Paula McDermid is a licensed financial advisor and mother of three who works with people to help plan for the future, manage their money and reduce their debt loads through personalized financial planning. Only 30% of Canadians follow a monthly budget, while just 40% of us have a formal financial plan in place... It's never too early or too late for your money to matter. If you have questions or wish to contact Paula, you can email him at email@example.com
Unless you have money to give away, don’t lend it to a friend
Friends or family in a financially binding situation? Aren’t those friends, the friends that always seem to be back in the same situation every couple months? They have refinanced their house just to buy that new truck, go on vacation, or rack up more credit cards debt.
Cornwall - January 25, 2012 - Friends or family in a financially binding situation? Hey, you have some free cash available, seems like a simple equation. You have to help them! They’re family or like family! They would do it for you, but would they?
Aren’t those friends, the friends that always seem to be back in the same situation every couple months? They have refinanced their house just to buy that new truck, go on vacation, or rack up more credit cards debt. Did they recently quit a job because they just weren’t happy there? They didn’t get treated properly? Maybe you have noticed they have some difficultly taking responsibility for their actions. They suffer from the ‘it’s never my fault’ syndrome?
Or is it the family members that are earnestly trying to make things work, going to work every day perhaps underpaid and overqualified but they still ask for overtime? Are they skimping on the extras to pay off their debt, or put their child through school? Did a series of events happen that was out of their control? They got laid off from a long term job because of the economy, they became ill, or began taking care of an ill parent or child?
I don’t want to be the bad news bear captain but in either of those situations unless you have money to give away, don’t lend it. The likeliness of you getting your money back on time, or at all is very slim. And the more you lend, the easier it is to get from you and easier it is to believe that you just don’t need it back.
Friends will quickly become enemies, and family strained over a few dollars. Most of the time, it has little to do with the actual money and much more to do with what they are doing with the extra money they have and conveniently forget to pay you back. What happens if your friend goes bankrupt? What happens if you suddenly need the money for your own emergency?
If you happen to be working on your assertiveness, or suddenly need to change your lending ways, you can use me as your excuse, I said not to lend to friends or family! I can handle it I’ve been blamed for worse.
P.S. If you are the borrower and you are avoiding the topic, buck up and talk about it. You may not have it right now, but putting an action plan on paper to pay it back might help ease some of the animosity you’re getting or ignoring.
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