Over the years, I have floated several loans to my family and friends. I feel thankful that I am in a position to help out when I can. However, it can be difficult to maintain relationships with people who owe you money.
I created these rules based on my experiences with lending money to family and friends. I am not trying to be a hard ass. In fact, these rules are meant to save my relationships with people, mostly family. Covid-19 has left many of us in unsettling financial situations. Most importantly, these rules are meant to spare the dignity of the borrower. Borrowing money is tough and I don’t ever intend to shame people.
1.
I don’t lend money that I need to see again.
Don’t get me wrong, I want you to return my money. But I wouldn’t be surprised if you didn’t. This is why I don’t lend money that I can’t afford to lose. (See Rule 2)
A few years ago, I loaned a significant amount of money to a family member. The person came to me in October and told me they would have it back to me at the end of the month. They set this repayment schedule, not me (See Rule 3). That date came and went, and so did several months. I was finally repaid when they got their tax return—in March. Even then, that check was postdated two weeks.
Whether its friends for family, my relationships are more important than the money. Although, a lawyer friend once asked, “why would I want to maintain relationships with people who don’t respect me and my finances?” I didn’t respond, but she left me with something to think about.
2.
I don’t lend money that I will need within 45 days.
Out of all these rules, this one is always the toughest, particularly when someone is in desperate need for money. I used to require 30 days, but then I got burned, and adjusted it to 45 days.
I learned this lesson in college when I gave someone part of my rent money. They promised they would have it back to me by the first of the month. They didn’t.
So, if you come to me on April 1 and my mortgage was due on the April 30, I will not lend you the money because I am going to need it relatively soon, within 45 days. This is tough because I could be sitting on a pile of cash, but I won’t part with it. Even if the person promises to return it within a week or two. Sorry, I won’t do it.
3.
I always let the borrower set the repayment terms.
Again, I am not trying to make this a difficult process. People come to me in dire times. So, I always let the borrower tell me when they can pay me back. It makes no sense for me to say, “I need this back by Friday,” when you don’t get paid until the end of the month.
I find that allowing this flexibility has made people more responsive to paying on time. Again, this is an effort to save relationships and dignity, and also not to shame people who are going through a tough time. This is especially important with the current COVID-related hardships.
4.
I don’t lend money to people who owe me money.
This rule is pretty straight forward—if you owe me money, I won’t lend you more.
Believe me, I have been asked, multiple times. In fact, I once had someone tell me that they were tempted to ask me for a loan, and then give it to someone who already owed me money because they knew how inflexible I am with this rule.
First of all, had that happened, I would have been pissed at two people—both family members. Second, how could anyone suggest such a con when I am doing them a favor?
5.
You must have a digital way to receive/repay money.
This rule may seem simple, particularly in this age of money apps, but this has been a real challenge.
On more than one occasion, I have been resting comfortably at home, in for the evening, when I get a call asking for money. I have had to get dressed, leave my house and go to an ATM. Then, go and drop off the money. Finally, when it was time for repayment, I had to pick up the money. At the time, I was dealing with someone who didn’t have a car and needed cash.
There are several cash apps, including some that don’t require the user to have a bank account to access, for those who are “underbanked.”
6.
I only need to know that you need money, not why. I don’t care about the reason.
Just call or text me that you need money, the amount and the repayment terms. That’s all I need. Again, this is another dignity-saving rule.
Over the years, I have heard some real doozies when it comes to the reasons people need money. In fact, too many of these excuses are of the “my cousin’s brother’s uncle needs a kidney” variety. I feel bad for the people who feel the need to have a story or reason for borrowing. I am not trying to shame people in their time of need. I am not a bank; I don’t need to see your business plan.
Again, I don’t need to know why you need money, I only need to know that you need it.
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SaveYourSelf | Blog 
great advice
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