Most of us have heard about the problems of loaning money to friends. Many of us have loaned money to friends. I want to know at what point does this kind of loan cost you a good friendship? If the friendship still exist after the loan, how has it been changed? For the better or for the worse?
I'd like to say that any TRUE friend would be interested in helping out in many ways. If I were to be asked by any of my friends I'd first ask them how did they get into this problem to see if there is a way for them to go about undoing their monetary problems. I had one such friend who was in deep problems with his mortage and was asking to borrow money from me to help him out to prevent him from losing his home. We went to the bank and had his home refinanced, which for some reason he didn't want to do because he didn't think it would help, and after getting it refinanced he was out of the problem for it reduced his monthly payments by HALF! That was because he had a high first mortage interest rate, over 7 percent and after the refi it was only about 3 percent. That cut his payments enough that he could afford the lower payments and not need money from me. Sometimes we can help our friends in other ways besides just giving them money for if they keep doing the same thing to create a money problem they will just be at your door sooner or later asking for more. I think by trying to resolve money problems is a much better way to help a friend for it shows you are willing to give your time and experiance to them which is another reason why you are friends anyway.
I certainly have to agree with you on that, but what happens when you explore all alternatives with no way out but loaning the money? My first thought would be how much can I afford to lose if my friend could not pay me back anytime soon. I would then want to see what his or her plans were to get out of trouble and pay me back. Friend or no friend I would not make any loan if I could not afford to lose it all.
I never "lend" money I always just give my friend what they need if I think it is the only way out without asking for repayment. If I were to think that I wanted the money back I'd never lend it to start with. I feel that friends in need and take advantage of you will only show that they were really never a "true " friend to begin with and just drop them as a "friend" and move on away from them counting my losses as I do.
I think you might be asking the wrong questions. Consider these questions instead: * Will it negatively affect me if I loan my friend money and I don't get paid back on time or at all? * Will I care if I loan my friend money and I don't get paid back on time or at all? If the answer to either of these questions is yes then giving your friend a loan will be a highly destructive experience for the simple reason that they are very likely not going to pay you a dime (and by very likely I would guesstimate a 97% chance of never seeing any cash come back to you).
A wise man once told me the same thing. His way of stating it was, "Never loan a friend more money than you would be willing to simply give him. That way if he falls on hard times and can't pay you back, you've only lost your money, moreover an amount you could afford to lose. You haven't lost the friend." I have a friend who goes with me to concerts, the ballet, theater, etc. She's not very prosperous so I usually buy the tickets, but she tries to pay once in a while. I've never asked her to take turns paying. Over six years I'm sure she's into me for a couple thousand dollars. But I had a good time by not having to go alone, so it's okay. One of the first concerts she paid for was Crosby, Stills & Nash, her favorite band. (One of the permutations. We've also seen Crosby and Nash, Steven Stills on a solo tour, and mercifully she has another friend who likes Neil Young since I don't. She keeps a tally and has seen them 55 times.) When we walked in the usher escorted us to seats in the sixth row. I said to myself, "She really paid some good money for these tickets." She obviously had to buy them from an agency at a markup. It was only this year that we were talking about it and she felt that she finally had to tell me the truth: she paid $500 each for those tickets. So she's not into me as deeply as I thought! You never know.
My mother always said, "Never loan money to a friend unless you are willing to consider a gift." Mom's a smart lady.
Unfortunately life sometime demands to give more to a friend than you would have given as a gift, it is inevitable. Especially if you are truly a friend and not just there for a benefit. The smart thing to do is to talk it over with the spouse/husband about the loan and have both either agree/disagree on it. In my case my close relative only decided to give such a huge loan under entire house we own, as a loan to a friend/relative without consent with his wife. This is unacceptable. In either case, a true friend would understand that putting you in such a great risk is unacceptable. It really comes down to how much you are willing to risk and how much close to your agree with your decision as a benefactor.
I wouldn't allow money to end a friendship. It seems foolish to give money so much power. As Susy Orman always says: people first, then money, then things. Of course lying can certainly affect trust, which can influence a friendship. I'm not interested in being friends with deceptive people, but I could certainly forgive an unpaid debt (especially for a friend).
I agree, money comes and goes, a true friend isn't that easy to come by. So instead of lending money just give them it if they need it. We live in a society where we tend to become hoarders and have more then we really need anyway.
