Lending Money to Friends?

A friend of mine recently expressed how lending money to friends has ruined some of his friendships

His post caused me to think about my experiences lending money to friends and what it has taught me. Here's what I've learned:

Short version: Don't lend money to friends. Give money to friends. If you get anything in return, count it as a bonus.

Long version: Here's my comment from his post -

I stopped lending after one friend never paid me back. At the time I felt disrespected, but I was able to get over it once I realized that the non repayment wasn't about me. We're fb friends now but the owed money has never been addressed again. Having the friend is worth more than the $2-300 or whatever the amount was.

It is always better to give with no expectation of repayment. If people are asking you for money it could be for any number of reasons, but it is usually because no other creditor will give it to them. And this is usually because they're really bad at managing money. Don't expect people who can't mange their own money to make and stick to a plan to pay you back your money.

Additionally, don't expect people who cannot provide for themselves to get to the point where they'll be able to pay you back - esp for 4-5 digit sums (6 digits if you're ballin?). Keep in mind that if the money was to help the person get back to "normal", normal wasn't a state where they were in debt for $10,000.

One last idea - give money in exchange for service. If the person is an artist, exchange money for some of their art. If they're a chef, have them invite you over to dinner for a few weeks over the next year. The exchange needn't be equal. Such an action allows you to speak life to the person. It says "You have something valuable to offer" to someone who may believe otherwise about themselves.



What say ye? Let me know your thoughts in the comments.