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Home > Lending money to friends--good idea or bad?

Lending money to friends--good idea or bad?

October 26th, 2006 at 04:56 am

I got hit up for another loan from a colleague today.

$200.

He's going home to India at the end of October until Thanksgiving, and I guess he needs a cash advance before his next paycheck. He even said he'll write me a check beforehand, and let me know when I can cash it.

I haven't gotten back the $300 I lent another colleague earlier this month.

Yes, it has apparently gotten around that I am the one sitting on top of wads and wads of cash.

Ironically, I earn less than ALL of them.

I'm more amused than annoyed, really. All of my colleagues are good friends, and I'm totally willing to help them out if it's in my power.

But I don't know how far I should let this go, or where I should draw the line. Could this turn into a slippery slope? Will they get used to this, and continue asking for loans, even for non-emergencies?

Once I get my desired cash flow scheme in place, I won't have as much of a buffer to hand out large loans. Yes, I'll still have loads in ING, but everything there is earmarked, and transferring money in and out constantly is not the most convenient of tasks.

I guess I'm just not sure if I'm being a doormat or a good friend.

Knowing me, though, I'll probably loan him the money. I do have enough to spare currently. And I like the 'pre-writing a check' idea. Maybe I'll institute that as a future loan policy.

Posted in A Day in the Life | 8 Comments »

8 Responses to “Lending money to friends--good idea or bad?”

  1. baselle Says:
    October 26th, 2006 at 05:55 am 1161842107
    1161842107

    I like the pre-writing a check idea, until the check bounces. Gotta say that lending money to friends, in my experience, is not good, especially if they don't pay back within a couple of weeks. You lose either the friend or the money; you're either a pushover or a pitbull.

    I'd try to limit the number of friends you loan money to at any one time...too hard to keep track of everybody and you don't want to be the bank. It also gives you an out..."gosh, I've loaned money to so-and-so1 and so-and-so2 so I'm short myself," isn't a bad little line.

  2. LuckyRobin Says:
    October 26th, 2006 at 09:29 am 1161854954
    1161854954

    I don't think its a habit you want to get into. Especially in large amounts. $5 is one thing, but a few hundred? When did it become okay for a colleague to even ask that? I never would have dreamed of it when I was in the work force. I'm with Baselle on this, you have a good chance of losing the friend or the money or possibly both.

  3. tinapbeana Says:
    October 26th, 2006 at 01:32 pm 1161869566
    1161869566

    i've loaned friends money, and am still waiting for some from june =/ i've never had it work out exceptionally well myself. even had a different friend i used to work with that would borrow 20-30 bucks quite frequently and would indeed pay it back. turns out she put me down as a contact for one of her utilities and now they keep calling me asking to have her call them back! best of all: we haven't worked together for 4 months and i have no way to contact her! argh....

    simply put, i think lending money to friends is definitely a slippery slope. start tellling them your cash in in a money market or online savings account and you don' t have quick access to it.

  4. tynana Says:
    October 26th, 2006 at 03:43 pm 1161877422
    1161877422

    Just call it what it is. Giving money to people that way when they don't pay you back you should not be mad or disappointed. Use this also when (loaning) money to family members. If you can't afford to lose it don't lend it. I have found that if someone needs to borrow a large amount of money then they really don't have it to pay back.

    Good luck

  5. Thrifty Ray Says:
    October 26th, 2006 at 04:27 pm 1161880058
    1161880058

    Ive loaned what I considered CLOSE FRIENDS money and either had to repeatedly ask for it back...way after the promised payback date...or never saw the money again.

    Loaning money to co-workers would be even more of a gamble and then, if it goes south, things get uncomfortable at work. Perhaps your co-worker could ask for a pay-advance from your employer.

    DH has had the same luck with his co-workers...so we just dont loan anymore.

  6. paigu Says:
    October 26th, 2006 at 04:35 pm 1161880533
    1161880533

    Interesting. It used to be my friends would hit each other up for cash only when we're out and someone buys a round of drinks or movie tix for all. But I've noticed some friends are slow to pull out the wallet....there's the expectation that we'll all eventually pay each other back in some form of currency, but no definite time frame to do so.

    Lending $$ to co-workers is not in my book. When someone asks, I joke and tell him/her we get paid by the same boss, go ask them for the cash advance on the pay check.

  7. fairy74 Says:
    October 26th, 2006 at 07:57 pm 1161892627
    1161892627

    I use the wince factor, if the idea of not getting paid back makes you do the inward groan, then don't lend it because there is a high likelihood you won't recoup. I agree with other posters, the post-dated check is fairly worthless, and may end up costing you bank fees if it bounces.

  8. fern Says:
    October 26th, 2006 at 08:21 pm 1161894086
    1161894086

    "JUST SAY NO."

    If they're truly friends, they'll accept your answer and that's the end of it.

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