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5 Golden Rules For Lending Money To Friends And Family

5 Golden Rules For Lending Money To Friends And Family

You may not be able to buy friendship with money, but you can certainly destroy friendships with it.

Lending money to friends and family is a very delicate affair, and like Dave Ramsey, I would flat out recommend never lending friends money, since money is always a difficult subject to talk about, personal loans can often lead to communication breakdowns which can wreck any relationship.

That said, if you really want to loan your friends some money, here are 5 key tips to follow to ensure that this loan does not destroy your relationships. If you are really lucky, you might even get back the money you loaned.

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1. Understand that you probably won’t get the money back.

If your friends or family are asking you for a loan, then they are not asking a bank for a loan. That is not a good sign. If you do want to loan out money to them, you need to stop and think about how important getting the money back is compared to not ruining your relations. If the latter is more important to you, it may be better to just make the loan a gift.

However, if you decide to make it a loan, you need to consider how important it is to get that money back. You need to be consistent about this, so that both you and the person you are loaning it are on the same page when it comes to paying the loan back.

2. Make a contract.

Your friend may want to make the loan a handshake agreement, promising that they will pay the money back at a certain point. Don’t let them.

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As you are making the loan, you get to set the terms. If you want your money back, a handshake agreement means nothing – a contract does. You can get a free promissory note here from Suze Orman which will let you set the terms of the loan. Also, get the loan signed by both of you and notarized. The latter part is critical.

If the worst comes to worst and you decide to take your former friend to court, a notary can stop them from claiming that they never signed anything. Your friend should have no problem being specific about repayment terms if they really intend to pay you back, so hold them to their word and get the contract written.

3. Don’t expect any favors back.

When someone owes you money, you may feel like they owe you something beyond the cash you gave them. You might think they should help you out with that weekend project you’ve got, or buy you a drink next Saturday.Thinking like that is a bad idea.

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If you signed a contract with your friend, then your friend agreed to pay the money back and nothing else. Expecting more is improper and makes it look like you are lording your better finances over him. Don’t hesitate to be firm about getting your money back, but don’t use it to get other perks or favors from your friend.

4. Ask if there are other ways you can help.

There are always other ways to help your friends beyond giving them money. You can teach them ways to make or save money. You could also help them around the house or office. If they are having problems with bills, you could even offer to pay the bill directly instead of loaning them the money.

If your friend is asking for help with a personal finance loan because they have a problem. Find out what the problem is and see if there are other ways you can help fix it. If they do not want to tell you, then point out that they have no right asking you for money if they won’t tell you what the money is for.

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5. Learn to say “no”.

As noted at the top, I would recommend against loaning any of your friends or family money; however, you may also have some close people who you consider reliable who have just hit a rough patch, and are confident that they will eventually repay you.

On the other hand, there are those family members who you would never trust with 50 cents. I have a family member who is incredibly compassionate and heart-warming – and that is the exact reason I would never loan her anything, because I know she would blow the money on the first sob story she ran into.

At certain points, you just have to say “no”. Your friend or family member may get mad, cry, or throw a tantrum, but this is your money. Offer other help as noted above, but learning to say “no” is critical to succeeding in general.

If your friend is willing to break it off with you over a sum of money, then they were never really much of a friend at all.

Featured photo credit: Next Avenue via nextavenue.org

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Last Updated on July 8, 2020

How to Say No When You Say Yes Too Often

How to Say No When You Say Yes Too Often

Do you say yes so often that you realize you aren’t really happy about this, wondering how to say no to people?

For years, I was a serial people pleaser. Known as someone who would step up, I would gladly make time especially when it came to volunteering for certain causes. I proudly carried this role all through grade school, college, even through law school. For years, I thought saying “no” meant I would disappoint a good friend or someone I respected.

But somewhere along the way, I noticed I wasn’t quite living my life. Instead, I seem to have created a schedule that was a strange combination of meeting the expectations of others, what I thought I should be doing, and some of what I actually wanted to do. The result? I had a packed schedule that left me overwhelmed and unfulfilled.

It took a long while but I learned the art of saying no. Saying ‘no’ meant I no longer catered fully to everyone else’s needs and could make more room for what I really wanted to do. Instead of cramming too much in, I chose to pursue what really mattered. I started to manage my time more around my own needs and interests. When that happened, I became a lot happier. And guess what? I hardly disappointed anyone.

The Importance of Saying No

When you learn the art of saying ‘no,’ you begin to look at the world differently. Rather than seeing all of the things you could or should be doing (and aren’t doing), you start to look at how to say yes to what’s important.

In other words, you aren’t just reacting to what life throws at you. You seek the opportunities that move you to where you want to be.

Successful people aren’t afraid to say no. Oprah Winfrey considered one of the most successful women in the world confessed that it was much later in life when she learned how to say no. Even after she had become internationally famous, she felt she had to say yes to virtually everything. It was only when she realized that after years of struggling with saying no, I finally got to this question: “What do I want?”

Being able to say no also helps you manage your time better.

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Warren Buffett views no as essential to his success. He said,

“The difference between successful people and really successful people is that really successful people say no to almost everything.”

When I made ‘no’ a part of my toolbox, I drove more of my own success focusing on fewer things and doing them well.

How We Are Pressured to Say Yes

It’s no wonder a lot of us find it hard to say ‘no.’

From an early age, we are conditioned to say ‘yes.’ We said yes probably hundreds of time in order to graduate from high school and then get into college. We said yes to find work. We said yes get a promotion. We said yes to find love and then yes again to stay in a relationship. We said yes to find and keep friends.

We say yes because it feels better to help someone. We say yes because it can seem like the right thing to do. We say yes because we think that is key to success. And we say yes because the request might come from someone who is hard to resist like the boss.

And that’s not all. The pressure to say yes doesn’t just come from others. We put a lot of pressure on ourselves. At work, we say yes because we compare ourselves to others who seem to be doing more than we are. Outside of work, we say yes because we feel guilty we aren’t doing enough to spend time with family or friends.

The message no matter where we turn is nearly always, “You really could be doing more.” The result? When people ask us for our time, we are heavily conditioned to say yes.

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How to Say No Without Feeling Guilty

Deciding to add the word ‘no’ to your toolbox is no small thing. Perhaps you already say ‘no’ but not as much as you would like. Maybe you have an instinct that if you were to learn the art of ‘no’ that you could finally create more time for things you care about. But let’s be honest, using the word ‘no’ doesn’t come easily for many people.

The 3 Rules of Thumbs for Saying No

1. You Need to Get Out of Your Comfort Zone

Let’s face it. It is hard to say no. Setting boundaries around your time especially you haven’t done it much in the past will feel awkward.

2. You Are the Air Traffic Controller of Your Time

Remember that you are the only one who understands the demands for your time. Think about it, who else knows about all of the demands on your time? No one. Only you are at the center of all of these requests. are the only one that understands what time you really have.

3. Saying ‘No’ Means Saying ‘Yes’ to Something That Matters

When we decide not to do something, it means we can say yes to something else. You have a unique opportunity to decide how you spend your precious time.

6 Ways to Start Saying No

Incorporating that little word ‘no’ into your life can be transformational. Turning some things down will mean you can open doors to what really matters. Here are some essential tips to learn the art of no:

1. Check in With Your Obligation Meter

One of the biggest challenges to saying ‘no’ is a feeling of obligation. Do you feel you have a responsibility to say yes and worry that saying no reflect poorly on you?

Ask yourself whether you truly have the duty to say yes. Check your assumptions or beliefs about whether you carry the responsibility to say yes. Turn it around and instead ask what duty you owe to yourself.

2. Resist the Fear of Missing out (FOMO)

Do you have a fear of missing out (FOMO)? FOMO can follow us around in so many ways. At work, we volunteer our time because we fear we won’t move ahead. In our personal lives, we agree to join the crowd because FOMO even while we ourselves aren’t enjoying the fun.

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Check in with yourself. Are you saying yes because of FOMO or because you really want to say yes? More often than not, running after fear doesn’t make us feel better.

3. Check Your Assumptions About What It Means to Say ‘No’

Do you dread the reaction you will get if you say no? Often, we say ‘yes’ because we worry about how others will respond or the consequences of saying no or because of the consequences. We may be afraid to disappoint others or think we will lose respect from others. We often forget how much we are disappointing ourselves along the way.

Keep in mind that saying ‘no’ can be exactly what is needed to send the right message that you have limited time. In the tips below, you will see how to communicate your no in a gentle and loving way. You might disappoint someone initially but drawing a boundary can bring you the freedom you need so that you can give freely of yourself when you truly want to.

4. When the Request Comes In, Sit on It

Sometimes, when we are in the moment, we instinctively agree. The request might make sense at first. Or we typically have said yes to this request in the past.

Give yourself a little time to reflect on whether you really have the time, or can do the task properly. You may decide the best option is to say ‘no.’ There is no harm in giving yourself the time to decide.

5. Communicate Your ‘No’ with Transparency and Kindness

When you are ready to tell someone no, communicate your decision clearly. The message can be open and honest to ensure the recipient that your reasons have to do with your limited time.

Resist the temptation not to respond or communicate all. But do not feel obligated to provide a lengthy account about why you are saying no.

A clear communication with a short explanation is all that is needed. I have found it useful to tell people that I have many demands and need to be careful with how I allocate my time. I will sometimes say I really appreciate that they came to me and for them to check in again if the opportunity arises another time.

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6. Consider How to Use a Modified ‘No’

If you are under pressure to say yes but want to say no, you may want to consider downgrading a “yes” to a “yes but…” giving you an opportunity to condition your agreement to what works best for you.

Sometimes, the condition can be to do the task but not in the time frame that was originally requested. Or perhaps you can do part of what has been asked.

Final Thoughts

Beginning right now, you can change how you respond to requests for your time. When the request comes in, take yourself off autopilot where you might normally say yes.

Use the request as a fresh request to draw a healthy boundary around your time. Pay particular attention to when you place certain demands on yourself. If you are the one placing the demand on yourself, try to evaluate the demand as if it were coming from somewhere else.

Try it now. Say no to a friend who continues to take advantage of your goodwill. Or, draw the line with a workaholic colleague and tell them you will complete the project but not by working all weekend. Or, tell someone in your family you can’t loan them money again because they never paid you back the last time. You’ll find yourself much happier.

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Featured photo credit: Chris Ainsworth via unsplash.com

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