Never Lend Money To Friends
In this up and down economy that we are having these days people seem a little short of cash. Your buddy is in a total jam and he needs your help, should you lend him the cash he needs? The Answer is not always as clear as it seems. I’m not talking about 30 dollars for concert tickets but hundreds or thousands of dollars which you might actually need. Borrwing or lending your relationship with your friends or family is not the same kind of relationship that you have with your bank.
If you are in need of cash go use that line of credit you have for emergencies responsibly. If you are lending out money to friends or family don’t expect it back, money is a touchy subject and everyone acts different about it. You can always draft up some sort of contract clause but this is pretty formal and can make things akward between you and the other party. If you end up giving away large sums of money treat that money as money well spent and gone, don’t pester people for it. Sometimes you might have a business venture where you need some start up capital loaned to you; instead, look for investors not handouts! If you have friends or family invest make sure to tell them that it’s an investment and that they might not see a return at all. As long as both parties always know the risks associated with the investment you should be okay. Always pay back your investors and be a credible person; if people trust you, you are ahead of the game! Lending or borrowing money can strain friendships and who wants to be a lonley person with a lot of money?
Kelly Parks
www.wealthforinvestors.com
February 5th, 2010 at 4:13 am
There are situations where providing a gift to assist someone financially is a greatly preferred to a loan that they most likely won’t be able to pay back.
Just as you wouldn’t lend your car to someone who is an irresponsible driver, it’s not the best idea to lend money to people who are financially irresponsible.
That being said, for someone truly and fundamentally looking to turn their life around, a loan which can be repaid by them over time is quite empowering.
The most important aspect of borrowing and lending with friends and family is to protect the relationship.
One of the easiest ways to protect the relationship is to increase the likelihood of borrower repayment.
The most successful way to accomplish this is by (1) ensuring both parties agree to the terms of the loan, (2) getting everything in writing, and (3) receiving assistance from a 3rd party.
We’ve started http://www.LendFriend.me to meet this exact need, hopefully we can help you also.