I have never been a bigger believer in getting a contract when lending money to friends, but there are pitfalls if you don’t cover your bases.
Money magazine reports that 27% of those who lend money to family members never get it back anyway, and 43% aren’t paid in full.
My friends are dear to me and I trust them, so why bother writing down every dollar that they owe you. Recently I have come to realize that not all friends are good at paying you back. I have one friend in particular who is guilty of this. I went through my bank, and credit card statements yesterday and saw that she owes me close to $500. Normally I wouldn’t preach mentioning it to them, but we have fallen out of touch. And since we are not on speaking terms anymore, it seems like she thinks she doesn’t have to pay me back anymore.
This friend of mine is famous of being in a mess when it comes to her finances, from being evicted to not having food money for her, being broke is pretty common for her. Despite having a job that pays more than $50000. I am here to judge what she spends her money, or whether her shopping, smoking, partying habits are good or bad for her. She is a fantastic mother and just goes through rough patches at times. Besides being extremely smart with everything else, she is horrible at planned spending. Therefore she owes me money for things like her gym membership, shopping spree, gas money, lunches and dinners, daughters eyeglasses. I am the poster child for financial responsibility either, but there are certain lines that shouldn’t be cross, and I dont cross them.
I am a nice person, or at least I try to be, so when a friend is in need of something I help them out. Up till now, she has been great at paying me back. Since we stopped talking, however, she has not. This got me thinking about what to do next time a friend asks to borrow money.
- The best way to deal lending friends money is getting it in writing.
I know it is harder for smaller amounts, but it is best thing to do. I have friends who I take turns with buying lunches. I am not talking about that. I hate being that person who writes everything down, but sometimes you have to look out for you. If you want to donate that money, there are worthier causes than someone’s gym membership and I am upset that I have to constantly attempt to remind others of their balances. They wouldn’t behave this way if it was a bank or a credit institution, but why treat a friend in a horrible manner?
- Perhaps saying no is the best answer; however hard it may be.
I will need to start practising saying that. I found that sometimes money can ruin a perfectly good friendship, or prolong a unpleasant situation, like this one.
- Coming up with and sticking payments arrangements from the onset is a good way to go as well.
- Having a witness during these transactions helps. It stops it from becoming a she said/she said issue.
- And finally don’t allow it to ruin a cherished friendship. Always be willing to have that conversation and see if there is anything that might be missing. Sometimes pride gets in the way.
- Charging interest.
I once lent money out to a friend who’s boyfriend had put her in a terrible financial position (well really she did it to herself). I told her that whenever she was able to pay me back would be ok. And she said that she would pay me a small amount every month. By the 2nd month, she was avoiding my calls and wouldn’t even update me. I would have been okay with her just telling me she still didn’t have the money. But she completely avoided and ignored me.. so I took her to small claims court. I served her with papers and on our court date, she showed up at my house with the rest of the money. She felt bad and I felt awful too. I explained to her that I just wanted her to keep me updated. Luckily we remained friends after that incident. But I’ve never lent out money to anyone since.
I heard a saying once:
Lend to a friend not the amount asked for.
Lend what you are willing to lose.
I learned that lesson the hard way. oh well.
I can only remember doing it once and I got paid back. I remember feeling like I wouldn’t though and that isn’t a good feeling. On the due date I only got half of what was owed but I got the rest the next week. I guess I should say this wasn’t a close friend, just a co worker I was getting to know. Anyways, I now go with the rule of gifting money and if I get it back count my lucky stars. If not, no harm done. I also don’t lend money that I will need in the future, if I can’t afford to lose it, I don’t lend it.
You know I think ill take it like that too. Lesson learned.