“It might sound draconian to some people, but I would have them write a contract,” says Baker. Be as specific as possible, and even pitch the idea of charging them interest – but maybe not as much as the bank, Baker says, because you might pass them on to a “family or friend” discount. And if you really want to avoid the problem, maybe it would be a good idea to Actually go to a bank instead.
“Give that person a chance to think hard: does they want to ask you for this loan,” Baker asks? the relationship?”
Whatever the dynamic, avoid if your friend has a problematic past with money. “You have to be careful not to help anyone financially,” Klontz explains. He says you don’t want your financial aid to hurt them, which can be the case if they “are a financial mess” with a “pattern of chronic financial mismanagement.”
No general rules
Still, experts point out that every scenario is different – because our relationships with people vary so much, as do their own individual circumstances. And while many loans that you’d like to see paid off often end up looking more like gifts, there might be situations where the transaction should be viewed as a giveaway, period.
For example, if someone is generally in charge and has a full-time job, but suddenly faces a disaster – a medical emergency, a burnt down house, or something similar – and needs support, Baker says, would just give the money, “not expecting them to pay you back.
And in fact, our social networks often have are what helps us through difficult times, whether it’s a group of friends, families, neighbors, church groups, colleagues and more. “These types of networks are the way we all do,” Collins explains. But “you have to do it in a way that works, and everyone is clear on the expectations.”
And if you’re upfront with your expectations – whether you want to lend the money, and if so, want the money back and when you want it – you might end up helping a friend in need without setting fire to the house. the relationship.
Be honest if the money ever gets into a close relationship, Collins says. “You have to break this taboo.”