Do you ever loan money to friends or family?
Do you have a limit you will lend?
Loaning Money
I personally Don't. If They NEEDED it, and I mean, gun to their head, made a bad life choice with a guy named rocko in a back alley in vegas, sure point me to an ATM. But I find most "needed" loans aren't that, they are I could wait and save the money but rather borrow it.
Plus I live so cheap anyway, most of my friends and family think im worse of then they are, my finances stay between my wife and I...and that's it. Well her and everyone on the ERE forum, but SHHH
Plus I live so cheap anyway, most of my friends and family think im worse of then they are, my finances stay between my wife and I...and that's it. Well her and everyone on the ERE forum, but SHHH
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aptruncata
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I can't recall anyone ever asking me to borrow money (other than maybe $20 if they forgot to bring cash or something). Suppose I got lucky by not having loser or unfortunate family, and did good with choosing friends.
As for what I'd say if someone asked, I'm pretty much in the same boat as the two above.
As for what I'd say if someone asked, I'm pretty much in the same boat as the two above.
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George the original one
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irukandjisting
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One of my girls arrived in Whistler and the only job, late in the season was at KFC for $10 per hour
Coming from $30 an hour plus all the penalties - she soon ran out of money
I lent her $1,000 which really helped her out - she then also secured a Early Childhood job for about $14 an hour
All her friends were living in a 6 bedroom chalet and still paying a fortune - think there were 10 in the accomm
When she returned home, she repayed the amontt within 3 weeks of working
I often help my kids out and slip them $50 as they are leaving, or petrol money
They know I will give smaller amounts and lend up to $1,000 - but they have all been pretty self supporting, even through Uni with part time work etc
And outside the family, would lend someone money, but only what I could afford to lose - that would be up to say $50-100
Coming from $30 an hour plus all the penalties - she soon ran out of money
I lent her $1,000 which really helped her out - she then also secured a Early Childhood job for about $14 an hour
All her friends were living in a 6 bedroom chalet and still paying a fortune - think there were 10 in the accomm
When she returned home, she repayed the amontt within 3 weeks of working
I often help my kids out and slip them $50 as they are leaving, or petrol money
They know I will give smaller amounts and lend up to $1,000 - but they have all been pretty self supporting, even through Uni with part time work etc
And outside the family, would lend someone money, but only what I could afford to lose - that would be up to say $50-100
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Christopherjart
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We've tried to cultivate the impression of impoverishment in order to head off any requests. But it is a good question, how do you say "NO" to someone who is desperate and knows you have the cash?
I heard an interview with Michelle Singletary on NPR where she recommended setting up a family account with money set aside specifically for family emergencies like this. Both partners must agree to every penny lent from the account. When it is empty, it is empty.
I don't do the family-account thing but I have pre-recorded (in my head) an answer to the desperate friend or relative. "We only keep enough in cash for one month of expenses. Everything else is tied up in investments. We just don't have that kind of cash on hand.*" If they continue to push I would revert to the simple, "I am sorry. I can't help you. You will have to find someone else." Then I'd throw someone else under the train, "Did you call XXX?"
*Avoid speaking about specific investment strategies with family/friends as they may use the knowledge against you in the future.
I heard an interview with Michelle Singletary on NPR where she recommended setting up a family account with money set aside specifically for family emergencies like this. Both partners must agree to every penny lent from the account. When it is empty, it is empty.
I don't do the family-account thing but I have pre-recorded (in my head) an answer to the desperate friend or relative. "We only keep enough in cash for one month of expenses. Everything else is tied up in investments. We just don't have that kind of cash on hand.*" If they continue to push I would revert to the simple, "I am sorry. I can't help you. You will have to find someone else." Then I'd throw someone else under the train, "Did you call XXX?"
*Avoid speaking about specific investment strategies with family/friends as they may use the knowledge against you in the future.
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Christopherjart
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I find it a difficult one.
Small amounts up till 100 euro's I do without a problem. In Holland (my country of origin) that is small money and I'll get it back shortly; often it is caused by a forgotten wallet etc etc.
Bigger amounts up till 1000 euro's.. well.. I'm not that happy with. I live in Bulgaria since 2 years and some of my girls family members have run into all kinds of issues (company going almost bankrupt, broken leg) and we (read I) have lend out 2500+500 euro's in total to various people. These amounts give me a real uneasy feeling because this is a few months of ERE + also a lost opportunity for investment.
Some of it will be payed shortly (500).. some of it (2500).. well.. I hope to get it back eventually.. but if I don't than that is nice excuse to quit borrowing completely. We have been living for free in the empty apartment of the people I lend the 2500 to.. so I consider that the rent if the money is not returned. I would also not have borrowed the money if there we no kids.
So personally I'm against borrowing... but sometimes things escalate.. But the 3000 euro's in total for me is the limit.
Small amounts up till 100 euro's I do without a problem. In Holland (my country of origin) that is small money and I'll get it back shortly; often it is caused by a forgotten wallet etc etc.
Bigger amounts up till 1000 euro's.. well.. I'm not that happy with. I live in Bulgaria since 2 years and some of my girls family members have run into all kinds of issues (company going almost bankrupt, broken leg) and we (read I) have lend out 2500+500 euro's in total to various people. These amounts give me a real uneasy feeling because this is a few months of ERE + also a lost opportunity for investment.
Some of it will be payed shortly (500).. some of it (2500).. well.. I hope to get it back eventually.. but if I don't than that is nice excuse to quit borrowing completely. We have been living for free in the empty apartment of the people I lend the 2500 to.. so I consider that the rent if the money is not returned. I would also not have borrowed the money if there we no kids.
So personally I'm against borrowing... but sometimes things escalate.. But the 3000 euro's in total for me is the limit.
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jennypenny
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@KevinW "Never. However I will loan tools"
That's funny, because I'm the opposite. I'll loan money (assuming I won't get it back), but I hate to loan out tools. My brother keeps *forgetting* to return a saw of ours, and I'm mad--I really liked that saw. I guess we buy so little that when we do buy something, we've spent so much time picking out exactly what we want that I wouldn't want to give it away. One dollar however, is the same as the next.
If you're afraid someone won't spend the money on what you expect, you could always buy them gift cards instead. A lot of my friends send their college kids food and gas gift cards instead of cash.
That's funny, because I'm the opposite. I'll loan money (assuming I won't get it back), but I hate to loan out tools. My brother keeps *forgetting* to return a saw of ours, and I'm mad--I really liked that saw. I guess we buy so little that when we do buy something, we've spent so much time picking out exactly what we want that I wouldn't want to give it away. One dollar however, is the same as the next.
If you're afraid someone won't spend the money on what you expect, you could always buy them gift cards instead. A lot of my friends send their college kids food and gas gift cards instead of cash.
@jennypenny
Anecdotally, loaned or gifted money seems to go up in smoke and not necessarily solve the problem at hand. A specialized tool or book is either used to solve the problem, or left unused which doesn't cost anything. I haven't had problems with people not returning things; no idea whether that's due to luck or something I do.
Anecdotally, loaned or gifted money seems to go up in smoke and not necessarily solve the problem at hand. A specialized tool or book is either used to solve the problem, or left unused which doesn't cost anything. I haven't had problems with people not returning things; no idea whether that's due to luck or something I do.
I've lost more friends and family due to this than I'd care to mention. And they ALWAYS ask for high round numbers. I've never had someone tell me they need 86.53 for something.. no.. they need 200 cause they would like to have some floating money. LOL.
A good friend of mine asked me for $1000 one time. I assumed it was for the baby they just had like 3 weeks prior and I was all ready to hand over whatever amount he requested to make sure the baby was taken care of. But, he wanted 800 to buy a dog. Just had a baby yet wanted to buy a dog.
I've also found that like others before me here, that I don't loan. Because I'll never get it back. BUT, in doing so you only act as an enabler to allow others to live above their means. I mean if you do this on a regular basis. I did this with my sister for years. Never realizing until I had a sit down with my parents(divorced) that she was also "borrowing" money from both of them for the SAME bills. So for a 50 dollar cell phone bill, she'd get 150.
In general it just leads to a lot of problems. If you loan the money you're an asshole for asking for it back. If you don't loan the money you're an asshole for being selfish with YOUR money. Friends, family, even people I just meet. Its lonely at the top sometimes.
Even people I hire to do things for me, when they find out where I work, there is always a mysterious inflation.
A good friend of mine asked me for $1000 one time. I assumed it was for the baby they just had like 3 weeks prior and I was all ready to hand over whatever amount he requested to make sure the baby was taken care of. But, he wanted 800 to buy a dog. Just had a baby yet wanted to buy a dog.
I've also found that like others before me here, that I don't loan. Because I'll never get it back. BUT, in doing so you only act as an enabler to allow others to live above their means. I mean if you do this on a regular basis. I did this with my sister for years. Never realizing until I had a sit down with my parents(divorced) that she was also "borrowing" money from both of them for the SAME bills. So for a 50 dollar cell phone bill, she'd get 150.
In general it just leads to a lot of problems. If you loan the money you're an asshole for asking for it back. If you don't loan the money you're an asshole for being selfish with YOUR money. Friends, family, even people I just meet. Its lonely at the top sometimes.
Even people I hire to do things for me, when they find out where I work, there is always a mysterious inflation.
I loaned money to a friend years ago, and it was a disaster. While I eventually got the money back, it was not a pleasant experience. My experience as the loaner of funds has not been good.
On the flip side, I've also been the borrower from family. While not a loan per-se, my parents provided a guarantee for a business loan of $200k to me. While there is a minor difference between co-signing a loan, and loaning the money directly, either way they are potentially liable for the whole amount.
I'm really glad they were willing to do this for me, as that investment has been one of the best of my life. I borrowed the money on a 5 year term from a regular bank, and am currently ahead on the payments. At the current payment schedule, it should be re-paid in 18 months.
If they hadn't been willing to guarantee the loan, I wouldn't have been able to take advantage of that opportunity. I'm pretty appreciative of them placing that trust in me.
Should I have kids one day, I think I'm going to mentally allocate some money that they can use as working capital for entrepreneurial activity. Structurally I suspect this will be in a similar form of guarantees, and on paper should be repaid. Mentally, I'll treat it as gifted, in case it does all go downhill. Better to loose some dollars than loose loved ones.
However, if friends/family want to borrow money for consumption, they can go jump.
On the flip side, I've also been the borrower from family. While not a loan per-se, my parents provided a guarantee for a business loan of $200k to me. While there is a minor difference between co-signing a loan, and loaning the money directly, either way they are potentially liable for the whole amount.
I'm really glad they were willing to do this for me, as that investment has been one of the best of my life. I borrowed the money on a 5 year term from a regular bank, and am currently ahead on the payments. At the current payment schedule, it should be re-paid in 18 months.
If they hadn't been willing to guarantee the loan, I wouldn't have been able to take advantage of that opportunity. I'm pretty appreciative of them placing that trust in me.
Should I have kids one day, I think I'm going to mentally allocate some money that they can use as working capital for entrepreneurial activity. Structurally I suspect this will be in a similar form of guarantees, and on paper should be repaid. Mentally, I'll treat it as gifted, in case it does all go downhill. Better to loose some dollars than loose loved ones.
However, if friends/family want to borrow money for consumption, they can go jump.