Do you ever loan out money?

**97guns** · 09-03-2015, 06:06 AM

I've lent money to "friends" several times and got burned, never paid me back and are no longer friends. I do have 1 friend now that trust 100% and I would not hesitate to lend money to but I also know that he would never ask me for a loan. I've lost close to $1000 lending money to "friends"

**disneysteve** · 09-03-2015, 06:06 AM

The stock answer to this question is NO. Just don't do it. No matter how good the friendship is, no matter how noble the intentions are, it instantly changes the nature of the relationship. And it doesn't matter if it's $5 or $5,000.

Have I ever lent money to a friend? No.
I have lent money to a very close relative on a couple of occasions. To my mom a few times when there was a simple cash flow issue. I know all the details of her finances and I knew why she needed the money right then and when she would return it. It was never an issue.

The other time was to my cousin, who is pretty much like a brother to me. When he moved to Florida after retiring a few years ago, there was an issue with when he needed to pay certain expenses that didn't align with when he would gain access to certain funds. I fronted him $5,000 without a second thought. I also know all of the details of his finances and knew how and when he would have the money to repay me. He repaid exactly as planned.

Still, my answer would be that it is generally not a good idea to lend out money. In my examples, I am totally informed on the person's finances. In fact, I'm the sole beneficiary of both my mother's and my cousin's estates, so even if they didn't repay me, eventually the money would come back to me anyway.

**ua_guy** · 09-03-2015, 07:04 AM

I also have people in my life that are really struggling and it too could be seen as not self-induced, but the root causes definitely are. Lending or giving money to these people would be like throwing money into the wind. There isn't an amount of money that can fix their problems; money only temporarily patches things here and there, but then what?

If you lend money, do it to people who will undoubtedly pay you back, or, if there's any doubt, don't call it lending. Call it what it is, giving them money as a gift and having already let go of the possibility that they might not repay you.

**Like2Plan** · 09-03-2015, 07:19 AM

DH and I have loaned $$ before with mixed results. But, over the years I have changed my philosophy a little bit. I feel like if we can spare the money, we should give it as a gift (and, they would have to be pretty close for that

. If we can't spare the money we shouldn't be loaning the money in the first place.

**Joan.of.the.Arch** · 09-03-2015, 07:38 AM

Is your friend actually looking for a loan? Is this your idea or hers?

It is often recommended when you inherit, to set the money aside for a defined period, say 12 months, before you make any decision about it. During the twelve months, a lot of possibilities will present themselves. You can weigh one against the other. Some seeming needs for the money will just disappear during that time-- other means will have been found.

It really is okay for you to use your inheritance for yourself and your own family. I bet that was your grandfather's intention. (On the other hand, perhaps he would have been happy to see you give or loan the money if he thought it would make you happy).

**Fishindude77** · 09-03-2015, 08:24 AM

I have a good friend that went through a rough spell. His wife had cancer that drug out over several years and she eventually died. Didn't take a brain surgeon to see that all of the medical bills, travel, etc. were putting horrible stress on them. They never asked and I never spoke about it beforehand, but on two occasions we sent them checks totaling $4,000. I don't ever expect to get this back and don't care, but this guy is a man of character and it wouldn't shock me if some day when back on his feet repayment of this showed up.

Had another friend that was in deep trouble over his house, mostly due to poor decisions, but he is a good friend none the less. He asked for a loan of $3000. I gave it to him and told him it was a gift not a loan, and that someday I may need help with something. Never got a dime back, but he has helped me on quite a few projects around my place, so we're square far as I'm concerned.

My opinion was, those amounts weren't going to hurt me and it could really help them out.
I won't put my personal financial security at risk, but will certainly help close friends in need when I can.

**Jluke** · 09-03-2015, 09:02 AM

Based on reading several of your threads, this windfall appears to be burning a hole in your pocket.

I saw you already invested $5500 of it in a ROTH investment - good move!

You may want to set this money aside and forget about it... Revisit it in 12 months or so.

15k can evaporate very quickly. e.g. 2016 is right around the corner so you can invest another $5500 in the ROTH.

As for this post, I would agree with others to not think of it as a loan. it is purely a "gift" to this person. If they pay you back, great. If not, that wasn't your original intent.

This may also determine how much you are willing to give - $1000?

good luck!

**FLA** · 09-03-2015, 09:43 AM

Originally posted by Jluke View Post

Based on reading several of your threads, this windfall appears to be burning a hole in your pocket.

I saw you already invested $5500 of it in a ROTH investment - good move!

You may want to set this money aside and forget about it... Revisit it in 12 months or so.

15k can evaporate very quickly. e.g. 2016 is right around the corner so you can invest another $5500 in the ROTH.

ITA with this, take care of your future needs first so you don't have to try to find someone to lend you money down the road. 15k, to me, is not so much that I would feel obligated to help people before soundly helping my future self. If you feel you have to give, maybe try smaller amounts and see how that goes.

I have lent small amounts of money over the years, with the expectation I may never get it back. I have not done this with a large amount of money. No one ever asks me for large amounts of money, they must assume I don't have any, lol. I would lend to 2 close friends and most members of my extended family. For my parents, I would give it as a gift. With others, if I was giving enough that I knew I eventually need it back, I would look into some kind of agreement to repay on paper. For my kids, I would help when they are older but there would be a discussion of how they got in this hole, their plan to get out and never fall back in this same hole again. Because Bank of Mom comes with advice and a plan, or remains closed, lol

**snafu** · 09-03-2015, 10:02 AM

I've twice 'loaned' money to a friend who needed 'short term' help. Never got any back from either and while no words were spoken, I see them as mere acquaintances, would decline any invitation. From that point any time I've 'loaned' money I treat it as a gift and am delighted if any is paid back.

If you see yourself offering help with no expectation of return, by all means give your friend a helping hand. I like your assigning $ 5K to your ROTH. I wondered what investment you'd chosen. Given the minimal information given, I wondered if you'd be happy with one of the Vanguard DCA [Dollar Cost Averaging] programs targeted to your retirement date.

**Fishindude77** · 09-03-2015, 10:08 AM

Because Bank of Mom comes with advice and a plan, or remains closed, lol

**rennigade** · 09-03-2015, 10:33 AM

Its generally not a good idea to lend money to a friend. But...if you really want to then by all means go for it. Its your money...you can do whatever you want with it.

Also, you may want to use the search feature next time. This has been discussed between 1 time and 500 times.

**bjl584** · 09-03-2015, 10:45 AM

Do it at your own risk.

If you decide to do it, then go into it under the assumption that you won't be paid back. Think of it as more of a donation than a loan.

**greenskeeper** · 09-03-2015, 12:10 PM

yes, at 10% interest when repaid.

Do you ever loan out money?