Don’t Lend Money to a Friend
This is a lesson I learned a long time ago. I’ve had the fortune of learning this lesson through the experience of others, and I am perpetually amazed at how many people seem to fall into this trap.
If you want to help a friend who is struggling financially, it is okay to give money. Don’t harbor any expectation what-so-ever of seeing it again. If your friend decides to pay you back, wonderful - but don’t hold a grudge if he/she doesn’t. If you aren’t willing to part with your money permanently this is simply one form of assistance you cannot provide.
Obviously, things are relative. Spotting your friend $50 isn’t a big deal; but when you get to more significant amounts - particular four-figures or higher - watch out. If your friend is struggling with debt issues you are going to be near the bottom of obligations that he/she is going to pay back. This is logical - you can’t really report an unofficial, personal loan to the credit bureau. There is a lot more pressure for your friend to pay back more structured, official debts. Even once these other obligations are resolved it can be incredibly tempting for your friend to “reward” himself/herself for surviving a difficult financial struggle, and he/she will want to start spending again before paying you back.
Nothing will destroy a friendship more quickly than unresolved debt (except, perhaps a mutual interest in the same member of the opposite sex). If you feel your friend is procrastinating repayment, you will become increasingly hostile toward that individual. Likewise, your friend will perceive your hostility and start avoiding you. Whether it ends with a whimper or bang, such a relationship is doomed. I can’t say it more clearly than this - do not lend money to a friend! Giving is fine, but mixing money with friendship in any other capacity is a recipe for disaster.
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