It’s tricky, tricky, tricky
Dustin’s financial arrangement is unusual but not uncommon. According to Pew Research, as of 2021, at least 36 million homeowners relied on alternative financing structures to purchase their homes. Many of these borrowers struggled to secure conventional mortgages and turned to friends and family for financial support.
While borrowing from loved ones can offer benefits — such as lower interest rates or more flexible terms — it also come with risks, including strained relationships.
“Borrowing from friends can be a fraught endeavor due to a mismatch in expectations,” notes a study published in the Journal of Consumer Psychology.
Dustin and his friend have recently encountered such a mismatch. Based on their loan agreement, Dustin believes he has the right to repay early. However, his friend insists on maintaining the original 10-year term they agreed to so that he can spread out the payments and minimize his capital gains taxes.
“He just didn't seem jazzed about it,” Dustin said. “And it put me in a weird situation where I'm like, ‘Man, I don't want to burn a friendship with a guy that I've had a long friendship with.’”
Despite the risk to their relationship, co-hosts Rachel Cruze and George Kamel said they believe there’s only one way to logically move forward.
Scammers are smarter than ever—are you protected?
The average American gets 2 scam calls and 3 scam texts every week. Think you can spot them? AI is making scams harder to detect, and in 2023 alone, Americans lost $12.5B to cybercrime. Don’t be next—learn how to protect yourself now!
Learn morePrioritize family
Although friendships are valuable, Cruze and Kamel emphasize that financial security and freedom are far more important.
“The writing’s on the wall, you have to do what’s best for you and your family,” Cruze insisted. “It's not like you're putting a friend into debt. Boohoo, he gets $500,000 and he's going to have to pay some taxes on it.
“He can wipe his tears with $100 bills,” Kamel interrupted, with a laugh.
The financial and psychological benefits of becoming debt-free may outweigh the discomfort of pressuring his friend. In fact, Empower discovered that 65% of Americans financial happiness as being debt-free.
This 2 minute move could knock $500/year off your car insurance in 2025
OfficialCarInsurance.com lets you compare quotes from trusted brands, such as Progressive, Allstate and GEICO to make sure you're getting the best deal.
You can switch to a more affordable auto insurance option in 2 minutes by providing some information about yourself and your vehicle and choosing from their tailor-made results. Find offers as low as $29 a month.
