New Rules to Follow When Lending Money

kimkamsoon · Post time 26-1-2018 11:23 AM

Article: Nancy Rones

Getting hit up for a loan can make you feel like you’restepping into a minefield. In today’s economy, it’s easy to understand howsomeone can find themselves in a dark place financially. On the one hand, youwant 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 gonewrong, with friendships ruined and families torn apart. Also, you may bedepleting funds that you might need yourself, says Irene S. Levine, Ph.D.,psychologist, author and producer of The Friendship blog. Even if you’resure that the asker will pay you back, it’s hard to know if you should proceed.

Rule 1: Only Say Yesif 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 personor 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 wantto, you risk feeling resentful, and that can cripple the relationship beforeit’s even time for her to repay you. Not going through with the loan doesn’tmake you selfish or a bad friend; the response may actually protect your bond,she adds.

Rule 2: Lend JustWhat You Can Afford to Lose

Your friend or family member may check all the boxes forbeing trustworthy, financially stable and reliable, but “things can happen thatprevent them from paying you back as originally planned,” says Byron Ellis, aCertified Financial Planner (w88) and managing directorat 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 familymember is going to be relegated to the end of the payback line, “behind themortgage company, the credit cards, the auto loans, etc.,” says Ellis. Now,imagine your stress level and the tension that would rise between you both ifyou actually needed that money—and she couldn’t repay you.

Rule 3: Create a FirmRepayment Timeline

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

But as it turned out, White’s sister appeared to haveanother idea in mind. “Now she’s been working for years, yet she hasn’tmentioned anything about payback,” says White. “I had no idea we were on a10-years-and-counting plan. I wouldn’t be upset, but now I’m considering someinvestments and that money would help.”