Four months ago, almost exactly, I lent my friend “Jackie” $5,000 even though I swore I wouldn’t lend to a friend again (to save on troubles, heartache, relationship stuff, etc). But she was going through a temporary hard spot and had a plan of paying me back, so I caved and decided it was worth the chance. And I was right! I am now 2-1 in the “loaning money to friends” department, and it’s never felt better ;)
But, I think I really have learned my lesson this time. Not that anything horrible happened or anything, it didn’t, but it was just “weird” at times and not worth the stress of getting freaked out here and there. The 2 months turned into 2 and 1/2 months, and then into 3, and then finally into 4 – and I’ll admit I started having my doubts. The entire time Jackie kept me in the loop and ALWAYS was super diplomatic about things, and I have always trusted her throughout our entire relationship, but as soon as a little seed was planted in my head that there WAS a chance of not getting that money back, I started getting scared.
And that’s never good in a relationship no matter what kind it is. Money should never come before friends or family members, and every time I was agreeing to those loans I was opening up a world of possibilities. It feels GOOD helping out your friends, but it’s def. not fun ;) And one thing I’ve learned from YOU guys after all these years, is that if you’re gonna lend out the money, you might as well call it a “gift” and NOT expect it back.
I think that’s the right way to go. And I also think I’m not *there* yet to be able to do that. I WANT to be at that point, and never think twice whenever a friend’s in need, but deep down I still struggle with letting some of my money go. Even when I give to charities and projects of my own (*ahem* Love Drop). But I do, every single month, in hopes of becoming BETTER at it and really learning how to pay it forward when others out there need it so much more than ourselves. I guess life is always a work in progress, eh? :)
As for my friend Jackie – she’s unfortunately in the same position we left her at 4 months ago. Still one of the smartest people I have ever met in this entire world, but financially it’s just not going her way. All the job prospects went out the window, and she’s still out there hustling and trying to make things happen day after day (and I still don’t think she has a credit card btw, though not sure if that’s good or bad at this point?). I know she’ll eventually recover, and I’ll be by her side throughout it all, but I think for now I’ll stick to the emotional and there-for-you support, over more of the financial. I’m too afraid of the possibilities of hurting our relationship again :(
Anyone else going through something similar right now? Either on the giving or receiving end?
————-
PS: Here’s out Loan #1 turned out w/ my uncle :(
PPS: And here’s how Loan #2 turned out, with my brother ;)
Get blog posts automatically emailed to you!
Glad this one worked out but pitty about your friend: jobs are hard for people (particualrly young people) today. As to ‘similar situation’ I am thinking about my financial relationship with my sister a lot lately. You see, we did have this agreement that I’ll provide the money while she looks after parents. Now they are gone, my sister doesn’t have a job and is getting a bit on for hustle. Also, the woman is a midwife – how much hustle can one do with this one? Well, I am thinking that probably a lot. But this is the problem – I can think of possibilities and she doesn’t. My dilema is ‘do I offer a fish or a fishing rod’? Fish is easy – I make a gift. Fishing rod will be much harder work – but ultimately much more dignity for all sides.
Congrats! I am sorry your friend is having such a tough time, but if she finally got her 20K then she should be able to live a few more months on 5K. She should try looking for any job until then. I can’t wait to see your net worth statement for July! You got your 401K money AND your friend repaid you! You’re gonna give Jed Clampett a run for his money!
Glad you got your money back and it didn’t ruin your friendship. I’ve never loaned money to friends just because I would find it too stressful.
I’ve “loaned” my brother money too many times to count…small amounts ($20 or so) he has no problem paying back within a week or 2 (usually). But I’ve loaned him larger amounts and still have not seen a dime :( He’s done this to our parents as well. Besides loaning him money, we have also bought him groceries, put gas in his car, bought diapers, clothes, etc for his son (my adorable nephew!). It’s very frustrating…now I refuse to loan him any amount of money over $50. However, I will help get my nephew what he needs – it’s not his fault that his dad cannot budget his money :( It’s difficult though, because my brother will boo hoo about being broke, can’t buy diapers or whatever, but then he and his girlfriend go out to eat or all the sudden have new cell phones. So then I get pi**ed off. Obviously we need to try some tough love and my brother needs to grow the f up…he’s 23 and I don’t know if thats ever going to happen.
Glad you updated on this one, and that you got your money back.
I’m glad this all worked out for you! It’s really scary, mixing friendship with money.
That’s so awesome that she paid you back, what a stressful situation that can be. I’m not currently loaning anybody money nor borrowing (I do my best not to). Although in the past, I’ve NEVER been repaid by friends. I never even loaned them much, usually 40 bucks for a specific thing.. ;-) I’ve probably lost about 5 friends because they decided to avoid me instead of paying me back or having to deal with it. Oh well, guess they weren’t that great of friends to begin with.
This is sure a tough situation to be in, but it sounds like at least she had a plan and was responsible throughout to keep you informed. Hope things get better for Jackie.
I’ve only gone down this path twice, both with the same person. The first time he needed more than I could give so I hooked him up with Prosper.com. He put a loan on there, and I took as much of the loan as I could get (at a 14% interest rate). He paid in full over 3 years without a single late payment. Fast forward to a few months ago. He’s again in a cash crunch. I gave him a loan of $3,636.36 with the promise of $4k in 6 months. That’s about 20% APY. He wanted to pay it off early so I’ll have $3,900 in PayPal shortly. His money woes are ridiculous given his status as a professor at a major university, but at least he pays well for the risk I take. I’d rather never have to loan to a friend though. It’s always weird. The Prosper route was actually a nice alternative. Even though the middleman takes a cut, the extra layer of the contract made me feel safer in both the friendship and the loan.
Hello! LOVE the blog – and I TOTALLY agree about not “loaning” to friends/family but “giving.” My friend and mentor has always told me that you should never “loan” because it causes distance – he calls it a “debt/debtor relationship” that is detrimental to close relationships. If someone is truly in need — just give it — don’t ask them to pay you back. If they feel bad about accepting it – just tell them to pay it forward to someone else in need when the opportunity arises. :D My dad always loans to my brother and my brother is in so much debt to my dad that he cannot pay back that he feels so guilty that he never wants to go visit dad (even when dad doesn’t say anything or ask for anything in those situations) – it just causes distance and “weirdness” that is awful.
Ya i know what you mean. Its never good to mess with a relationship. Let alone a family relationship.. I usually never give out any money. The reason is because all my cash is tied up inside investments right now, or else i probably would. However, this article made me think twice. Now, i don’t think i want to risk loosing a friend :)
I’m never loaning money to anyone ever again. I’ve loaned small amounts that haven’t been paid back, which I didn’t care about. I thought of them as gifts even if the borrower SWORE they were going to pay me back. It’s the large amounts that I’ve loaned that made me never want to loan again, even if I did get paid back eventually. It’s just not worth the stress.
I’ve only ever loaned to family and have always gotten it back. I don’t with friends…like the other said above, I just couldn’t handle the stress it would bring.
Hope Jackie finds the work she is looking for…and soon!
It’s great that you got your money back. Maybe you can help her get a job or get her involve with your online business.
Sorry to hear that Jackie is in the same place she was 4 months ago, but glad you got your $5K back!
I loaned a friend a small amount of money several years ago for a family emergency, $100. He said he would pay me back within a few months. I never saw the money and I never asked. But when I gave it to him, I was prepared to lose it, so no shocker there.
@Maria Nedeva – Yeah, that is a tough one :( I feel like I’m going more fishing road lately from now on, but maybe you can give both for a bit and then slowly move toward no fish?
@LaToya – Haha, well this $5k hasn’t hit yet so it’ll be going into next month’s Net Worth update, BUT the 401k one will be sexy enough for sure :)
@No Debt MBA – Yeah, it kinda is stressful. Even when you think it may not be, so good choice.
@Kelly – Oh wow, yeah that’s tricky. Esp for your adorable nephew! I think I’d be the same way too :) Giving him what he needs, but trying to limit the amount directly to the brother. I wouldn’t worry too much about him just yet though, it takes us guys a good 25-30 years until we mature ;) haha…
@Yana – Thanks Yana!
@Melissa – Thanks :) It’s def. a weird ride, that’s for sure.
@Jen @ Master the Art of Saving – Oh man, that’s messed up! Especially over something as small as $40? Dang… yeah, totally not “friend” material then.
@cashflowmantra – Me too!
@slug | sunkcostsareirrelevant.com – Yeah for sure, GREAT idea w/ Prosper! Much more “legit” that route, though it would be weird for me (I think?) to make money from any interest. I’d feel bad doing that. But I can see that it would get someone to take it more seriously and pay it back faster knowing they’re getting charged a lot for it! So in that case I can understand it.
@LizzyL – Awwww, that is def. sad about your brother & dad :( Yeah, I think your friend/mentor is really onto something w/ that :) Good to keep in mind, always! (And thx for the kind words about the blog – that really means a lot).
@financialmoneytips – It’s a slippery slope sometimes, that’s for sure. But it DOES feel good to help someone out though on the other side. My friend was very appreciative of the $5k :)
@Ashley @ Money Talks – Sorry to hear you’ve been dissed before like that, that $hit really pisses me off. Very disprespectful either way you look at it :(
@Work At Home Market – Yes, me too! Thanks :)
@retirebyforty – Already on it! :)
@Jenna, Adaptu Community Manager – Yeah, just a crappy situation altogether for her. I’m pretty surprised nothing major has panned out over the past 4 months, she really is brilliant!
@Ms. S – Still makes you sad though, right? That someone promises to pay it back and make good, and then just move on like that? Def. nice of you to offer though either way :)
I believe in teaching people to fish, rather than giving them fish…I’ve never had a hard time saying “no”. ;)
That’s a mighty fine way to do things! :)
J, actually I wasn’t sad. When I gave him the money, for some reason, I expected that I wouldn’t get it back. So even though he said he would and didn’t, my mind was already made up that I’d never see that money again after it left my hands. If it were a larger sum of money, maybe I’d feel differently, no I’m sure I’d feel differently. It has been the only time a friend has asked to borrow money so I haven’t had any experience outside of that.
Well that’s good! Glad you weren’t too bummed out about it :)
I am happy to hear that it has worked out well for you. I cannot even get one of my friends to pay me back $20. And if I ask her for it I seem cheap, but she does it all the time and over the years it adds up!
Ouch – that sucks. It most def. adds up overtime!
I am so glad I just stumbled across this entry. My husband and I rented an apartment last year with a friend of my husband’s. The “friend” was going through a tough time, so we offered to pay his half of the rent until he could get back on his feet. Well… 7 months of rent, utilities, groceries, and a live-in girlfriend later, the “friend” moved out (leaving behind a mess that WE had to clean up, plus a broken cable TV remote WE had to pay for) with nothing more than a “I’ll pay you when I can.” That was almost 6 months ago and we’ve still got nothing. It is EXTREMELY frustrating, so I am glad that your situation has worked out better for you!!
Oh man, I’m sooo sorry to hear that! That’s no joke :( And really sucks when you go out of your way to really help someone out, and they’re disrespectful like that. It’s one thing to be constantly trying to pay you, even little pieces here and there, but to just be a dick about it is uncalled for. Sending you some positive vibes things turn around soon for you! It’s def. possible! :)