WASHINGTON — Your friend asks if they can borrow some money. You feel a little uncomfortable, but say yes to appease that person.
But as time goes on, you still haven’t been paid back. How do you approach your friend without ruining the relationship?
Janet Bodnar, editor of Kiplinger Personal Finance, tells WTOP that you shouldn’t expect that money back.
“Sometimes the best strategy is simply not to do it at all,” Bodnar says. “If it’s a significant sum, don’t make any hasty responses.”
She adds that the loaner needs to be upfront if they are uncomfortable lending money, and to tell the loanee that it’s their “personal policy” not to give money to friends or family members.
“It’s not personal to them … you just don’t do it in general because you don’t want to ruin the friendship, you don’t want to ruin the family relationship,” Bodnar says.
And if you are the one asking to borrow money, she advises that unless you’re prepared to give up the relationship, don’t ask for the loan.
“You should expect that someone will tell you, ‘No, I can’t afford to do that now,’ or ‘No, I just feel uncomfortable doing this,'” Bodnar says.
If you still plan on going through with loaning someone money, she has some advice: Draw up and sign a promissory note that has the terms of the arrangement and how it’s going to be paid back, and then to formalize it in some way.
Bodnar says the loanee is more likely to pay the money back this way.
“But even that could ruin the relationship because you’re suddenly taking a friendship or a family relationship and you’re making it into a legal relationship,” she says.
Bodnar also has some advice on what to do before making a group purchase (i.e. tickets to a sporting event, tickets to a concert, hotel stay, etc.)
- Find out the total cost, including taxes, fees, etc.
- Tell everyone in the group what they owe.
- Tell each person how you would like to be paid back (cash, check, PayPal, etc.)
