Every once in a while someone will approach you for some money. They will tell you that they will pay you back as soon as possible. Before you take that money out and lend it to a friend, relative or co-worker here are some things to consider
1. Recording the transaction
Write down the exact amount you are lending, how much will be paid back, and when it will be paid back. Then have the one borrowing sign the paper. By putting everything down you and the other person have a reference point in the future. You will not only have an idea of how much is outstanding but the person who borrowed the money from you will know you are serious about wanting the money back.
2. Giving some guidance
Make it clear to the borrower you want to be paid back in full. Specify the day of the month you want to receive the money and where the money must be paid. Also specify if you want it in cash or deposited. This way they will know what you expect from them and hopefully you will not be running after them when the pay back day comes around.
3. Keeping the matter between the two of you
Do not broadcast your generosity to third parties. The person you lent money to came to you because they had no other means of getting money and they came to you because they trust you and probably respect you. Show them the same respect by keeping things between the two of you.
4. Giving the person time
If after paying you back some of the money they start to show signs of faltering (or stopping). Do not hound them to pay you back. Afford them some time to settle their financial woes and get back on track. Circumstances change very easily for all of us so an occasional late payment or less than you expected should be the price you must pay for your generosity.
5. That you might lose more than money
Depending on whom you have lent the money to; friend, family or work colleague the dynamics of a relationship can change very quickly. Suddenly you may be avoided by a family member or get the cold shoulder at work. At this time you may have to consider that you will lose a friendship, your money or both. If you decide to write the debt off the way you will treat the person in future will depend on you and how important the relationship is to you.
6. Just giving the money
Considering some of the hassle you may have to go through forget loaning money and just gift it. Just remember to give amounts of money you will not miss and try not to repeat it too many times or you will be taken for granted. You certainly are not a mobile ATM.
