This morning I woke up and read Sam’s post on Financial Samurai – Irresponsibility of Borrowing Money to Borrow More Money. This is an interesting question for my husband and I, because while we don’t believe in credit card debt, we have been discussing borrowing money from his parents for a down payment on a house when our financial circumstance settles down. This is why:
We are hoping to buy a house in the next year or two for about $300K. We had about $20K saved up in cash and still have around $13K in investments (not retirement). But since we uprooted back to the PNW, we’ve spent a lot of the money we saved. Obviously we hadn’t had enough for a downpayment, but we were getting close – now we’re much further back.
His parents have money saved that they can easily lend us and are willing to. We plan on – if we actually end up borrowing from them – paying them back within 5 years with interest. They have declined the interest, preferring to “gift” that portion to us. That’s something to be discussed if and when this happens.
We have a little townhouse that we’ll be moving back into when our tenants lease is up, but it’s a tiny 2 bed/1 bath place with no backyard or room for two boys to run. It’ll be great for the next year or so, but when the second starts running around we’ll definitely need to get something a little bit bigger – not too big, but just right.
In our case (and doesn’t everyone like to think that their own case is special?) we do plan on paying them back, and we do plan on buying within our means. So what do you all think of Sam’s point – and do you think that us borrowing money to borrow money is ok?