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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 15, 2019

41 Beautiful Pictures That Show What True Love Is All About

41 Beautiful Pictures That Show What True Love Is All About

Some things in life are hard to describe, yet we can recognize them when we see them.

Love is one of those things.

True love comes in many different forms, but here are some that many of us know well.

True love means supporting those who can’t support themselves

supportive couple

    A young man comforts his date in Times Square, New York City. Image by mbtrama

    strong hug

      A young man holds his significant other close to him. Image by Brad Fults

      running help

        A young track competitor helps one of her injured opponents over the finish line. Image from ViralNova.com

        feeding kitten

          A soldier in the Korean War takes time to feed a baby kitten. Image from US Naval Insititute

          It’s having the perfect selfie partner

          mom and daughter selfie

            A mother and her daughter take a selfie together. Image by Andrew Fysh

            girlfriends

              Two young girls pose for the camera. Image by Rolands Lakis

              selfies

                A happy couple takes a picture together. Image by Kayla Heineman

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                selfie

                  Two best friends take a selfie together. Image by Jason Wahido

                  dude selfie

                    Friends take a selfie together. Image by Glenn Scofield Williams

                    It’s all the warm fuzzies

                    12748262703_84c008f4e5_z

                      A young man spends time with his dog on a beach. Image by Magdalena Roeseler

                      DSC06952

                        A pet owner hugs his dog while on a day trip in San Francisco. Image by Taro the Shiba Inu

                        It means having a friend to photobomb you

                        photobomb

                          A boy makes a funny face as he poses for a picture with his brother. Image by Michael Bentley

                          old man photobomb

                            A man photobombs his wife while their grandson snaps a picture. Image by Frank

                            family photobomb

                              Family members photobomb their relatives’ Thanksgiving day family photo. Image by Beth Scupham

                              boyfriend photobomb

                                A friend photobombs the photographer and their friend, the woman in the foreground of this photo. Image by Lachlan Hardy

                                True love means being there even when life gets unbearably hard

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                                shoulder to cry on

                                  A family watches the Vermont National Guard depart for Afghanistan. Image by The U.S. Army

                                  flood dog

                                    During a monsoon in the Philippines, a boy carries his dog to safety. Image by Romeo Ranoco

                                    A woman is rescued from flood waters by a resident standing on top of her car during heavy rain in Chalandri suburb north of Athens

                                      A man helps a woman out of her vehicle during a flood in Chalandri, Greece. Image by John Kolesidis

                                      lunch

                                        A woman has lunch with her husband every day, even after he’s passed away. Image from ViralNova.com

                                        hug

                                          A woman hugs the mother of 6-year-old Noah Ponzer, who was one of the victims of the Sandy Hook shootings. Image by Spencer Platt

                                          rubble

                                            An Oklahoma couple pauses while trying to salvage belongings from a family member’s home after a tornado. Image by Adrees Latif

                                            sister and brother

                                              A girl puts her arm around her little brother as they wait outside of Sandy Hook Elementary after gunshots are fired. Image by Reuters.

                                              headstone

                                                A woman sits at her husband’s grave the day before their wedding anniversary. Image from NBC news

                                                It means taking the time for long goodbyes

                                                110321-N-BT887-100

                                                  A man says goodbye to his son before deploying. Image by Official U.S. Navy Page

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                                                  national guard goodbye

                                                    A South Carolina man says goodbye to his son before deploying for Afghanistan. Image by The National Guard

                                                    saying goodbye

                                                      A Sergeant hugs both of his sons before being deployed to Afghanistan. Image by The National Guard

                                                      And cherishing reunions

                                                      husband home

                                                        A woman hugs her husband as she sees him for the first time since his deployment to Iraq. Image by The U.S. Army

                                                        boyfriend home

                                                          A young  woman hugs her significant other as he returns home for Kuwait. Image by The National Guard

                                                          mother hug

                                                            A mother drops to her knees as she hugs her son on her return home from the Persian Gulf. Image by The National Guard

                                                            True love is letting yourself feel young when they’re around

                                                            elderly women

                                                              Two friends on their smartphones. Image by Robert Neff

                                                              feeling young

                                                                A young couple getting their picture taken. Image by db Photograph

                                                                sprinkler dad

                                                                  A father plays in a sprinkler with his daughter at Millennium Park in Chicago. Image by Ben Forsberg

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                                                                  subway couple

                                                                    A young couple on a subway enjoys sharing time together, while the girlfriend’s father sneaks a photo of them. Image by Gareth Williams

                                                                    wheelchairs

                                                                      A couple holds hands on a fall day. Image by David Amsler

                                                                      It’s letting yourself be silly… just because they’ll enjoy it

                                                                      silly faces

                                                                        A grandfather makes faces at the camera with his granddaughters. Image by Tim Pierce

                                                                        vote for pedro

                                                                          A woman’s father wears a Napoleon Dynamite t-shirt to make his daughter laugh. Image by emdot

                                                                          True love is allowing yourself to show how you really feel

                                                                          date night

                                                                            A young couple kisses in the back of a restaurant in Washington, D.C. Image by Derek Key

                                                                            playing violin

                                                                              Violinist Nancy Dinovo plays at a memorial service for the victims of 9/11. Image by Christopher Morris

                                                                              True love is timeless

                                                                              old friends

                                                                                Friends spending some time together. Image by Cristian Bortes

                                                                                sitting around a fire

                                                                                  A group of friends sits around a campfire eating. Image by New Old Stock

                                                                                  elderly couple

                                                                                    An elderly couple walks down a street together. Image by Matteo Paciotti

                                                                                    Featured photo credit: Matteo Paciotti via flickr.com

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