07-28-12, 09:47 AM #1
Why You Shouldn't Borrow Money From Friends
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?
Why You Shouldn't Borrow Money From Friends
Orion Jones on July 27, 2012, 4:00 PM
What's the Latest Development?
At a time when more and more of us are forced into financial difficulty, there comes a point when asking for a loan may become necessary to stay afloat. But who to ask? Banks, family, friends? While the bonds of friendship may seem strong enough to withstand a simple financial transaction, they are actually ill-suited to carry the emotional baggage associated with money, says author Anneli Rufus. "The size of a loan that one friend requests from another puts a neon price tag on that friendship. Is a new iPad worth more to you than a roof over my head?"
What's the Big Idea?
Unlike asking a bank to lend you money, friends typically have similar economic situations, meaning that the sum asked for will likely be considered a substantial burden by the person being asked. Ultimately, the weight that money has in our culture makes its exchange a loaded event. "Every human relationship has its boundaries and taboos. If sex and money are our culture’s twin obsessions, both wreak similar havoc on friendships. Asking friends for loans is not unlike asking them for sex: Whatever the answer, the relationship changes forever—typically in a haze of guilt, shame and regret."
07-28-12, 11:19 AM #2
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.
07-28-12, 11:51 AM #3
07-28-12, 12:56 PM #4
07-28-12, 03:16 PM #5
* 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).
07-28-12, 05:13 PM #6
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.
07-28-12, 11:05 PM #7
My mother always said, "Never loan money to a friend unless you are willing to consider a gift." Mom's a smart lady.
07-29-12, 02:36 AM #8
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.
08-08-12, 06:46 AM #9
08-09-12, 03:41 PM #10
08-09-12, 09:21 PM #11
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.
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