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These 10 Things Will Happen After You Lend Money To Friends

These 10 Things Will Happen After You Lend Money To Friends

If a friend comes to you for help, lending money seems like a sensible option at first. That’s especially true if it’s someone very close to you who you think would never let you down. But, even though there are some upsides to lending money, it’s hard to justify the risks. Here are ten things that will happen when you lend money to friends.

1. Your friend will appreciate you.

It’s always nice to feel appreciated and, especially at first, your friend will be grateful to you for lending the money to them. It gets trickier when it’s time for them to pay you back, but at first it can make your relationship stronger.

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2. You’ll feel good about yourself.

A selfless act like lending money to your friend is sure to give you some warm fuzzy feelings. It’s nice to be able to help out someone close to you, and the satisfaction of doing a good deed is often worth the sacrifice.

3. You don’t earn any interest on the loan.

Let’s consider reasons why lending money might not be good idea. One less-than-selfless reason is that whereas at a bank you accrue interest on your money, when lending money to a friend the value of it decreases over time due to inflation. That means even when you’re paid back in full you’re still in the red.

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4. You might want the money.

We all want nice things. Chances are, you’ll be able to buy less nice things after lending money to a friend. This is less than ideal, though hardly enough of a reason not to be lending money to someone. The reasons that follow, though, will make a much more convincing case.

5. You might need the money.

Fortunes can turn very easily. Yours might if something unexpected happens like a medical issue or the loss of a job. At that point, you might really need the money you loaned your friend in order to support yourself and your family. But, even if your friend is now in a better place financially than you are at that moment, there’s no guarantee that you’ll be you’ll get your money back when you need it.

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6. The due date tends to shift.

This is if you have a due date at all. If you ignore this advice and lend money, at least set a due date. But even if you do, the problem remains that your friend will feel less pressured to pay you back because of your prior relationship. That’s natural; your friend might not realize how big of a deal returning the money is to you. They feel like they’re waiting to do it when it’s convenient for them. Heads up: it will never be convenient for them to return a significant sum of money.

7. Your friend is more likely to ask for a loan again, or a loan from others.

A lot of the time lending money just encourages people to rely more on others than they did before. That’s not their fault; it’s very easy to becoming dependent on others instead of shouldering all the burden yourself. If your friend does fall into this all-too-easy bad habit, they might even ask you for another loan. If you don’t grant it, they’ll move on to others who might.

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8. It’s a hard subject to bring up.

It’s uncomfortable enough for a creditor to call someone up and request payments, it’s another thing entirely to broach the subject if someone close to you isn’t showing any inclination that they’re going to pay you back anytime soon. That money might create a wedge between the two of you. That’s why lending money leads to further problems than just a hit to your checking account.

9. It can ruin your relationship.

This is one of the most significant risks of lending money to friends. If your friend can’t pay you back or, especially, if they won’t pay you back, you’ll start to resent them. Even if you don’t think you will, you will. That resentfulness isn’t worth it when there are likely other ways you can have their back.

10. You can help your friend in other ways.

Lending money isn’t the only way to solve someone’s problem. In fact, throwing money at a problem can oftentimes (though not always) be the most shallow way to take care of it. To pull out an oft-quoted metaphor, don’t give your friend a fish. Teach them how to fish for themselves. With your professional and personal help they might be able to benefit in ways like landing a better job or developing healthier spending and saving habits. There are definitely some dire situations when lending money to friends is the best choice (such as if you’re in debt to a loan shark), but if lending money can be avoided, you should steer clear.

Featured photo credit: Money Wallet/401(K) 2012 via flickr.com

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Matt OKeefe

Matt is a marketer and writer who shares about lifestyle and productivity tips on Lifehack.

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

More About Thinking Smart

Featured photo credit: Austin Distel via unsplash.com

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