Opportunity cost of helping out relatives

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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ChowYunPhat
Posts: 237
Joined: Mon Jun 02, 2014 7:49 pm
Location: Texas

Re: Opportunity cost of helping out relatives

Post by ChowYunPhat » Sun Jan 12, 2020 8:23 am

Jags4186 wrote:
Tue Jan 07, 2020 10:22 am
Be careful. You're rich compared to them. You say its a 20x difference between your home country and here. Let's pretend you make $1,000,000/yr. Would you give a 33 year old cousin in the United States $140,000 to fix up his house?

Nothing wrong with helping out family. You just don't want to alter the relationship.
This. The money and math is the simple part. You will be fine and can probably afford to be generous many times over as you're posting on this board. The more important piece is to consider the impact on relationships. Think through a few things first:
  • Do you have a close relationship with your cousin, or do you merely enjoy hanging out with him when you're there? I have friends who I would do anything for, and family members I'm more cautious with.
  • How would a generous gift such as the one you're proposing affect your relationship? You and he may be on equal ground in the relationship today, but providing $5000 may place you above him, if only in his mind.
  • How would the gift impact your cousin's relationship with his other family members?
  • What could your gift potentially steal from your cousin? Consider that finishing the floor may be one of the more impactful accomplishments of your cousin's life, and your gift could minimize this.
  • Other posters have mentioned changing expectations amongst other family members.
Best of luck to you. Your heart is in the right place.
A wise man and his money are friends forever...

OogieBoogie
Posts: 5
Joined: Wed Nov 06, 2019 2:21 pm

Re: Opportunity cost of helping out relatives

Post by OogieBoogie » Sun Jan 12, 2020 3:11 pm

basspond wrote:
Sun Jan 12, 2020 7:05 am
I hate acronyms. I was taught that if you ever use them in writing, the first instance you need to spell it out, Financial Independence, Retire Early (FIRE).
My bet, was mistaken that FIRE (Financial Independence, Retire Early) would be better known. But @AlohaJoe did a great job to explain this perfectly. And yes, probably 99.9% on the FIRE path have a big excel sheet :)

basspond
Posts: 1266
Joined: Wed Nov 27, 2013 4:01 am

Re: Opportunity cost of helping out relatives

Post by basspond » Mon Jan 13, 2020 10:27 pm

AlohaJoe wrote:
Sun Jan 12, 2020 7:16 am
basspond wrote:
Sun Jan 12, 2020 7:05 am
I hate acronyms. I was taught that if you ever use them in writing, the first instance you need to spell it out, Financial Independence, Retire Early (FIRE).
Do you want me to give you the bad news of how many times you've posted about IRAs with spelling out that acronym first? :happy

Or CDs? Or the IRS? Or DW? Or SS? Or RMD? Or ARM? Or SALT? Or TSP?

Hey, you actually use a lot of acronyms for someone who hates acronyms!! :wink:
The person was asking a simple question and you sent them a link. I’m glad you had time to research my past posts but couldn’t spend 5 seconds spelling out the acronym for someone who was asking nicely. 😏

You made my point on people who throw out acronyms to sound smart.

Unladen_Swallow
Posts: 87
Joined: Tue Dec 10, 2019 6:12 pm

Re: Opportunity cost of helping out relatives

Post by Unladen_Swallow » Mon Jan 13, 2020 10:32 pm

AlohaJoe wrote:
Sun Jan 12, 2020 6:46 am
danielc wrote:
Sun Jan 12, 2020 6:34 am

What does FIRE mean? I've seen that acronym a lot in this forum.
For what its worth, the Bogleheads wiki lists a lot of common acronyms. FIRE is in there: https://www.bogleheads.org/wiki/Abbrevi ... d_Acronyms

But a fuller explanation:

https://en.wikipedia.org/wiki/FIRE_movement

It is kinda like "supercharged Bogleheads". Not just Live Below Your Means but live really below your means, which will make you financially independent (which does not necessarily mean "rich") at a relatively young age, giving you the freedom to choose what you do with your life. It tends to have a lot of overlap with anti-materialism, anti-consumerism, and minimalist lifestyles (since those tend to go hand in hand with living below your means).

OogieBoogie's comment is referring to the fact that many people planning on FIRE have a spreadsheet that tells them things like "at my current savings rate and portfolio growth it will take 19.4 years to reach my goal. If I increase my spending by $1,000 (by going on vacation with my family) then it pushes back my goal by 1.24 years. So I won't go on vacation with my family." That kind of quantification, though it has a place in helping you make tradeoffs, can make people miss out on the important things in life. It is easy to quantify "years left to financial independence" and harder to quantify "I am happier because I spent more time with my family".
Excellent post!
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

michaeljc70
Posts: 6005
Joined: Thu Oct 15, 2015 3:53 pm

Re: Opportunity cost of helping out relatives

Post by michaeljc70 » Mon Jan 13, 2020 10:43 pm

basspond wrote:
Mon Jan 13, 2020 10:27 pm
AlohaJoe wrote:
Sun Jan 12, 2020 7:16 am
basspond wrote:
Sun Jan 12, 2020 7:05 am
I hate acronyms. I was taught that if you ever use them in writing, the first instance you need to spell it out, Financial Independence, Retire Early (FIRE).
Do you want me to give you the bad news of how many times you've posted about IRAs with spelling out that acronym first? :happy

Or CDs? Or the IRS? Or DW? Or SS? Or RMD? Or ARM? Or SALT? Or TSP?

Hey, you actually use a lot of acronyms for someone who hates acronyms!! :wink:
The person was asking a simple question and you sent them a link. I’m glad you had time to research my past posts but couldn’t spend 5 seconds spelling out the acronym for someone who was asking nicely. 😏

You made my point on people who throw out acronyms to sound smart.
There are a lot of commonly used acronyms on Bogleheads and I don't think it is to sound smart. A simple Google of them elicits a quicker response than a post and waiting for a response. A quick search on the search bar on this site returns almost 12k results for FIRE. I don't think it is customary to spell them out in each topic on the first use on a financial based site.

This post is dedicated to DH, DW, tIRA, SIL, MIL, FIL, POD, TOD, IMO and SS. :shock:

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