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New Rules to Follow When Lending Money

Discussion in 'Marketplace' started by kimkam soon, Jan 25, 2018.

  1. kimkam soon

    kimkam soon Member


    Article: Nancy Rones

    Getting hit up for a loan can make you feel like you’re stepping into a minefield. In today’s economy, it’s easy to understand how someone can find themselves in a dark place financially. On the one hand, you want to help out a loved one who’s in need.

    This article originally appeared on Learn vest.

    On the other hand, you’ve heard the stories about loans gone wrong, with friendships ruined and families torn apart. Also, you may be depleting funds that you might need yourself, says Irene S. Levine, Ph.D., psychologist, author and producer of The Friendship blog. Even if you’re sure that the asker will pay you back, it’s hard to know if you should proceed.

    Rule 1: Only Say Yes if You Mean It

    If you feel guilt-tripped into making the loan by the asker (“I’m desperate!”) or you question your own hesitation (“I must be a bad person or I wouldn’t feel conflicted”), and then turn her down, says Levine.

    If you do cough up the cash when you aren’t sure you want to, you risk feeling resentful, and that can cripple the relationship before it’s even time for her to repay you. Not going through with the loan doesn’t make you selfish or a bad friend; the response may actually protect your bond, she adds.

    Rule 2: Lend Just What You Can Afford to Lose

    Your friend or family member may check all the boxes for being trustworthy, financially stable and reliable, but “things can happen that prevent them from paying you back as originally planned,” says Byron Ellis, a Certified Financial Planner (w88) and managing director at Ellis and Ellis, a division of United Capital Financial Advisers in online slots Malaysia.

    If your loanee does get in a bind, a best friend or family member is going to be relegated to the end of the payback line, “behind the mortgage company, the credit cards, the auto loans, etc.,” says Ellis. Now, imagine your stress level and the tension that would rise between you both if you actually needed that money—and she couldn’t repay you.

    Rule 3: Create a Firm Repayment Timeline

    Ten years ago Emily White,* 43, lent her younger sister $20,000 to register m88 and buy a house near their elderly parents, without discussing a repayment date for the loan. “I loved that my sister would be there for my parents, and the idea was for her to pay me back once she got settled and found a new job, since she had moved from out of state,” recalls White.

    But as it turned out, White’s sister appeared to have another idea in mind. “Now she’s been working for years, yet she hasn’t mentioned anything about payback,” says White. “I had no idea we were on a 10-years-and-counting plan. I wouldn’t be upset, but now I’m considering some investments and that money would help.”

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