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How to Borrow Money from Friends or Relatives (Without Ruining Your Relationships)

How to Borrow Money from Friends or Relatives (Without Ruining Your Relationships)

In the words of William Shakespeare, “Neither a borrower nor a lender be.” The problem with borrowing or lending money is that it poses a serious threat to your relationships. Borrowing money from family and or friends is especially risky because it puts you in an awkward situation and can easily taint a perfectly good relationship. For example, being in debt to your mother or best friend can lead to feelings of guilt and associated problems when you realize you can’t pay back your debt on time–or at all.

If you care about your relationships, you will try to avoid borrowing money completely. Even if you are able to pay back the money you owe in full and on time, it still can change the nature of your relationship forever. That being said, asking for money from someone you care about is often the surest refuge out of a difficult financial fix. If you must borrow money from family or friends, do it as the very last resort and only for temporary financial shortfalls.

Here are some basic guidelines to help you borrow money from friends or relatives safely without ruining your relationships:

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1. Be honest about your financial situation

Personal finance is a topic that most of us would rather not discuss. But, if you are asking for financial help, it is necessary to show some level of humility and a willingness to be honest about your financial condition. This is necessary because your lenders will want to know how you will use money they give you.

Don’t paint an eternally rosy picture of your financial condition when it is not all that rosy. Explain all the risks involved honestly so your friend fully understands what she is getting into from the outset. Being transparent will also create room for her to be honest too and give you genuine advice.

2. Borrow only for essential stuff

Never borrow money to obtain non-essential things like a new smartphone or to invest in volatile markets like the stocks. Borrowing money to obtain unnecessary stuff is not prudent at all. Your brother-in-law will also not be amused if you ask a significant sum from him and blow it all in a single event, such as a party.

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Ask for a loan from relatives to address real emergencies, such as hospitalizations. If you must borrow to invest, invest in solid things that appreciate steadily like an education or a house. Just be prudent about how you use your loan and make sure your friend or family member invests a comfortable amount, in case things go sour.

3. Put it on paper

Treat loans from family members and close friends just like you would treat any other loan. Put your loan on paper and document the loan terms, principal, interest rate, and repayment frequency. This helps to minimize risk of a misunderstanding in the future and ensures your friend is clear on when to expect repayments and when the loan should be fully settled.

Also, record any provisions for repayment extensions or reliefs in case you are unable to repay your loan as agreed upon. Of course, you can do away with this formality especially where the loan is only a small amount. But, it’s recommended you insist on documenting the loan just to be on the safe side.

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4. Pay up on time

This goes without saying. Once you agree on the loan repayment terms, be professional and stick to them. Pay your loan on time without making excuses. Remember that a personal relationship you turned into a business relationship is at stake here and not just another random relationship.

If your financial situation improves before the loan repayment period lapses, pay off the loan early. This will be a pleasant surprise to your friend or family member and may help you win back some of the “points” you lost by taking the loan in the first place.

5. Maintain communication

If you are struggling with your repayments, don’t run or start hiding from your lender. Hiding gives a bad impression that you don’t intend to repay the money you owe. Maintain communication throughout the life of the loan and be honest and sincere about your situation. Being honest might take away more “points” from you, but it at least allows you to keep some of your honor.

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Resist the urge to get agitated when your friend or relative starts to nag or hound you to pay up. Put yourself in his shoes and imagine how you would feel if you were the one on the other side. You would likely also remind him constantly to pay up. Take it in stride and pay some amount back even if it is only a fraction of what you owe to demonstrate sincerity and ease the tension.

6. Return the favor

Life has a way of turning things on their heads. In time, you may find the friend or relative who helped you out of your financial fix is in need of help themselves. Return the favor extended to you by offering yourself and your resources to help them out. Do this even if you repaid your debt with interest or had incidents when your relationship was strained by the loan. Showing this kindness to others is a mark of maturity and reflects well the favor paid to you—and it was a favor!

More by this author

David K. William

David is a publisher and entrepreneur who tries to help professionals grow their business and careers, and gives advice for entrepreneurs.

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Last Updated on August 6, 2020

6 Reasons Why You Should Think Before You Speak

6 Reasons Why You Should Think Before You Speak

We’ve all done it. That moment when a series of words slithers from your mouth and the instant regret manifests through blushing and profuse apologies. If you could just think before you speak! It doesn’t have to be like this, and with a bit of practice, it’s actually quite easy to prevent.

“Think twice before you speak, because your words and influence will plant the seed of either success or failure in the mind of another.” – Napolean Hill

Are we speaking the same language?

My mum recently left me a note thanking me for looking after her dog. She’d signed it with “LOL.” In my world, this means “laugh out loud,” and in her world it means “lots of love.” My kids tell me things are “sick” when they’re good, and ”manck” when they’re bad (when I say “bad,” I don’t mean good!). It’s amazing that we manage to communicate at all.

When speaking, we tend to color our language with words and phrases that have become personal to us, things we’ve picked up from our friends, families and even memes from the internet. These colloquialisms become normal, and we expect the listener (or reader) to understand “what we mean.” If you really want the listener to understand your meaning, try to use words and phrases that they might use.

Am I being lazy?

When you’ve been in a relationship for a while, a strange metamorphosis takes place. People tend to become lazier in the way that they communicate with each other, with less thought for the feelings of their partner. There’s no malice intended; we just reach a “comfort zone” and know that our partners “know what we mean.”

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Here’s an exchange from Psychology Today to demonstrate what I mean:

Early in the relationship:

“Honey, I don’t want you to take this wrong, but I’m noticing that your hair is getting a little thin on top. I know guys are sensitive about losing their hair, but I don’t want someone else to embarrass you without your expecting it.”

When the relationship is established:

“Did you know that you’re losing a lot of hair on the back of your head? You’re combing it funny and it doesn’t help. Wear a baseball cap or something if you feel weird about it. Lots of guys get thin on top. It’s no big deal.”

It’s pretty clear which of these statements is more empathetic and more likely to be received well. Recognizing when we do this can be tricky, but with a little practice it becomes easy.

Have I actually got anything to say?

When I was a kid, my gran used to say to me that if I didn’t have anything good to say, I shouldn’t say anything at all. My gran couldn’t stand gossip, so this makes total sense, but you can take this statement a little further and modify it: “If you don’t have anything to say, then don’t say anything at all.”

A lot of the time, people speak to fill “uncomfortable silences,” or because they believe that saying something, anything, is better than staying quiet. It can even be a cause of anxiety for some people.

When somebody else is speaking, listen. Don’t wait to speak. Listen. Actually hear what that person is saying, think about it, and respond if necessary.

Am I painting an accurate picture?

One of the most common forms of miscommunication is the lack of a “referential index,” a type of generalization that fails to refer to specific nouns. As an example, look at these two simple phrases: “Can you pass me that?” and “Pass me that thing over there!”. How often have you said something similar?

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How is the listener supposed to know what you mean? The person that you’re talking to will start to fill in the gaps with something that may very well be completely different to what you mean. You’re thinking “pass me the salt,” but you get passed the pepper. This can be infuriating for the listener, and more importantly, can create a lack of understanding and ultimately produce conflict.

Before you speak, try to label people, places and objects in a way that it is easy for any listeners to understand.

What words am I using?

It’s well known that our use of nouns and verbs (or lack of them) gives an insight into where we grew up, our education, our thoughts and our feelings.

Less well known is that the use of pronouns offers a critical insight into how we emotionally code our sentences. James Pennebaker’s research in the 1990’s concluded that function words are important keys to someone’s psychological state and reveal much more than content words do.

Starting a sentence with “I think…” demonstrates self-focus rather than empathy with the speaker, whereas asking the speaker to elaborate or quantify what they’re saying clearly shows that you’re listening and have respect even if you disagree.

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Is the map really the territory?

Before speaking, we sometimes construct a scenario that makes us act in a way that isn’t necessarily reflective of the actual situation.

A while ago, John promised to help me out in a big way with a project that I was working on. After an initial meeting and some big promises, we put together a plan and set off on its execution. A week or so went by, and I tried to get a hold of John to see how things were going. After voice mails and emails with no reply and general silence, I tried again a week later and still got no response.

I was frustrated and started to get more than a bit vexed. The project obviously meant more to me than it did to him, and I started to construct all manner of crazy scenarios. I finally got through to John and immediately started a mild rant about making promises you can’t keep. He stopped me in my tracks with the news that his brother had died. If I’d have just thought before I spoke…

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