Many of us at one time or another have been asked by a friend or a family member if they can borrow some money. This can put us in a difficult situation. We want to help, but we have heard the stories of loans gone bad. What to do?
Do you understand how it will change the relationship?
Proverbs 22:7 says the borrower is the slave to the lender. When you loan money that person is no longer a friend, brother, parent, child. There is now an element of master/servant added to the relationship. What happens when the borrower tells you about the TV they just bought. Will your first thought be “how could you afford that when you owe me money?” There is a change in the relationship that is very difficult to avoid.
Do you have the money to lend?
Will lending them the money create a hardship for you? While you may want to help your friend or family member, do you have money to spare to lend? Your first responsibility is taking care of your own family. If making the loan puts in jeopardy your ability to put food on the table for your children, then no matter how much you want to help, you are not in a position to be able to.
Can you afford to lose it?
What happens if they don’t repay? Understand that if they are asking for a loan, chances are they aren’t in the best financial shape. Obviously, if they had money they wouldn’t need the loan. So the question is what impact will it have on you if they don’t repay? Will you be able to forgive the loan? Or will losing that money create a real financial hardship for you and your family? If you can’t afford to lose the money, you can’t afford to loan it.
Is guilt the motivating factor?
Sometimes family members can be experts in laying down the guilt trips, particularly if you have always handled money well and your family member has not. Family has to take care of family. Don’t you love me? Do you realize all I sacrificed for you? Family members with no boundaries can use these tactics to try to get what they want. Yes, I agree that it is good to help family members if you are able, but you also need to make sure you are properly defining help. If you are really just subsidizing their financial misbehavior, you aren’t really helping. In fact, you may be harming them because they are not learning the dignity that comes from standing on their own two feet.
Are you willing to risk losing the relationship?
The most important of all the questions is are you willing to risk permanent damage to your relationship? Sadly it happens all too often. Grandma loans Jr. money for school, but then Jr. can’t repay it. Jr. feels guilty and avoids grandma. Now grandma is out the money and she also doesn’t get to see her grandson. Your friend at work is in a bind and you loan her $100. Suddenly, you notice your friend always has some extra work to do when you ask her to go to lunch or you see her at the end of the hallway and she ducks into a conference room when she sees you coming. Too often these kinds of scenarios are the end result of loaning money to a friend or family member.
The dangers of loaning money to a family member
Desiring to help a loved one in need is a noble thing. In fact one of the prime reasons that we should strive to get out of debt and build wealth is so that we can be in a position to bless those in need.
But we also need to be sure our help is really a blessing. Here’s a better idea: If we have the money, how about making it a gift instead of a loan? Tell our friend or loved one that the way they can pay it back is by passing the kindness along to someone they see that needs some help.