Monday, April 12, 2010

Fronting the money, does that make sense?

Sometimes you have to learn from experience.

Here are some examples in the money category: Your Gen Y kid fronts the money for something and is told that they'll be paid back (by their friends). Well, not exactly:

1) Getting a storage unit for the summer. Your college student has got to move out of the dorm, move his/her stuff into a rental storage unit and it makes sense to go in on this unit with a few friends. The rental company requires payment in full for the three months, your kid takes care of it and his buddies say they'll pay him back. It takes months and months to collect after many very uncomfortable conversations, emails, etc.

2) Your kid is on a club sports team. He volunteers to help organize a BBQ after the game with the other team. He heads to Costco and makes all of the purchases, paying for the shopping spree himself. He's already communicated with his teammates that everyone needs to chip in X dollars. Collecting the money from each team member proves to be a real challenge. He's left holding the bag to the tune of a few hundred dollars!

3) Your college kid puts the money down to secure an apartment for next year's housing. He's not flush with cash, so he's counting on being reimbursed for half by his future roommate right away. They talked about this upfront. The roommate doesn't ever get around to paying him back.

Needless to say, each of these scenarios leaves a person feeling:
disappointed in people
upset with oneself
irritated that they volunteered/signed up to be the "front guy"
questioning one's own judgement
feeling differently about someone that you thought was your friend
and not to mention: out the money!

In a word: Lousy.

What are some of the learnings?
And.... Where does Mom come in? What kind of advice do you give or do you?
Well, I listened, I chimed in when asked (OK, maybe even if I wasn't asked), but I think I've learned through the years and my kids that listening and then "couching" your comments in a way so that your kid feels like you're bouncing ideas around....much more effective, much much! So...
The "tough" advice and obvious: Without the money upfront from everyone, there's no BBQ, no storage unit, no.... whatever.
If that's not an option and the money's been spent, one of my kids did this:
First, asked repeatedly for the money he was owed. When that got more and more irritating and uncomfortable, then he sent out an email to everyone (bulk, so all could see) who paid + owed money and specifically highlighted those that have paid. That got a few more to pay up. And for that last couple of stubborn people that just would not pay him back, he sent an email (again copying everyone) letting everyone know that a letter was going to go home to the parents about the money owed to their son's college friend. This worked (before the letters went out). But I'll tell you, it was months and months before he was fully reimbursed and it certainly left a sour taste in his mouth.
As for the BBQ? That was a very expensive lesson. (My son didn't choose to listen to Mom, but in his defense he may not have chosen to share with his mother until after the fact and he sure didn't want to "hear it", at that point.)
And the apartment? Haggled over the first and last month deposit, the roommate had to anti up more to make up for the IOU. Mom's advice.

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