recently, i was chatting with one of my brothers on the phone, who i will refer to as Little Brother. he is currently with the air force in nebraska, and scheduled to become stationed in the U.K. in a few months. in preparing for his future responsibilities, we were updating one another on personal contact information, etc.

“by the way”, Little Brother says. “i can give you my bank account information now.”

bank account information?? oops!

ok, maybe not an ‘oops’, but more like an ‘eek!’.

let’s go back in time for a minute.

about a year ago, we were chatting online with aim about the service known as prosper. he had an account, and was explaining to me how it worked. interesting, i thought. i could really use some help with my finances there, it looks like. why not attempt to borrow from the proper community with a lower interest rate than the 15.99% i was getting for my consumer loans at the time? i can then use that money to pay off some of the consumer loans.

then a different idea hit me. Little Brother said that he is a lender at prosper. he told me what sort of interest rates one might be able to find as a lender. i offered a proposal:

instead of through prosper, why not lend me $2000, and i could return the money to you in 6 months with 10% interest?

definitely better than almost 16%.

sure, he agreed easily. sounds great.

he also added that he didn’t expect me to pay back the loan for a year at the soonest, which was kind of him.

6 months came. i had half the money for him at the time, so i decided to write him a check. through my ING direct electric orange checking account, i sent him a paper check of $1200 to his then military mailing address in texas. i told him about it, he thanked me, and time passed.

a month later, i check in with him again.

have you cashed the check?, i asked.

no, he replied. i didn’t get the check yet.

what? i responded, bewildered. but i sent it weeks ago!

another month or so later, he contacted me and told me that he had finally found my check buried in his mountain of incoming snail-mail, but had not given it much thought since it looked like business/spam mail. he had expected a handwritten check from me, i suppose, rather than ING’s computerized version.

ok, i replied. that’s great. please cash soon! i’ll send you the next one after you get around to depositing the first one.

why would i do that, you ask? because i didn’t want to send another $1000 over without knowing that he would actually deposit the funds. it made me uncomfortable to think about a few checks worth thousands sitting around gathering dust while money was tight for me.

3 months later, i suddenly noticed that i was credited $1200 in my checking account from Little Brother. huh?? i contacted him immediately.

what happened? i asked. did you not want the money or ?

oh, huh, he replied also confused.

it turned out that the ING checks expire in 3 months (rather than the 6 months with standard personal checks), and as a result credited back into my account after inactivity.

ok, let’s do this differently, i said. why don’t you e-mail me or tell me your bank account number and routing number? then i can just electronically deposit the money to you through ING.

i do this with my SO occasionally, so i know that it can be done and is relatively painfree.

ok, he said.

weeks later, i still did not receive the information. the Little Brother and i do communicate every two weeks at least on the phone or online through aim or google talk, but we usually have other more interesting and personal things to chat about. every now and then though i would prod, don’t forget to send me the information, ok? i believe i even sent him an e-mail reminder.

fast forward to the present.

finally, a few days ago, Little Brother gives me his account information on the phone. i am sort of not surprised that he finally did. i know from a different conversation the week before that he had lost about $7000 through his various investments as a result of the recent economic downturns. it made sense then, that he might want to get around to recovering some assets by claiming loans he had handed out.

i am in a bit of a conundrum. the $1200 i had put into my emergency funds, an account currently with hsbc direct, soon to be changed to an everbank account. the situation isn’t an emergency per se, but he is definitely entitled to his money. the problem is that i had recently opened an everbank money market savings account that requires a $1500 minimum. in my overzealousness, i had slightly overlooked the $1200 for the Little Brother. i was going to move that $1200 plus 300 from my current checking account into that mma. oops.

okay, regroup. i want to pay him back asap. what are my current options?

1. cancel my everbank account application, give him my emergency fund. rebuild emergency fund moving forward.
2. use money from my next paycheck (in five days) to send to Little Brother. minimum at least for this month’s credit loans has already been paid. not much snowballing until next month.
3. take money out of my ira’s money market fund account to hand over to brother

a quick analysis tell me that #2 seems the most appealing, doable, and sensible. i shall continue with the everbank account change as planned, and send Little Brother $1200 in 6 days through an electronic payment with ING. i won’t have to touch my emergency funds, nor mess with my ira money market funds.

as for the remaining $1000, unless i receive pleasant monetary surprises in the coming weeks, i’ll have to send him that mid-november through mid-december.

my main goal though, is to have paid him what i owe before he leaves for the UK, before christmas.

i love Little Brother, and do not want to cause any problems or bad feelings from our monetary transactions. not that we are having any (as far as i can tell) at the moment. but i have heard of problems that may occur when borrowing money from family. fortunately, we have always had great relations since we were children, as we are both respectful towards one another. i know that he generally thinks highly of me, and he seems fine with the slow going process at the moment. however, i don’t wish to take advantage of that.

i’m not sure why i didn’t account for this extra $2200 in my previous posts highlighting my debts. i guess i have always considered debt mainly money owed to institutions such as banks and the government. i suppose i had been highlighting my consumer debts, rather than personal ones. it could also be that i figured it was a payment in process, i had already set the money aside, was trying to pay him already, so it didn’t need to be included. it could also be for a host of other reasons.

regardless, here is my updated debt profile:

1. my college loans of $10,253.83
2. credit loans of $6400
3. personal loan of $2200
   

and i’m sure i don’t owe anyone else money!

how about you?

have you recently or in the past realized that you owed more money than you had believed or disclosed? why do you think that that had occurred?

how does that make you feel?