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Money Lending Situation
Cristo
Registered User regular
Registered User regular
Ok, so my family was approached by an old acquaintancetoday asking to borrow roughly $1000 for his rent.
Now the background is, this guy used to be a seriously high rolling businessman who was very wealthy but then hit a bump in the road and more or less lost most of it, so obviously he must be in shit if he's been able to sacrifice enough of his dignity to be doing this. For the last few years or so he's been doing OK and trying to get back on his feet, but with the economic crisis as it is he's taken a huge fall and is more or less fucked at the moment. He says by the end of next month he'll be out on the street.
He says he has some really good business deals to make soonish but he might be out on the street before that.
My family is pretty well off, white upper-middle class and we could easily lend him the $1000 or so dollars but like EVERYONE in the entire WORLD we've been hit by the economic crisis as well and our stocks are bleeding money etc. but it's nothing critical. But we're still starting to save up and look after our money better just in case it should get worse, wherein lies the rub.
Should we lend this guy who we've known for years (but haven't always been on the best terms with) our hard-earned cash, do the right thing and help him out? Possibly ending up with his deals falling through and him never paying us back, resulting in his avoiding us and us losing out on a substantial amount of money? Of course, for all I know he may end up paying us back and we can feel good about having helped him out.
We're quite hesitant since we have been in this situation before where we've lent friends (from way back beofre I was born, I'm 18) around the same amount of money but they have never paid us back, even to this day when we still them a couple of times a year.
It's really hard, because I really want to help the guy out, but we aren't made of money. ARGH.
Also, the actual amount is £550 since we're in the UK. I think that more or less adds up to roughly $1000.
Thanks guys, it's somewhat of a moral dilema.
Now the background is, this guy used to be a seriously high rolling businessman who was very wealthy but then hit a bump in the road and more or less lost most of it, so obviously he must be in shit if he's been able to sacrifice enough of his dignity to be doing this. For the last few years or so he's been doing OK and trying to get back on his feet, but with the economic crisis as it is he's taken a huge fall and is more or less fucked at the moment. He says by the end of next month he'll be out on the street.
He says he has some really good business deals to make soonish but he might be out on the street before that.
My family is pretty well off, white upper-middle class and we could easily lend him the $1000 or so dollars but like EVERYONE in the entire WORLD we've been hit by the economic crisis as well and our stocks are bleeding money etc. but it's nothing critical. But we're still starting to save up and look after our money better just in case it should get worse, wherein lies the rub.
Should we lend this guy who we've known for years (but haven't always been on the best terms with) our hard-earned cash, do the right thing and help him out? Possibly ending up with his deals falling through and him never paying us back, resulting in his avoiding us and us losing out on a substantial amount of money? Of course, for all I know he may end up paying us back and we can feel good about having helped him out.
We're quite hesitant since we have been in this situation before where we've lent friends (from way back beofre I was born, I'm 18) around the same amount of money but they have never paid us back, even to this day when we still them a couple of times a year.
It's really hard, because I really want to help the guy out, but we aren't made of money. ARGH.
Also, the actual amount is £550 since we're in the UK. I think that more or less adds up to roughly $1000.
Thanks guys, it's somewhat of a moral dilema.
Cristo on
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I would definately go against lending this man money. Banks exist for a reason and while it may suck for him - its not your responsibility.
If you do decide to go the optimistic route and lend him it, get some collateral if you can. Any valuable rings/jewelry he has, etc...
If your family trusts him, then offer the money and ask for him to pay it back before the end of the year, or early next year. If your family doesn't really trust him, ask for £600 back next year, with the stipulation that this is a one-time thing because you're not exactly rolling in dough either. Or strongly encourage him to go to the bank.
If you don't trust him, then he's done something in the past to cause that lack of trust. Don't lend money to people you don't trust. Don't feel that you're being miserly or scrooge-ish; if he's really hard up, but has the ability to run businesses, he'll land on his feet regardless of the £550.
My personal view on lending to friends and acquaintances is that I don't expect to see the money again. So if I do lend money, that's my mentality coming into the situation. I'm not a loan shark or a bank so I'm not going to start adding compound interest and chasing bad debtors. If they do pay me back, great, if not I'm not going to ruin a friendship over it. If the money is that important to me, I wouldn't lend it in the first place.
So my approach would be: How important is £550 to me right now and how important is this guy to me right now? If he's a close enough friend that he's more important than £550 then he gets the money, sure pay me back when you can, whatever, don't worry about it. If he isn't close enough that he isn't more important than the £550 then sorry dude, I just don't have that kind of money spare right now.
But this is really something that you and your family have to decide for themselves. Can you afford to lend that money out temporarily? Can you afford to loose that money for good? If you can, are you comfortable lending it out to someone else? etc.
2008, 2012, 2014 D&D "Rare With No Sauce" League Fantasy Football Champion!
Oh and sorry for the currency thing, I'm still stuck in the world of yester-month when the £ was worth double the $.
:P
That line sounds like total shit.
If you do end up loaning for whatever reason, take something that's worth roughly the same value and keep it until it's repayed. (TV/iPods/Laptop/Guitars) It's amazing how much quicker people want to repay things when you have their stuff in your room.
It sounds like the guy is in a shitty situation and he might really just need some help to get back on his feet, but the line he fed you about a business deal is a total crock. If you're going to "lend" him the money then make sure he knows it's a one time thing.
As a general rule unless you 100% trust someone (which you obviously don't) it's just not worth the personal risk. Really the credit union is his best bet, this is why the exist after all.
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.
~ William Shakespeare, "Hamlet", Act 1 scene 3
Friends wise, the above 'don't give it out if you can't let it go' advice is solid. See also, trouble with reoccuring expenses means you need to downgrade your shit, pronto. Buddy is probably finding that his means aren't sufficient for his lifestyle, in which case the cure is to get a cheaper lifestyle. The economy isn't turning around any time soon, so be wary about getting involved with dudes inability to change/manage his shit. On the same hand, actively helping someone towards what they need (a few less cars or a smaller property) provides the cure rather than the temporary relief of certain symptoms.
A week or two later he came back and asked for another 100. I had thousands in student loan money at the time, so I easily could have provided it to him. I refused, saying that it was a poor idea to lend him more as he was already in debt to me.
In a few months he was working steadily and was able to pay off all his debts, including mine.
We both knew going into it that debts can ruin friendships. He was actually extremely reluctant to even ask me. But, when it came down to it, I knew he was good for it. We work on the same kind of honour system, and I know he'd never try to weasel his way out because it would mean losing face to me.
So, what I'm trying to say is that debts between friends can work. The amounts are different, but I would have lent him 1000 bucks at the time had he required it. I suppose it depends on the friend, and the relationship you have, and really how well you can trust that person. It can lead to bad stuff, but it doesn't have to.