9/25/2017

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Don't Lend Money To Friends And Family

If you can't afford to give your money away, you have to learn how to say "no" to family and friends when they ask for a loan.

Helping people by lending them money is a noble act, but it's not always the best thing to do. There may come a time when your money will be needed for your own benefit. That's when you have to make decisions that may not bode well with the people who feel that they are entitled to a loan from you. You should understand that there is nothing wrong with keeping your money for your own financial well being.

You may not want to be called a miser, a tightwad, a money hog, or a greedy person, but you should understand that it's not all about what other people think about you. You have to think about yourself, and if keeping your money in your own pockets mean taking flack from others, keep your money with pride.

Once you start making loans to friends or family members, it makes it easier for them to come back to you time and time again when they need money. In many cases, you become what is called a human ATM. This means that every time they want something or if they get in debt, they know where they can get the money. It is also called "being used."

Most people, although not all of them, have genuine needs when they borrow from friends or family. And most people have intentions of paying it back. But once you loan them the money, good intentions fly out the window and don't mean anything.

  • Before you lend money, ask yourself if you can afford the loss if the money isn't paid back.
  • Saying no may save a friendship. If you loan the money and it is not paid back, you may lose a friend forever.
  • The worst feeling you can have is to have to repeatedly ask a friend or relative to repay a loan.
  • When you lend money, are you living within your means?

You should never loan money that is meant for utility bills, credit card payments, your house note, car note, or for groceries. If you don't have additional money set aside that is not necessary for living expenses, you don't have the money to loan. What would happen if an emergency arises and you really need the money sooner than you expect.

And you should never borrow money to lend to someone else, especially from your home or your credit cards. These are long term loans and you may find yourself paying them back for 10, 15, 20, or 30 years at a high interest rate. This is really not a smart thing to do.

Some people lend money because it makes them feel important. They feel good initially but then they realize their foolishness and then try to get their money back. Once the money changes hands, you are at the mercy of the person you loaned the money to. You may never see your money again or you may end up having to take the person to court. And to make matters worse, you may lose a good friend over a few dollars.

If you decide to lend money to family or friends, make sure you get everything in writing from how much you are lending to when you expect the loan to be repaid.

 

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