When you live frugally and your relatives see that you are out of debt, they may ask to borrow money. Here are some tips for a successful loan. By successful, I mean that you'll likely be repaid and your relationship will not suffer.
The only time I've had a problem with getting repayment from a loan to a relative was the one and only time I didn't create the written document.
By Charlie from Waco, TX
I don't loan money to anyone, especially relative! My sister owes me $250.00 today, which I know I will never get back. Just give them the money if you have it, and please don't give if you can not afford to part from it. Because relative will never pay you back.
Charlie, this is excellent advice. And advice I wish I'd followed 18 months ago when we bought our own Christmas gift. Youngest son talked about what he intended to buy us new to sis, who told us. We got excited when we found the exact item at 1/4 the price and ran to tell son. He "didn't have the money then," so we bought the item with the verbal understanding he and fiancee (will be wife in 11 days) would repay. We're still waiting... or should I say, have given up waiting. :P
Sickandsexy, I'm sorry you've had bad experiences regarding family loans. Please don't take this to heart. We have several other children who are very faithful at repaying small loans. We've borrowed from them and repaid just as faithfully.
I'd get really upset if a loan weren't repaid. I have loaned an item or two, and gotten them back damaged. So knowing myself. my policy now is either to GIVE an item or "Neither a borrower nor a lender be". It just saves me so much stress.
Old saying: Never loan more than you can afford to lose. Once it leaves your hands, realize that you may never see it again. If you can live with that possibility, go ahead and loan it.
Charlie, YOU have a HUGE heart.
Past experience has taught me NEVER LOAN MONEY TO ANYBODY. Even with a written contract, transactions can go array.
If I "loan" money, I consider it a gift. Money with family and friends can become extremely uncomfortable.
Also NEVER cosign a loan--NEVER!
There is never a need to offer an explanation as to why you are declining their request. A simple reply of; "I can not do it at this time" is all that is necessary.
One time I needed to borrow some money. A friend had just received a large sum of money. He complied. Without his requiring it, I wrote him a detailed IOU. His friendship was worth far more than the $400.00 I asked for.
Life experience has taught me well. "neither a borrower or a lender be." Ben Franklin
Easy rule. Don't ever loan money to relatives. If you really feel you need to help a relative out, face the fact that you will be giving them the money, you will never get paid back. It's the only way to live with the situation without having hard feelings. Because the chances are, if they need to borrow money from you and cannot get it anywhere else, you will never see it returned. So give them the money if you feel you have to, but don't expect to be repaid. If you do get paid back, it will be a pleasant surprise.
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