Should You Lend Family And Friends Money?

QUESTION

I’ve been dating a man for 3 months; he’s polite, considerate and generally very supportive. He was let go from his job a month ago and has no savings to fall back on. He has been looking hard for work, but in his field there’s not much just before the holidays.

He recently asked me if he could borrow $1,000 from me. I told him that I needed to think about it. I have savings and can spare the money right now. However, I’ve had bad experiences when it comes to lending money to men that I have dated. I swore I’d never to do it again. He is not at all like the men I have dated in the past and I do want to help him. Are there boundaries I can set or a way to protect myself in order to get the money back if I loan it to him?

ANSWER

VICKI:
When loaning or giving money, items, time or anything else of value, the rule is never loan what you cannot afford to lose. Keep in mind that you need to think for the future and not the present. If you lost this $1,000 would you still have enough in your savings for an emergency; for example would it make a difference if you lost your employment and couldn’t find work again for six months?

With that said, I stumbled upon a great article called, The Best Ways To Loan Money To Friends And Family from Geri Detweiler for credit.com. It covers all the important issues of setting a fair interest rate, getting an agreement in writing and setting up a formal payment arrangement.

If you do not choose to lend your boyfriend money you may think of employing him to do some odd jobs that you need done such as renovations including house painting. This way he has earned the money and there is nothing to be paid back.

No matter which you choose, remember that you must be true to yourself and make sure that you are taken care of. Your boyfriend’s present predicament is a great example of this.

JILL:
Even though you asked about boundaries and ways to protect yourself, I would like to address whether or not you should lend the money. So here are a few things to think about.

1. Why have you been able to accumulate savings but he hasn’t?
2. Would you ask a boyfriend of 3 months for $1,000-?
3. Pretend for a minute that he didn’t ask for any money, would you be perturbed by the other facts; that he is out of work, has no money to fall back on and cannot find work at this time of year?
4. What will you do if he doesn’t find work, cannot pay you back or asks for more?

I understand that everyone falls on difficult times and sometimes all they need is a helping hand. I just want to make sure that you have looked at the situation from all the angles. Things are currently unstable economically; you must make sure that you protect yourself first.

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