Saying no when people want to borrow money
Posted
May 08 2008, 08:21 PM
by
Karen Datko
This post comes from Xin Lu at partner blog Wise Bread.
I think most of us have been asked to lend money to someone we know. No matter how close you are with the potential borrower, there are certain situations when you just have to say no.
Here are some of the times I think you should absolutely keep your money for the sake of your relationship with the other person and the well-being of both parties.
The money is enabling an addiction. If you know full well that someone has a drug habit or gambling problem, you should not give that person money. The best thing you can do is to get them real help like rehab; otherwise the money will be spent on the habit. If you become an enabler by giving them money, they may hurt themselves even further.
Your boss is asking you for money. I wrote about this in an article about crazy bosses. A manager should not use his or her authority to secure a loan. It is highly unethical, and you should not be afraid to report such behavior to the higher-ups or even the authorities. If a manager targets you in a threatening manner because you refused to lend money, that should be reported.
Good money is going toward irreconcilably bad debt. I read a story about a very responsible man whose extremely irresponsible in-laws took out multiple cash loans on their mortgage and ended up near foreclosure. They asked their son-in-law for help to cover their mortgage, which was now twice their income. When you know that the borrower cannot manage the money you give them, you should not let them squander what you earned and saved. Teach them to manage money responsibly; otherwise, continually paying off a chronic debtor's debt is no different from enabling a drug habit.
The asker is a repeat borrower or leech. In some families there's a person who has a track record of hitting up everyone for cash. If that person is able to work and generate income and chooses not to, you should refuse to be taken advantage of. Once again, what would really help these people is to teach them to become financially savvy, and that can be done with coaching and perhaps employment opportunities.
In all of these cases, you should think of alternatives to money to help those you care about. Ask them what the situation is, and look for ways to improve their lives without giving away a bundle of cash. In most of the stories I have heard, relationships actually get worse if money exchanges hands, because more often than not the borrower does not pay the lender back.
If someone is worth helping, you should dig deep to find the root of the problem and help eliminate it. If someone is just an opportunistic jerk, perhaps it is best to sever that relationship and improve your life.
Either way, you must be strong and say no when you're asked for money, even if that person promises to pay you back.
Other articles of interest at Wise Bread:
"How big of a house do you really need?"
"Should you stockpile the forever stamp?"
"The ethics of hoarding"
