How to lend money to friends and family

Rule number 1. Say "yes" if you are really ready

PhD and author of the blog TheFriendshipBlog.com Irene Levine (Irene S. Levine) advises the first thing to suppress a feeling of guilt, which occurs when the asking is in despair, or when you think of yourself that would be a bad person if you do not give money to debt.

If you lend money without being completely sure of what you want to do this, you run the risk of feeling resentful, and your relationship with a friend deteriorate before he will return to you the debt and will be able thank.

Refusing to give money in the debt does not turn you into an egoist and a bad friend. On the contrary, so you can save a good relationship.

Carefully refuse: "I would be very happy to help, but now I have no money." If you feel you have to explain its refusal to add a reason: you have any unexpected expenses, you save money on something essential (children's education, an apartment, a car).

Think about how you can still help a friend in this situation. Perhaps you have an idea where you can borrow or earn the required amount. true friend

thank you for any help. But if he offended you, how much more good that you did not borrow money.

Rule number 2. Give as many as are willing to lose

Your friend or family member can be any number of trusted, financially stable and reliable man, but no one is immune to the force majeure.

Imagine how it will increase tension between you and your best friend or relative if you are urgent will need money to lend, and it is not caused by him, will not be able to return them on time.

Ellis Byron (Byron Ellis), financial planner, recommends only borrow the amount money which you are ready to say goodbye definitively, and it will not affect your personal financial goals and saving.

Rule number 3. Designate strict repayment terms

Often we say: "come back when you can." After all, strange to expect a friend or family member to return the debt on time. But imagine the situation: you have given hundreds of thousands of his sister to buy an apartment. She promised to return them as soon as gets on his feet. But after a few years, but the money is not visible. They already have depreciated inflation.

Byron Ellis advises discuss the terms "on the bank": how long, with what interest and what parts you will return the debt. So you do not find yourself in limbo, not knowing when you will return the money, and whether it will return. A borrower will realize that he is obliged to return the money within the prescribed period, and not allow himself reckless spending.

Rule number 4. Always sign a written agreement

Priorities change, the memories are erased, and here is your debtor says that you agreed completely different... Another advantage written agreement: by signing it, the person holding the money, realize the seriousness of this step, and that he should return to duty specified time.

If the borrower has missed a payment, there is always a paper to which you can apply to the dispute. Friendship is one thing, but the commitments subscribed, it is necessary to perform.

Byron Ellis, a financial planner

For smaller amounts, you can make an agreement on their own, but when it comes to large loans, it is better to involve a lawyer.

Priyanka Prakash (Priyanka Prakash), a former business lawyer and now a finance specialist in Fit Small BusinessHe says that the contract must specify the date of receipt, and the loan amount, repayment term in full, schedule payments if the debt is paid by installments, the agreed interest for late payment, full contact details and the lender borrower. Must be the signature of both parties.

Rule number 5. Do not allow the borrower to miss the deadline for payment

Big mistake - forgiving late fees and not even try to find out, which is why it delays the borrower. If the payment date is advisory rather than mandatory, your friend will keep it safely ignored.

Again comes to the rescue agreement. Prescribe a penalty for late payment. Of course, your friend, signing a contract, must understand what he is talking. And it is hoped that this tactic will save you from having to send reminders about payments and you will not regret that one day decided to play banker.

Ellis advises to establish a five-day period during which the borrower can make the payment without penalty: still the situation are different. However, if a longer delay, but others ignore calls and reminders, it makes sense to think about the court appeal.

If you lend money for a long time and agreed on a one-time refund, a month before the expiry remind the borrower of the agreement.

It may seem that these rules are too strict when it comes to the help of friends and relatives. In fact, just so you can keep a good attitude, is not marred by innuendo and grievances related to finances.