Loaning Friends Money

[Ima saver]

I loaned a friend quite a bit of money one time. Her new husband had written a bad check and signed her name. She needed the check covered immediately! (They did not stay married too long)
I would have felt better if she had tried to pay me back a few dollars a paycheck, even $5 or $10. However, she waited for several years before she ever paid me back. That upset me.

[wincrasher]

I don't understand some of the posts above. If you aren't willing to help out a friend in need (of course, if you can afford it), then what kind of friend are you anyway? A friendship is more than just watching a ballgame and drinking a beer together.

That said, my last loan (supposedly for just 30 days) hasn't been repaid in 12 months. He keeps reminding me that he'll pay, but I just laugh it off. He has helped me out quite a bit, moving my stuff to the new house, waiting on delivery men, etc., so I guess I can count that as "interest".

Family, on the other hand, is a bit stickier. I recently decided to just gift them some money. Calling it a loan is just a silly pretense.

[Slug]

I lent a friend $1k plus to help pay down credit card debt, but I had him go through Prosper to do it. This way it was more formal and he could get more $ to pay off the card. It's a 3 yr loan with monthly payments. I make 15% on it.

[ea1776]

I've loaned money to friends and not been paid back. Some will pay back. One friend mowed my lawn a few times to repay his debt.

I've had worse experiences with family. I've loaned money to my mom and my sister. I since told them not to worry about repaying so they wouldn't feel weird around me.

Lesson I learned? Don't lend money to anyone. If you are able and feel it is a decent cause, then GIVE it.

I like Suze Orman's advice to say no out of love rather than saying yes out of fear.

[ea1776]

I lent a friend $1k plus to help pay down credit card debt, but I had him go through Prosper to do it. This way it was more formal and he could get more $ to pay off the card. It's a 3 yr loan with monthly payments. I make 15% on it.

Wow. If you choose to loan money to someone and are pretty sure you'll get paid back.... this is a great way to do it !

[ea1776]

You'll be able to tell a lot about so called friends when you observe that they've recovered from their financial crisis but are dining and dancing instead of paying you back.

This is what I've gone through with my sister. She was in the hole with me, but she was taking her kids to have piercings done and paying for cheerleading camp, etc. That's yet another GREAT reason to NOT loan people you care about money. You feel like "what the heck, why are they doing that instead of paying me back?" And they feel bad (maybe) for doing luxurious things when they're in debt with a family matter. It does have a master/slave type of effect.

[Scanner]

Well, maybe I take a contrarian view on this (surprise, surprise. . .me the contrarian here) but I think the most valuable assets you have in life are friends and family.

Now. . .I am not suggesting you can "buy" or "keep" friends with money. . .not at all. But is what Suze Orman says, "People first, money second, things last." just a cute tagline or is there some meaning behind it?I feel like I have only 2 real close friends and one who is maybe getting closer. . .he gets a lot of service from my business and I have let him run up his account in the past and it gets paid down. I have loaned the one friend only $120 when I was younger and it was paid back in a timely manner.

What am I trying to say?

Your "network" is one of the most valuable assets you have and I am not sure taking an "isolationist" approach with your money is always the best thing for you financially. You never know when you'll need a favor. I know the prevailing view is "Hoard it!" but somehow, intuitively, it doesn't strike me as the right philosophy.

Of course, I don't make a habit of lending money.

Anyway, this unscientific poll of mine would seem to indicate that lending to friends is indeed risky business though. . .pretty split responses, which indicates, even if you responded "so-so", you have lost money. Thanks for the responses.

[Scanner]

BTW, anyone here spare $50? I can surely pay you by next Tuesday.