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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 November 15, 2018

Success In Reaching Goals Is Determined By Mindset

Success In Reaching Goals Is Determined By Mindset

What do you think it takes to achieve your goals? Hard work? Lots of actions? While these are paramount to becoming successful in reaching our goals, neither of these are possible without a positive mindset.

As humans, we naturally tend to lean towards a negative outlook when it comes to our hopes and dreams. We are prone to believing that we have limitations either from within ourselves or from external forces keeping us from truly getting to where we want to be in life. Our tendency to think that we’ll “believe it when we see it” suggests that our mindsets are focused on our goals not really being attainable until they’ve been achieved. The problem with this is that this common mindset fuels our limiting beliefs and shows a lack of faith in ourselves.

The Success Mindset

Success in achieving our goals comes down to a ‘success mindset’. Successful mindsets are those focused on victory, based on positive mental attitudes, empowering inclinations and good habits. Acquiring a success mindset is the sure-fire way to dramatically increase your chance to achieve your goals.

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The idea that achieving our goals comes down to our habits and actions is actually a typical type of mindset that misses a crucial point; that our mindset is, in fact, the determiner of our energy and what actions we take. A negative mindset will tend to create negative actions and similarly if we have a mindset that will only set into action once we see ‘proof’ that our goals are achievable, then the road will be much longer and arduous. This is why, instead of thinking “I’ll believe it when I see it”, a success mindset will think “I’ll see it when I believe it.”

The Placebo Effect and What It Shows Us About The Power of Mindset

The placebo effect is a perfect example of how mindset really can be powerful. In scientific trials, a group of participants were told they received medication that will heal an ailment but were actually given a sugar pill that does nothing (the placebo). Yet after the trial the participants believed it’s had a positive effect – sometimes even cured their ailment even though nothing has changed. This is the power of mindset.

How do we apply this to our goals? Well, when we set goals and dreams how often do we really believe they’ll come to fruition? Have absolute faith that they can be achieved? Have a complete unwavering expectation? Most of us don’t because we hold on to negative mindsets and limiting beliefs about ourselves that stop us from fully believing we are capable or that it’s at all possible. We tend to listen to the opinions of others despite them misaligning with our own or bow to societal pressures that make us believe we should think and act a certain way. There are many reasons why we possess these types of mindsets but a success mindset can be achieved.

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How To Create a Success Mindset

People with success mindsets have a particular way of perceiving things. They have positive outlooks and are able to put faith fully in their ability to succeed. With that in mind, here are a few ways that can turn a negative mindset into a successful one.

1. A Success Mindset Comes From a Growth Mindset

How does a mindset even manifest itself? It comes from the way you talk to yourself in the privacy of your own head. Realising this will go a long way towards noticing how you speak to yourself and others around you. If it’s mainly negative language you use when you talk about your goals and aspirations then this is an example of a fixed mindset.

A negative mindset brings with it a huge number of limiting beliefs. It creates a fixed mindset – one that can’t see beyond it’s own limitations. A growth mindset sees these limitations and looks beyond them – it finds ways to overcome obstacles and believes that this will result in success. When you think of your goal, a fixed mindset may think “what if I fail?” A growth mindset would look at the same goal and think “failures happen but that doesn’t mean I won’t be successful.”

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There’s a lot of power in changing your perspective.

2. Look For The Successes

It’s really important to get your mind focused on positive aspects of your goal. Finding inspiration through others can be really uplifting and keep you on track with developing your success mindset; reinforcing your belief that your dreams can be achieved. Find people that you can talk with about how they achieved their goals and seek out and surround yourself with positive people. This is crucial if you’re learning to develop a positive mindset.

3. Eliminate Negativity

You can come up against a lot of negativity sometimes either through other people or within yourself. Understanding that other people’s negative opinions are created through their own fears and limiting beliefs will go a long way in sustaining your success mindset. But for a lot of us, negative chatter can come from within and these usually manifest as negative words such as can’t, won’t, shouldn’t. Sometimes, when we think of how we’re going to achieve our goals, statements in our minds come out as negative absolutes: ‘It never works out for me’ or ‘I always fail.’

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When you notice these coming up you need to turn them around with ‘It always works out for me!’ and ‘I never fail!’ The trick is to believe it no matter what’s happened in the past. Remember that every new day is a clean slate and for you to adjust your mindset.

4. Create a Vision

Envisioning your end goal and seeing it in your mind is an important trait of a success mindset. Allowing ourselves to imagine our success creates a powerful excitement that shouldn’t be underestimated. When our brain becomes excited at the thought of achieving our goals, we become more committed, work harder towards achieving it and more likely to do whatever it takes to make it happen.

If this involves creating a vision board that you can look at to remind yourself every day then go for it. Small techniques like this go a long way in sustaining your success mindset and shouldn’t be dismissed.

An Inspirational Story…

For centuries experts said that running a mile in under 4 minutes was humanly impossible. On the 6th May 1954, Rodger Bannister did just that. As part of his training, Bannister relentlessly visualised the achievement, believing he could accomplish what everyone said wasn’t possible…and he did it.

What’s more amazing is that, as soon as Bannister achieved the 4-minute mile, more and more people also achieved it. How was this possible after so many years of no one achieving it? Because in people’s minds it was suddenly possible – once people knew that it was achievable it created a mindset of success and now, after over fifty years since Bannister did the ‘impossible’, his record has been lowered by 17 seconds – the power of the success mindset!

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