After coming across an article on CNNMoney, it made me instantly think about the very few times I lended money out.  Although, in most instances the money was returned, there was one friend who didn’t give my money back. This created a huge cloud over our friendship and weakened my trust. So after reading this article, I got to thinking about the downfalls of lending people money.  What happens when a cousin ask for money to help pay a electric bill? Or what happens when a girlfriend ask to “hold” a few dollars for gas money?  What do you do? Give it to them with the risk of not getting it back?? Or simply say “NO” and quickly inheret the reputation of being “stingy”??

 

Well, let’s take a look at the advice that is given by CNN and make the assumption that you’re not getting your money back. Here’s my list of downfalls of lending family or friends money…

 

CNNMoney #1 – Talk In Person (Opening Gambit) – “I was happy to lend you the money when you needed it. That’s what friends do.”

 

Bels:  Although this statement reminds the friend that you helped them out in an emergency, it wouldn’t make the friend pay you back any faster.  Because the friend expects this type of treatment due to the fact that you two are “friends”.  People who have known each other for years and have developed a tight bond, sometimes feels entitled to certain things. Those things include money. If a friend is in a bind, yes they expect one of their friends to bail them out.  Family is especially faulty of this.

 

CNNMoney #2 – Be Direct – “When do you think you’ll be able to pay back the $500 I lent you?”

 

Bels:  Now, I agree with this bit of advice. YES, you have to be direct. Beating around the bush will get you nowhere. Being direct will leave no stones unturned.  That family member or friend will know exactly what it is you want. The only downfall is that it may seem confrontational. Some people don’t like being approached in a straight-forward way. Also, if your tone of voice sounds angry, the other person will immediately get in defense mode. This will strike up a potential argument causing both parties to be pissed the hell off!

 

CNNMoney #3 – Add Urgency, As Needed – “We’re going to get hit with some really big tuition bills soon and could really use that money.”

 

Bels:  If you give off the sense of urgency, your family member or friend will ignore it. I know. I’ve been there. As kids, we grow up hating authority. We dislike when a mother or whoever pressure us to do something. I can’t stand that. If you ask for your money and say you need it in three days, but I don’t get paid until ten days later, what can you do about it.  You have no choice but to wait. Regardless of your reason for needed it back ASAP, a person will not move until they are ready to move.

 

CNNMoney #4 – Set A Deadline – “I’d really like to get the money back before the end of June.”

 

Bels:  Read my response to #3 again!

 

CNNMoney #5 – Offer Flexibility – “Would it be easier for you to pay me back over time, say, $100 a month?”

 

Bels:  I think offering a payment plan is a good idea.  But, if it is a substanstial amount of money, create a promissary note for them to sign off on.  Add a clause in the contract that states “if by the deadline date full payment is not received, legal action will be taken.”   Most times when the threat of taking them to court is presented, people tend to get on the ball and pay you back more quickly. 

 

 

At the end of the day, there’s downfalls to lending family or friends money.  If you are willing to lose a friend over money, then do so. I did. All of us want people in their circle that they can trust.  If you see them clubbing every weekend or always at the mall, but can’t pay you your money, that’s a problem. Apparently, they don’t take your friendship that serious and in turn you shouldn’t take theirs.

 

 

If you have a story to share or know of other downfalls to lending money, let us know. Please feel free to share your thoughts in the comments. 🙂