Lend Money Carefully
In these difficult times, it has become a common occurrence to have relatives come to you asking for financial assistance. There is no shortage of people who are unemployed and looking for financial assistance, and more often than not, people will oblige by handing over a small amount of money as a personal loan to tide them through the difficult times. While the amount loaned may be as small as $100, it can still be a strain on your finances. Getting the money back will surely send you to a pharmacist, seeking help for a headache you could have avoided.
Personal Loans to Relatives?
What usually starts as a small personal loan to a relative could easily turn bad in these difficult times. Relatives seem to feel that a personal loan from a relative is a gift that does not have to be paid back. This may be fine, as long as you are in a good financial position. However, things may be different when you need the money back, and excuses start coming out faster than you can drop your hat. Personal loans between relatives have a tendency of not being repaid, leading to hard feelings and strained relationships.
How to Avoid the Headaches
These headaches can be avoided if you apply some thought to what you may do or say, should a relative ask you for money. One solution is to simply say the dreaded word NO, and be done with it. This will strain your relationships, but without the bonus of a headache. Of course, if you feel that your relative really needs the money, make sure that you have some proof in your hands that the money was indeed a loan. This will give you an opportunity to get your money back, should you ever end up in court over this. Most people feel that documentation isn’t necessary when lending money to a relative, but things would be a lot easier if you documented every financial transaction you conducted, especially if money changes hands.
Don’t Loan if You Can’t Afford It!
A number of people have gone out of their way to help relatives by giving them a personal loan. Older parents who are emotionally attached to their children often end up lending money to their children, even though they cannot afford it. This also applies to any other relatives besides parents and children. Remember, your relative is choosing you because he thinks you have the money and not the other way around. They are the ones who are giving you the headache that you really do not need. Under the circumstances you are best advised to avoid these situations with a firm no instead of a yes. Finally if you do feel that your relative is having extreme difficulties and needs the money, you have every right to expect that the money is returned to you within a specified time. You also have the right to be compensated by charging an interest rate for the help you are extending.