoothly. The first interest payment was made as agreed.
But then, silence. Payments stopped, and subsequent texts from Slabaugh went unanswered.
Because she had mentally framed it as a gift, she didn’t press the issue, attributing the silence to the usual cadence of their intermittent communication.
A year later, Slabaugh reached out again and finally received a reply. Her relative apologized, citing personal issues and, crucially, provided a new repayment timeline, which they then honored. Later, the relative confessed to feeling immense shame, which had prevented them from responding.
“In my work today, I often see clients experiencing feelings of shame around money. Having it, not having it, needing it, wanting it, resenting it – all of these stir up complex emotions,” Slabaugh commented.
The Power of Clarity and Emotional Honesty
Reflecting on the experience, Slabaugh realized a critical oversight: she had mentally treated it as a gift but acted as if it were a loan. This contradiction, she believes, created confusion and prolonged the period of silence and emotional strain for her relative.
Today, she guides her clients, many of whom are ultra-high-net-worth individuals, to delve deeper into their motivations for lending money. “There’s always the stated reason: ‘I want to help.’
But beneath that, there are often unexamined emotions such as guilt, fear, or unresolved family dynamics. When we don’t name those, our actions often send mixed messages – and create unnecessary harm,” she advises.
Her key takeaway for anyone considering lending money to a loved one is to address one’s own emotions first. “Unspoken guilt or shame doesn’t go away; it just hides in the fine print. And in relationships, that’s where real damage happens,” Slabaugh emphasized.
Seven years later, Slabaugh and her relative are on good terms, with occasional communication. The loan was repaid in full, and they haven’t entered into any further financial agreements. For Slabaugh, the amount of the loan was secondary to the “principle of everything the money stirred up.”