Thinking about doing this for a friend. They are super honest, but their near term earning future is not all that bright and the friend has some adult children who live with her, one of whom has potential serious issues that could prove to be a significant drain on her if they relapse. I want to help them, but my practical side tells me I might as well be lighting the money on fire.
What’s your record of loaning money to friends and relatives? Would you do it again?
I don’t loan money- at least not “significant amounts” to friends and family. If they need the money, and ask for a loan, I might give it to them as a gift if I have it to spare, but lending it with the expectation of repayment is a set up for hurt feelings and bad blood in the long run.
If you want to lend the money and can afford to do so, then think about how important prepayment would be to you. If its not that important then go for it- and then if it is repaid it will be a happy surprise, if not then you are exactly where you started and everything’s fine. 
My personal belief is if you lend money to a friend or a relative you need to be mentally prepared to never getting paid back and be okay with that. IF you get paid back consider yourself lucky.
I am NOT saying to not lend the money but lend it knowing it likely will end up as a gift not a loan. Then you won’t be butt hurt when it isn’t paid back. If you go in with the expectation that it will be paid back you likely will be upset when it isn’t. Better to go in with the concept of it is a gift and if you get repaid then that is just a bonus.
My wife has a friend she loaned a fair amount to in her younger years and never has seen a dime of it and likely never will. Her friend has the best of intentions of paying her back but something always comes up. So my wife knows she will never get repaid this money and has come to peace with that. But she wouldn’t loan this friend money now, and in fact when the friend drops hints my wife just changes the subject. So she wouldn’t do it again I don’t think, but then again I have heard her talk about lending/giving another friend of hers money, so who knows.
I lent my younger brother money and never got repaid, but then again I knew I wouldn’t be repaid as I stated above. I would do it again because I love my brother.
All it is, is perspective. It is only money afterall 
I loaned $400 to my cousin and her husband maybe 8 years ago. They were going to Florida to “start a new life” and told me of their plans. It sounded really good to me and I felt they really were going to do it this time, and pay me back. They didn’t do shit and they never paid me back. $400 was a grand amount for me at the time, and I am still sour about it.
I used to lend my brother and my business partner money. My brother was on the hook with me for many years. I even had a ledger. I told him that I would be severely upset if he got married before paying me off (because getting married isn’t free, at least not in our family). He actually managed to pay me off before his wedding…I think because I made it very clear how extremely upset I would be if things didn’t go my way.
He’s still bad with money and now I just give it to him. Not every time he asks (he never asks). It’s too much of an emotional investment to wait for the money to come back. I much prefer giving as a gift.
Hmmm…I just remembered I loaned my roommate money last year, with a promise to get it back by this April. It hasn’t bothered me too much, as I am pretty sure I’ll get it back on time. But there is this nagging feeling of “you could have spent that money paying me back!” every time he goes to the movies. That kind of sucks.
Some times I have been paid back (when I least expected it) sometimes I haven’t. Like others have said, I don’t “loan” it unless I’m fine never seeing it again and never bringing it up. It’s a gift to someone in need. However, I once borrowed a considerable sum from my brother. I’m quite sure he expected it back, and I paid back every penny.
It wasn’t a significant amount I lend to a friend, he needed someone to pay for an online purchase with a credit card and he didn’t have one, so he asked me. I agreed to it, but I really shouldn’t have. My income wasn’t that great at that time (I was still a student) but he assured me that he’d get me back when he got his next paycheck so I thought I’d help a friend out. He ended up switching the terms after his items arrived and told me he’d give me half when his next paycheck came and then the other half the paycheck after that. The first half came without a problem, but then when it came time for the other half, there was a lot of excuses about having to catch up on bills, gas for his car, medication for his mother… basically a bunch of things that boiled down to saying that he knew he owed me money but didn’t care enough to deal with it. It was especially aggravating when I’d see him brag about a shiny new toy on his blog or the awesome new video game that he just got.
I did end up getting all the money back. The last time we had communication with each other was when he texted me to say that he left the money in my mailbox.
Echoing what others have already said; only offer if you are comfortable with never seeing the money again. My personal experiences have been that whenever I have “lent” a decent chunk of money to someone (say, > $100), the recipient usually had some meaningful financial issues, and I rarely saw the money again. Which I’m okay with, as I don’t offer to help out if I can’t reasonably afford to part with the money in the first place.
On the flip side, I once borrowed money from a friend to make rent. I paid the money back in full, but then I loathe feeling indebted to others.
Having lost two friendships over money loans, I don’t do it anymore. I wouldn’t have minded staying friends, I never mentioned the debt to them-- but I guess they felt so guilty when they saw me that we drifted apart. They never paid back the loans.
Another friend owed me money, about 700 dollars that she had asked for when she had difficulties. She invited me to her place once when she stilled owed me the money, and she was having a party for 30-- serving lobster. I sort of felt like an idiot. I like her qualities and we’re longtime friends, so I just resolved that if she had another need for money, I’d go on about how broke I am, hell, I can’t even afford a cleaning woman (which she has!). I did it, and wrote off the 700 dollars in my mind.
Another friend asked me for a loan a few months ago, and I told her that I don’t lend money, that I would give her the amount she needed. She told me she’d pay me back, I said No, pass it on to someone else who’s in need, and left it at that.
If I can’t afford to give it, I can’t afford to lend it, in my opinion. It’s not worth losing friends over money.
Twice, recently. I gave $600 to a desperate friend. I made it clear that it was a gift. He paid it back in full anyway.
My uncle, however, has not, and will not. He didn’t even thank me. Fucker.
I have lent money to my son’s mother with no expectation of giving it back, but yet calling it a loan. The first time I never got it back; the second time I did, with interest.
I paid two months’ worth of rent for an ex-girlfriend of mine when she and her kids were about to be evicted, but only after we agreed that it was a gift rather than a loan and she could not attempt to pay me back.
I had a sister-in-law who used to live upstairs from us, in the upper apartment of a two-flat house. She was constantly buying stuff at garage sales and resale shops, and brought more presents to Christmas that year than anyone else, even her siblings that made a lot more money than her.
But we figured she might be having financial problems - she was responsible for the water bill and it was turned off twice, while she claimed they didn’t process her payment. The electric bills used to be billed to the wrong people - we were getting billed for her electrical consumption and vice versa - and the second time that our power got shut off, we figured out the billing mixup with the help of the electric company rep on the phone.
A month or so after that Christmas of bounty from her, she goes to my husband/her brother, sobbing. She hasn’t paid rent in five months and claims she didn’t get served for a court appearance that she didn’t know about, which she therefore missed. She’s going to be evicted, and we’re the only ones she can talk to about this because she’s so ashamed, she says. She wants him to go to the bank and cosign a loan for her, and promises she’ll pay it back. It was for a significant amount of money, being for back rent, penalties, court costs, the next month’s rent, something else too I think. My husband refused, and said he’d pay her back rent which would at least stop the eviction. He loaned her around $3000, which we could barely afford ourselves, but at least we didn’t have a cosigned loan outstanding with the bank. The lease was up in a couple months after that, and they didn’t renew her lease (understandably), so she ended up having to move anyway.
This was a few years ago. She insisted it would be a loan. We thought otherwise, but she insisted on setting up a payment schedule and was just so persistent about it. We gave her the benefit of the doubt. Shame on us. She owed us well over $2000 after her last payment. Lots of excuses and promises and putting it off.
We weren’t well off, so it was a blow to us, but we managed. And we believed her when she said how ashamed she was, so that she couldn’t reveal this to anyone else, so we didn’t say anything about an eviction and smoothed over the topic with the family. Until my husband started subtly dropping hints in discussions that came up, and found out she’d gone to their parents and to a few of her siblings and gotten significant sums from them as well. More than what she’d asked for on the original loan request, in total.
Really, it’s not so much the not paying us back. It’s lying to us and to her other family members, to essentially “profit” off her own misfortune, which she created herself.
I wouldn’t loan her money again. Frankly, I’m not sure we’d even give her more than a small amount.
When I was about eighteen my mother cautioned me to never lend money to a friend or relative. Said it had the potential to damage relationships.
I have followed her wise advice all but once. A friend of nearly a decade, single mom with a steady job history, in a pinch.
She paid it back within six months and I breathed a sigh of relief.
Since then I make a decision based on how useful my generosity may be and give it as a gift if I choose.
When I loaned a relative 5 thou, he never paid it back. When I saw it was not coming back I declared it a loss on my income taxes. It was then declared income on his taxes. He was pissed at me for making him pay income on the 5 grand and has never spoken to me again. It worked out fine.
That has always been my outlook as well. If a friend asks me for a loan, I decline. I then offer to give them the money. If they pay it back, cool. If not, then at least I don’t feel I’ve been screwed.
Remember, optimism is the first step to disappointment.
I loaned $3K to a good friend – money from the sale of a house, normally I don’t have that kind of money – and it was paid back very quickly, I think from her tax refund. I wasn’t surprised – she’s an honorable person.
I loaned $1K to my husband’s son to keep the son out of trouble with his boss. He’d used a business credit card for personal stuff, or something. Didn’t get any of it back.
We were asked to co-sign for a $7K loan for my husband’s daughter, to keep them from losing their house (a mobile home). We refused, and a few months later the house burned down when one of her kids left a candle burning near some drapes. The house wasn’t insured. Dodged a bullet on that one. She was upset with us for awhile but she got over it. We wouldn’t have been able to make the payments.
Not technically a loan, but I sold a car to a friend for $500. He paid back $120. Last I heard, the car had died and the guy couldn’t afford to fix it, so he gave it to somebody who fixed it and then entered it in a demo derby. :rolleyes:
Sold another car to friends of my daughter who lived in another state. They paid in full and on time.
So, some good experiences, some not so good, and one close call.
Heh, this is a timely thread - just this morning I gave a friend a reasonable sum of money as she was in dire financial straits. But I made it clear that it was a gift, and that I wasn’t expecting to be paid back - I’ve been in her situation myself before, and I know that the guilt of not being able to pay back loans eventually leads to resentment and can ruin friendships. I am fortunate enough these days to have it to give, and just glad I can help out.
She, being proud, is insisting she will pay me back anyway, and that’s fine if she does. But I’ve tried to make it clear it’s not expected - she’s a very dear friend and her well-being is what matters to me.
Yeah, if you let a loan to a friend ruin the friendship, it’s your own fault. Give the money, then let the matter go.
This happened in my family too. No one was asked to not talk about it, but my aunt knew no one would talk about it because that’s how our family is. Everyone ended up spilling the beans, tho, and were quite pissed when they realized how not only my aunt but her kids and her husband were making the rounds to everyone asking for money (the cousin I lent money to in my first post was the one of the kids).
When my grandparents offered to sit down with them and go over their finances, my aunt and uncle were positively appalled that the grandparents thought they couldn’t handle money :dubious:
I think eventually my one aunt sent the other aunt a $50 gift card for a grocery store with a terse little note saying that this money was a gift, please don’t ever ask anyone for money again. She’s from Texas so I’m sure it had a nice “bless your heart” tinge to it
I sort of have a story - one of my girl friends and I were taking a trip together - she called me and suggested that I should put both of the plane tickets on my credit card to ensure that we got seats together and then she would give me cash to the tune of $700 (for her flight - mine was additional $700).
Well, the cash never came and never came and she kept having excuse after excuse. I was able to avoid a total disaster by phoning her and telling her that I had contacted our B&B and given them her contact number to settle up the entire bill - I still wound up behind by about $200 but at least I didn’t feel so bad about it. The trip, BTW was for her B-day which I purchased concert tickets for at $325 each. She wound up getting a very good birthday that year.
Ever since then I’m very careful to avoid these situations and make sure that we each pay for our stuff up front.
She is in a situation that makes money issues tough for her - her husband constantly runs up debt and buys himself ‘toys’ instead of paying their bills, and despite the fact that he makes a 6 figure salary. Their house has almost been foreclosed on because he didn’t bother to pay the property taxes, he had his wages garnished because he ignored about 10 letters from Revenue Canada demanding payment, etc.
This past X-mas she said they were once again in dire straights with no food in the house to feed the children and she was thisclose to phoning to asking for a loan to buy groceries and pay bills. (She managed to get an advance from work or something). In that case I would have just given her the $$, told her it was a gift and told her to never ask me for $$ again.
I hate that she makes her financial woes my problem. It’s like she thinks that because I pay my bills on time it must mean that I’m rolling in dough. FWIW I make well below 6 figures but actually live within my means.
I LOVE that!
I just once loaned a friend $400. She knew how I felt about money and friends and family. I didn’t have it to spare for long and needed it paid back. She was an extremely close friend, but she knew I didn’t trust her with money because she sucked at managing it and knew it. We talked about it, she told me where the repayment would come from, and I wrote up a loan agreement and had it notarized. She paid me back on time.
I still want to ask her for the $1,200 I spent as her bridesmaid years later, on the marriage that lasted a whole year. Talk about cash down the drain!