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The bank of Aria

For a 20-something, Aria makes a reasonable income working as a seafood vendor at a local market. She claimed her hourly rate is $21.50 and she works roughly 40 hours a week. Her rent comes to $800 a month, which means she has plenty of room to sustain her lifestyle and set aside some money for savings.

Unfortunately, some members of Aria’s family are unemployed and rely on her to make ends meet. She co-signed an auto loan with her younger sister when she was only 19 — a decision she now describes as her “biggest regret.” When her sister missed a payment on the car, it impacted Aria’s credit score. Now, the loan’s interest rate is 20.61%.

Aria also gifted her elder brother $2,200 to buy a car and helped her unemployed mother with emergency repairs on her car — which cost another $2,000 and further drained her finances. In addition to all that, she’s also supporting her younger brother, too. Her 21-year-old sibling refuses to get a job and relies on Aria to give him $500 every month for rent.

“My family sucks,” she sighed, holding back tears. “If I had that extra $500 I probably wouldn’t be in this situation.”

Borrowing money from friends and family on occasion is relatively common. In fact, nearly 30 million Americans claimed to have used funds from friends and family to meet their needs at the end of 2023, according to a U.S. Census Bureau survey.

According to a study conducted by CreditCards.com, 59% of people who lent money to family and friends said something went "terribly" wrong with the arrangement. In addition, 26% claimed the situation had damaged their relationship, while 10% said it impacted their credit score.

Aria seems to have experienced both aforementioned situations and now regrets her emotional decisions to support her family members. “I look at my [accounts] and think, ‘dude, I’m not making any f–king progress. It sucks!’”

Research published in the Journal of Consumer Psychology found that loan arrangements between friends and family can often breed anger and resentment. In fact, these bitter feelings can persist even after the loan has been paid back in full.

According to Hammer, Aria needs to escape this vicious cycle.

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Setting boundaries

Aria can’t salvage her situation without setting clear boundaries with her family. “When the plane is going down and the masks drop, you put the oxygen mask on yourself first and then you put the mask on people around you,” Hammer told her.

He recommended she tell her younger brother to get a job and support himself. “Stop coddling this adult,” Hammer said. “He’s three years into adulthood.” He also recommended Aria speak with her sister’s husband to compel her to refinance the car or get rid of it. Finally, Hammer suggested a strict budget for Aria’s own personal spending.

With these changes, Hammer estimated it’ll take her up to four years to pay off all her credit cards and accumulate a six-month emergency fund.

Fortunately, Aria is already working with a therapist to deal with her family dynamics and learn how to set strong boundaries.


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Vishesh Raisinghani Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.


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