Golden rules for lending money to friends and family
Greer McDonald explains why caution must be displayed when borrowing money from and lending money to friends.
For the most part though, my friends have been the ones who have really come through over the years.
When my laptop (read: my sidekick in life) died last year, one of my good mates came to the rescue.
My credit was shot to pieces years ago (that story is for another blog post) and he offered to get my new baby on interest free HP under his name.
Now don't get me wrong, that is a huge thing to do for someone.
Even though our friendship is more like a brother-sister relationship, I was hesitant about getting into this situation.
There are unwritten rules about lending mates money and we broke all of them.
But around $1800 later I have my new pal and only two more payments left on it (which is going to free up some extra money to put on my larger loans once it's paid off in June - whipee!)
It's strange because in a roundabout way it's like I became more responsible with payments because I knew it would be my mate's neck on the line if I got behind.
How's that for a warped sense of obligation?
I set up the fortnightly payment to come out the day after I been paid and I've just forgotten about it.
It was an interest free deal so to me it all worked out well.
Other mates and family members have helped out in such amazing ways. To them - "is there anything I can do to help you?" is a real and true statement.
So far, there hasn't been a bust up over money - but I know it can be a deal breaker in marriages - but it's still never sat well with me. I absolutely hate being in this position. Hate.
Every time I've asked for help, I can literally hear the words of warning running through their heads.
I know those words because when I've lent money, I've heard those same words too.
I think it's pretty normal for warning bells to ring in these situations.
Because I value my friendships and I don't want it to ever be a problem - either with me lending or being lent to - I did a little bit of research.
Some of the rules or suggestions about lending money to friends I've found are:
- Never lending more than you can afford to lose.
- It can be a risk, so why not get it in writing.
- You could offer alternatives to giving cash such as going guarantor on a loan.
Have you ever lent money to a friend? How did it turn out? Let us know in the comments below.
Written by Greer McDonald. First appeared on Stuff.co.nz.