One cheapster expresses his miserly woes
Being a cheap man will inevitably lead to a surplus of cash. When you have a surplus of cash, friends and family will inevitably ask for a loan. What are you supposed to do if they ask to borrow money? Over the years, I’ve lent out thousands of dollars to friends and family members and have learned a couple of lessons in the process.
Not lending people money makes you feel like an asshole, and lending it makes you feel anxious. It’s a totally unpleasant experience. You lose your right to be an asshole as soon as you hand them the money. Why? Because once the money is lent, you suddenly have to start being nice to the person, when in reality you hate the person for asking for money in the first place. At one point you may need to go through the uncomfortable experience of having to beg for your money back. So here I am being a nice guy by lending money and now I have to get down on my knees and beg for it back?
As unpleasant an experience it is to lend money out to friends and family, sometimes it has to be done. The general rule is to never do it in the first place. But if you have to lend out money, here are some lessons I’ve learned over the years:
Don’t lend out more money than you are willing to lose.
I think of a loan to friends and family as more of a grant than a loan. If they end up paying you back, then it’s a bonus. I sometimes wish that they didn’t pay me back so I won’t need to lend them money again in the future. People who ask to borrow money will always ask for more in the future.
Past payment does not mean future payment.
Just because they paid you back the first time doesn’t mean they will pay you back the next time. Since they paid you back the first time, they will also usually for more money the second time around. Always pretend they’re borrowing the money for the first time. And make it very clear you won’t lend them money ever again.
Don’t fall for the trick of getting paid interest.
The borrower will say they will pay you interest, but that’s always a trick that will backfire. If they start paying interest they will feel like they are doing you a favor. You don’t want them to think that because if they start feeling screwed in the process, then they are more likely to screw you over by not paying you back. The goal should be to get the money back as soon as possible, not to make a profit on your friends.
Try to get some collateral.
One of major drawback of lending money out is the fact that you lose your right to be an asshole. But if you have collateral, you could still be an asshole and you don’t need to worry about not being paid back because you have their laptop.
Be the first to be paid back, not the last.
Try to get your money back as soon as possible. Set a clear date when you want your money back. Don’t allow your debt to be viewed as something they could pay back as soon as they pay back all their credit cards, car payments, and groceries.
Give the money, don’t lend the money.
If you just give them the money you don’t have to deal with the stress of trying to get the money back. You can also continue to be an asshole to your friend and they will most likely not ask to borrow money again. You also don’t need to give as much money as you will lend out. Grants are always smaller than loans.
Don’t take it personally if you’re not paid back.
At most it’s a couple thousand bucks. That’s just the cost of having friends and family who are fuckups, or are unlucky. For the most part their intentions are good, they’re just bad with money.
