A debt repayment plan is a must-have if you’re working on paying off multiple accounts. For most people, one of the simplest approaches is a debt snowball: you pay the minimum amount on all of your accounts, except the one with the highest interest rate. You throw as much money towards that one as possible, until it’s paid off. Then you move on to the next one. A debt snowball has the advantage of being the most cost effective approach, because it will save you money on interest.

But sometimes, paying off your debt with the highest interest rate isn’t your priority. If you’ve borrowed money from a friend or family member, it might be worth reordering your priorities.

More Than Interest Rates

If your family is anything like my family, loans are extended without interest — and usually without any sort of repayment schedule. Looking at the situation from a purely financial aspect, a personal loan winds up at the absolute bottom of your debt repayment schedule. It’s almost certainly carrying the lowest interest rate of any of your obligations, and if something happens and you are late with a payment or even default, your family isn’t likely to report you to a credit agency.

But family and friends don’t offer loans based on purely financial thinking. If your mom or dad offers you money, it’s because they want to help you out. They trust you to repay it — they expect you to do your best by them, just as they do their best by you. That means that you need to take more than just the money into account when figuring out your debt repayment plan. You have to consider the emotional aspects as well.

Making Family a Priority

In my mind, a loan from a friend or family member takes precedence over just about anything else. I want to minimize the amount of time that loan is out there, causing any sort of strain on my personal relationships. I try to make a point of laying out repayment terms when I’m talking about a possible loan from a family member in the first place, but even if I don’t have a minimum payment due, I set out to pay it off as soon as possible.

Sometimes, that means sitting down with your debt repayment plan and figuring out by hand just how much you can afford to pay towards the balance of that loan. Without a minimum payment to guide you, it can be tough to determine just how much you want to pay each month. You can simplify it by paying those minimum obligations on other debts first and then paying everything you have left over towards that personal loan.

Your Choice

If you don’t have a set agreement with that family member or friend who extended you a loan, you don’t really have an obligation to put repaying the loan as a high priority. If you choose to go that route, it’s worth at least figuring out just when your lender can expect repayment and passing that information along. Simply ignoring question — at least in most families — just seems like asking for problems.

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The holidays are just around the corner. If you’re still looking for ideas for gifts, we’ve got a couple that can give your loved ones a head start on improving their finances and building wealth.

1. Personal finance books: there are plenty of books that can provide a basic introduction to personal finance, as well as those that can provide a more advanced education on investing and other money topics. There are a quite a few different authors and companies that routinely crank out books on financial topics. In particular, I would recommend the many Motley Fool books — there’s a book for just about every financial situation and they’re high quality with sold information.
2. EE Savings Bonds: The U.S. Treasury recommends EE Savings  Bonds as gifts — they’re reliable and low-risk investments. Personally, I think savings bonds are a particularly good gift for children, especially if you explain how the investment works. You can purchase EE Savings Bonds on the Treasury’s website, which we have discussed in depth. The site does not offer paper bonds, however — if you want to purchase the paper version, you will need to do so through a local financial institution.
3. Time: For some people, time (or lack thereof) is making it harder for them to achieve their goals. Maybe a friend or relative needs a babysitter or someone to cook up a few meals so that they can just get ahead of things. If you’re a little short on time yourself, you can purchase an absolutely amazing list of services both online and locally. A personal chef will come by, cook up a few meals and stick them in the freezer. A maid service will come by and take care of the laundry. Most companies will allow you to buy services for a friend or family member in a block and save them some time.
4. Money management software: I’m not talking about Quicken or other big software packages (although if it’s on someone’s holiday wishlist, more power to them). There are plenty of small money management tools that can help out in a big way. Shoeboxed, for instance, can get all your receipts organized for you. Expensr can help track expenses. There are thousands of other tools and at least one is probably perfect for your friends and family.
5. Anything business-related: If you want to give a gift to a family member with even the slightest entrepreneurial bent, ask what they need for the next step of their business. Maybe a year’s worth of website hosting can help them more than anything else, or maybe there’s something even more useful. Asking can help you find a gift that truly can move the recipient along the path to his or her goals.

Note that I didn’t actually include money in the list above. For some people it might make an ideal gift, but I know that others feel that a gift should be selected with a person in mind. I do think that money makes a better gift than a gift card, financially speaking: gift cards have so many limitations that cash isn’t subject to. Money is just more useful than a gift card.

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Even if you’ve gotten your own financial house in order, you may be worried about your family’s bottom line. Maybe one of your parents isn’t financially savvy, maybe one of your children is struggling or perhaps you and your significant other aren’t on the same page of the ledger.

Most of us have an instinctive reaction whenever we see a friend or a family member in a tough spot: we offer to help. But, at least in financial situations, helping may not be such a great idea. The most common type of financial help anyone will ask you for is a loan. Can you afford to make such a loan? Will you be able to help again if their situation gets worse? You might be tempted to offer up financial advice, especially if you’ve been working on your own situation. Unfortunately, most people just don’t want to hear it.

How can you help your loved ones?

There’s nothing wrong with offering up a little cash to help your family through a tight spot if you want to. If you do so, don’t think of the money as a loan. Don’t count on getting it back. Some relatives may make the effort to repay you, and if that happens, congratulations. But if that’s not the case, you don’t want a little money interfering in your relationship with your family. Just consider it a gift and let it go.

Don’t make a habit out of loaning money to your friends and family, either. It’s tempting, but I’ve learned from experience that just means that they’ll keep coming to you for help, rather than trying to find a permanent solution to their problems.

The best help you can provide is often education on their current situation. Most people don’t particularly want advice on straightening out their finances, but if one of your friends or family members have decided that they’re ready to make some changes, offer up the resources that have worked for you. I would never suggest pushing a copy of your favorite personal finance book on your relatives. If they ask for it, though, go right ahead.

Don’t wait around for your loved ones.

I’ve talked to plenty of folks who say that they’ll work on their finances when their significant others will help. But while they wait around, their financial situations are getting worse. Their significant others may not even know that there is a problem.

Personally, I’m in favor of just getting a move on personal finance. But don’t just leave your significant other out on the project: explain what you’re trying to do. They don’t have to help — it’s nice, but there are plenty of relationships where one person is clearly in charge of the money. They should know what you’re thinking, though. Maybe you’ll be surprised. Maybe your other half has just been waiting on you.

In the end…

You can’t just fix someone else’s problems. The best you can do is make sure you’re on solid financial footing and offer help when it’s asked for.

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