We Accepted a $1M ‘Advance’ from In-Laws—Is Avoiding Debt Always the Best Choice?

Anytime someone in your family offers you money, it might seem too good to be true at first glance. In many cases, it is, but occasionally, you might get into a situation where things are precisely what they are in that family just wants to help, but even that comes with a difficult mindset. 

This is the challenge one Redditor is facing after posting in r/fatFIRE about how his in-laws offered $1 million in cash to help pay down a mortgage on a new home. What might seem like an obvious answer, around taking the money, has the Redditor and his spouse feeling pretty nervous about what to do.

Family Gifts 

Looking at this Redditor’s scenario more closely, we learn that the in-laws have an estimated net worth between $5 and $10 million. The Redditor, who is already making 7 figures, is posting in r/fatFIRE as this is his goal, so the money being offered isn’t because the son and daughter are in poor financial shape. 

Quite the opposite, in fact, as the original poster and his wife are looking to sell their current $1 million home and move into a new $3.5 million home, paid for on their own. Having already paid the down payment on the new home, the plan is to take the equity from their current home and invest it in the market. 

However, there’s a big flag here as the father-in-law comes from a culture that dislikes debt, so the in-laws want to help financially. Their proposed gift is $1 million to help with the new mortgage, and the only stipulation is that instead of transferring the equity from their current home into the market, the Redditor and his wife also use this money to put toward the mortgage. This would leave them with a more manageable $800,000 mortgage. 

Understandably, the Redditor and his wife have mixed feelings, even knowing that the in-laws only have one child, so all of their money will be the couple’s one day anyway. Of course, there is also a bit of ego here, with the Redditor outright admitting some pride concerns about accepting help. 

What Do You Say to Your Family? 

In the post’s comment section, we got the most needed answer, as the in-laws are not looking for anything in return for this money. The only stipulation is that the Redditor uses the proceeds from the sale of their current home to help pay down the mortgage as well. He says point blank that they are not “buying favors” and that there is a strong relationship already, so they genuinely just want to help. 

In this case, I would take the money and run as they are not looking for anything and are not causing any other ruffles here. If the Redditor and his wife are worried about the pressures of their new multi-million dollar mortgage, and this money can help alleviate this pressure using money they will receive one day anyway, then take the money and run. 

While you can say there is no such thing as a free lunch, the Redditor says the family will always be welcome in their home, with or without an inheritance. He’s adamant that this money isn’t being used as a chokehold on the couple. 

If anything, this Redditor should take the money and then make sure to treat everyone to three meals a day on Mother’s Day and Father’s Day. This said, it’s the wife’s money at the end of the day as it affects her inheritance, and while she was initially against it, she’s seemingly come around. 

Should The Redditor Avoid Debt? 

When it comes to avoiding debt, it should always be avoided when and where possible. However, when it comes to a mortgage, there is an argument both for and against. In the for column, you have the idea that having a mortgage would allow this Redditor to take the proceeds on the current home, invest, and earn a potentially strong return over the next 30 years. There are also tax deduction benefits from having a mortgage, like mortgage interest being tax-deductible. 

On the other hand, if you have enough cash to pay down your mortgage to a more comfortable level, you might want to do so and leave yourself with less of a monthly cash burden. This absolutely eliminates a higher monthly payment and provides more flexibility if you want to sell or move.

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