A friend of mine is getting married this summer. In recent years, he has occasionally borrowed money and regularly pays it back in small amounts, but he still owes four figures. At this rate, it will take a few years before it becomes profitable.
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They will ask for cash donations to go towards a honeymoon or set up the household. They both have their own living conditions and don’t need a toaster etc. I want to contribute, of course, but would it be better to give up part of the loan or give them the money they ask for?
Confused best man
I have two pieces of advice for you: Stop lending your friend any more money, and don’t confuse the long history of these misguided loans with his wedding gift. He might be hoping you forgive him for much of the loan as a wedding gift, but that doesn’t seem fair to either of you. He borrowed the money and he should pay it back. You can give her money as a wedding gift if you want, but I consider a request for money instead of a wedding gift to be nothing more than a request. Give him a nice gift. Tea cups or a bottle of champagne to open for their first birthday with two champagne flutes.
Her wedding, however, is a good opportunity for you to sit down and organize a payment plan a few months after the wedding. He will want (or should) want to start making financial plans with his new wife, and she should definitely be aware of any unpaid debts, especially debts that involve a dear friend. You may or may not choose to give her a haircut, but in the spirit of transparency and this new payment plan, ask her to legalize the loan agreement. About two-thirds of loans to friends and family go unpaid, and verbal agreements are notoriously difficult to enforce.
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My approach might sound harsh, but there’s a reason some people borrow money from their closest friends. The banks turned them down, other friends and family saw how they mismanaged their finances, and they also said no. Plus, it’s easier to rely on friendships for loans and non-payment of loans. After all, the guarantee here is the friendship itself. If you insist that your friend pay back the money, it upsets the balance of power in the friendship. He can end it and go. But people who borrow from friends often rely on this for leverage.
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When you borrow thousands of dollars from a friend, it is a business arrangement. Unless the borrower wants to see this as a personal matter and as such relies on friendship to keep borrowing – like this man did. This only benefits one person: the borrower. I get too many letters from people who have donated money to friends and family. Their friendship and good reputation was the only credit score they needed. If your friend is man enough to ask for thousands of dollars, he should be man enough to sign a loan agreement. It would be, as I said, polite to wait until after the wedding.
If you really want to get that money back from a friend, you can’t treat it as anything other than a debtor. You have to treat them like a customer. That doesn’t mean you have to be mean or lose your temper. By not making any real effort to return the money, he has put a price on your friendship. In this case, it is a low four-digit sum. The only thing that separates you from the money he owes you is the risk of losing that friendship. So go to the wedding, don’t mention the loan, be there for your friend, and when the confetti is swept away, sit him down to clear that debt once and for all.
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