We’ll start with a simple word of advice: DON’T! Don’t lend money to your friends. And I have here 20 reasons why you shouldn’t do it!
I was the “good guy” on numerous occasions and I wanted to help. I had and I still have friends that are not doing that well financially and who happened to need some money for some unexpected expense or even to buy food to put on their table. They used to come to me asking for money and almost every time, one way or another, I got burned. Here is how I got burned and how you can get burned too (and the firs 5 reasons why you shouldn’t lend money to your friends):
1. In most cases “lend me some money” meant “give me some money,” especially when they were asking for small amounts – let’s say 5 or 10 bucks. Small amounts add up and at the end of the year I might end up not buying a new TV because I keep giving them fives and tens because they are my “friends”.
2. They almost never respected the deadline. “Lend me some money until next week” usually ended up in me having to send text messages and phone calls for three or four weeks before getting my money back. Sometimes they even tried to make me understand that they were doing me a favor by returning the loan!
3. They disappear and never pay: I lost a good friend (or so I thought!) for almost $200. He desperately needed the money to pay some bills and I was there to help. I haven’t seen him since. He stopped answering his phone and he simply disappeared from the face of earth. Apparently, for some friendship has a very low cost.
4. I might need the money. I’m not a cow machine, I don’t have endless chunks of cash in my bedroom. I might need those money for a super deal or an emergency and I won’t have them.
5. There is usually no interest involved. This means that you gain nothing from helping your friend, except for a thank you and the risk of seeing any of the 4 previous reasons become reality. And the bigger the sum and longer the period of time they keep your money, the more you lose!
So it’s simply not worth it. If those three reasons above that directly affect you are not enough to convince you not to lend money to friends, here are 15 more directly related to your friends and their living style:
6. They will ask for more. If you lend them once, they’ll keep coming back!
7. They don’t know how to budget and don’t even consider trying it.
8. They need your money, but they’re always eating out and drinking with friends.
9. They are always buying new clothes and accessories, even though their old ones are still doing good.
10. They like to gamble, bet or play the lottery, hoping for the easy way out and the ton of money in.
11. They blame society for their lack of money.
12. They have not grown up. Maturity makes you financially responsible.
13. They don’t stop smoking. One pack a day makes the money go away.
14. They own five dogs. I have a friend that keeps lending money because he can’t afford to feed them and gets mad at me when I tell him that it would be best to give them away.
15. They don’t try to get a second job. Get some side hustle income. DO SOMETHING!
16. They don’t try to find a better paying job but keep complaining about how crappy their current job is.
17. They end up calling you to see how you’re doing only when they need a favor.
18. They just came back from an expensive vacation and plan to do it again in a couple of months.
19. They keep driving their car two blocks to get to the gym.
20. They go to they gym instead of saving the subscription money and go for a run in the park.
So overall, if your friend shows no interest in making things work for him or her, cut the costs, know the difference between “need” and “want” and generally think about the future, you should not lend them money. You’re not helping, you’re losing money and probably you’re about to lose a friend too.
[Photo by Tax Credits]