Sunday, November 11, 2012

Lending money to friends

Recently, one of my army acquaintances texted me to borrow money from me. He is one of my reservist army bunkmates and I got to know him only a few years back (both of us were from different units during active times). When I received his message for help, I was a bit apprehensive to lend him the money. This is because my father was hospitalized recently and my wife is a full time homemaker. And I have a baby daughter. So I thought to myself if I had any spare cash, my priority would go to my immediate family first. After some thinking, I texted him back and explained my financial situation to him. I also suggested to lend him $50 instead. He understood my plight and politely turned down my suggestion.

I suppose most of us would face financial difficulties at certain points in our lives. Sometimes we really need a helping hand from close friends to tide us over obstacles. I believe in this case, my friend genuinely needed my help but unfortunately, I could not support his request due to my family circumstances. I wish him all the best and hope things would turn out well for him. But somehow I think he could have been more sincere in his request. Perhaps he should have dropped me a call to explain that he is facing severe financial hardship instead of sending me a text. Perhaps he should not have requested me to bank transfer him the money in his initial message, before I even agreed to lend him the money. No friends would like to be treated as an ATM machine!

Sometimes ago, I read an article from The Straits Times on the issue of lending money to friends or relatives. I shared the author's views that if you decided to lend out the money, you must be prepared to write it off. This is because the chances of getting back the money is slim and if you wanted to claim back your money, it could potentially damage the relationship. I am thankfully that my close friends and relatives had not approached to borrow money from me so far. I am not particularly close to this friend of mine and the other time I was approached for money was 4 years ago by one of my my ex-company internship students.With this outlook in mind, I had laid down three principles before lending out my monies:

1) my relationship with the borrowers
2) purpose of borrowing money
3) character of the person

What is your views on lending money to friends or relatives? Perhaps you can share with me your experience, good or bad. I am interested to know.

Magically yours

Reactions:

7 comments:

  1. Sorry, but friendship and money just do not mix....

    ReplyDelete
  2. ya, the saying is right. If you decided to lend out the money, you must be prepared to write it off.

    For my case, I lend out 1 -2 k before (mentally write it off) with many promise
    of returnng it sometime down the road. Ha ha, never see $ again. Am still a
    happy man though as I was mentally prepared to write it off.

    So, I guess u r not wrong to turn down the request politely :)

    ReplyDelete
  3. This is a tough decision. Lending to a friend some cash is like giving it away without expecting him to return it. I just create alibis so that I can get away with it.

    ReplyDelete
  4. I totally agree with the statement "if you decided to lend out the money, you must be prepared to write it off". I lent out money to friends and relatives in a few ocassions. Sometimes they paid back, sometimes they don't.

    Knowing the person's character and the purpose of borrowing money are important factors for my decision to lend.

    ReplyDelete
  5. If you're lending money, you should think of it as money you're giving away. Else, you will just feel bad if the person borrowing the money doesn't pay on time or at all. That's what ruins relationships. Just my two cents.

    Sabrina
    Henit

    ReplyDelete
  6. The written piece is truly fruitful for me personally; continue posting these types of articles.
    franking machine

    ReplyDelete