Guiding Teen Nephews, What’s My Next Step?

[Ibrahim Yamini]

Hello all!  

My wife and I have been taking care of my nephews since they were Freshmen and Sophomores in high school.  When the oldest one graduated last year, he stayed with us because he wasn’t sure what he wanted to do with his life yet.  I have no problem with that at all, not everyone is ready to leave right away. He got a job and I charged him a small sum a month for rent.

I also said I didn’t mind them staying with us for a few extra years while we teach them fiscal responsibility.  Unfortunately, that knowledge isn’t taught in schools. I was adamant about them never EVER getting student loans and not to borrow money except for buying houses. I always ask them; “When should you buy something?”  Their answer is “When we have the money for it.”  EXACTLY, is my response.  I told them they can use credit cards, but only if they have the money in their bank accounts and to pay them off right away.  They both have jobs now and I asked them if they could reasonably save $800-$1000 a month for a year so they can buy a car of their own around $8K - $10K out right without making payments.  They said they could.  I already knew the answer because they make more than enough to save that and still be comfortable.  There’s no way they shouldn’t, the rent is extremely low and they get free everything else living with us.  I told them; “you’re debt free at 18 and 19 years old and you’re already ahead of most Americans.”  I do want them to go to school, but I told them to take classes when they can afford them.  Community College is often overlooked.

 Now that you have a bit of background please comment or let me know of any issues or steps I should take next.

First, my wife and Nephews both know I plan to buy an investment property at the end of next year as I craft my business plan.  In order to have a little bit of fiscal security, I’ll need roughly 6 months worth of rent available in the business account for vacancies. In order to achieve that by January of ‘22, I told my nephews that I have to raise their rent from $200 to $300 a month.  My wife thinks that I’m taking advantage them.  I personally think it’s more than reasonable.  That should give me around $9.6K at the end of next year.  Is this morally wrong?   Thoughts?

Second, I was wondering if it would be beneficial for them to be put on an Actual Lease but I don’t know where to go from there.  Once I activate my small company into a functioning business, will the lease I have for them on file be a reliable record to use for their credit history after a year?  If so, how do I update their lease info on for their credit report?  I want to make sure I do everything in my power to make sure they break the continuing cycle of fiscal irresponsibility and poor credit histories that has plagued their family.  If you have any answers or books to reference, please let me know.