My mother always used to day: “Aint nothing going on but the rent….”
I’ve been taught to be about my money. Not from a financial standpoint because I still have problems with my spending and saving. But moreso about making it and being smart with what I spend money on. I wish I was a frugalista but I’m not. I splurge more than I should but I am serious about loaning money to folk. If you ask me to LEND you money or give you a cash advance, I intend on getting it back.
We all have hard times. And what’s a real friend if they aren’t for you in your time of need? But St. Louis financial guru Tracey Weeks says this:
“Loaning money to family and friends is absolutely a no-no, especially if they do not have the means to pay you back. If they have no job and no steady income, how are they supposed to pay you back? When they get their income tax check? That is such a lie. They won’t pay you back then because they will find other things to do with the money. Be money smart. Do not loan money to friends and family.
Not only does Tracey say you should not loan money to family or friends, she also says you should never co-sign for a family member or friend.
“When you co-sign for someone, you are taking the responsibility to the car note or financial obligation if they do not pay. And oftentimes when a person needs a co-signer, it is because they do not pay the bills they have. Just say no!”
Kind of harsh! But it makes absolute sense. Ms. Weeks states that if you simply must loan money to family or friends, write a contract and have them sign it and have it notarized. That way, if the loan is not paid, you can take them to small claims court in order to get your money back.
For more information on how to “properly” loan family and friends money and for additional tips, click HERE!
I never loan money to friends and I never borrow money from friends. We have a clear understanding, my money is my money and if I don't have no money, I don't want your money.
Good advice! I wish I'd taken this obvious advice a couple years ago.
You live and learn. We all do!
If you decide to loan money to friends you are better off considering it a gift, unless you don't care what happens to the friendship. Should some day come that you see the money returned, or a loan made back to you in time of need, you are blessed. If you "loan" money to your kids, you also should consider it spent, but can take the opportunity to teach them a lesson about responsibility. I would never cosign a loan for anyone, family or friend, if I was not willing to bear the whole cost myself.
Oh EM GEE! I TOTALLY agree with this. 100% I was taught never to loan out anything I couldn't live without- because there is a great chance I'll never get it back. So if I can't flat out GIVE the money to a friend or relative in need, they will have to find another resource. As far as co-signing and sharing debt? NO MA'AM. Sorry, I'm not a mean person, but I can't gamble my financial security to spare your feelings.
My dad has always taught me never to lend anyone money, period. Friend, family or not. If they need the money and I have it, I will GIVE them the funds, not expecting repayment. I've had someone try to pay me back before and I refused. I told them if they absolutely had to pay it back, to pay it forward to someone else who needs the money.
I agree. friends shouldnt loan or borrow money but I think its sad that 2 people who are good friends would let money destroy their friendship. Why cant both parties just be honest and honor their agreements?
IF someone is going to borrow money from a friend and a friend CAN lend it (as opposed to GIVE it), then I think this is a good article to follow. Another thing I would add in is to put everything in writing. The party who is paying the money back should also cover themselves as well.
Each time they make a payment, there should get a receipt or have the ‘lender’ sign something saying they paid. This should be agreed upon BEFORE the money is loaned and the friend should let the lender friend know that they will want receipts for payback and will sign a form saying that they DID borrow the money.
People have faulty memories and it’s easy for someone to forget that you’ve paid them back this month. Professional lender services can track when you’ve paid back but friends just handing money over might forget it in their busy lives. So it’s best to keep records that you’ve paid back. This way IF a misunderstanding ever arrives, you can just show them the document and pinpoint it to the exact day and time.
It would seem kinda strange but trust me it’s better than not proving you made a payment and being seen as a leech or thief. Trust me the person who forgot that you paid will feel awkward if you cant prove it because all they will be thinking is that you’re trying to screw them over. They will feel MUCH better when you prove that it’s been done. Don’t make them feel like it’s their fault they forgot either.
Lastly, it should be confidential between the two. The last thing friends need is other friends butting in and putting in their two cents. Trying to convince the lender that they should have gotten more interest or telling the borrower he got screwed on the interest rate. Even spreading rumors about how one is bad-talking the deal. When information leaks, people ALWAYS interfere. Whether they have good or bad intentions, they tend to always put their two cents in and it DOES affect the parties involved.
All in all, If both people agree to an agreement and follow their ends of the deals with a paper trail, AND keep it between the parties involved, I don’t see how a friendship would be in jeopardy.