Tuesday, December 19, 2006

Loaning Money to Friends

Well yesterday I broke one of my primary rules around money. I gave a loan of money to a friend.

To date I never given out a loan to a friend. In my mind it is just asking for something to go wrong and money is not worth losing a friend over. In fact, I know a friend in Alberta who is very well off who has helped a number of friends over the years. Almost every loan has ended badly.

So why did I break my rule? Well in this case the money is already partly his. You see I have a fund setup which a group of friends pay in to each month. That way when we see each other we just deduct the expenses for dinner out from the fund. The fund is a bit over sized right now, so I talked to the other members a while back about giving the gentlemen in question a short loan to buy an engagement ring. They all agreed.

So I've given out a loan, but in reality I only put up about $500 of my own money. Payment terms are set and we get to know about the engagement about a week ahead of the world. I'll let you know how it turns out.


MillionDollarJourney.com said...

Perhaps you can try something like paltrust.com. It will setup regular payments from your friend so you don't have to bum him for payments.


Canadian Dream said...


Thanks for the tip. That looks like a good site.


Anonymous said...

"The borrower is slave to the lender".

When you lend money to a friend or relative, your relationship with them changes from friends or relatives to a borrower-servant relationship.

Better to give what you can afford to give and then ask the person that you gave the money to to pass it on.

This way you are viewed as generous. It will return to you in other ways.

Canadian Dream said...


Good point, but in this case I saw the gentlemen in question over the holidays I got three post dated cheques to cover the balance. He wants to have this cleared up ASAP, so I'm going to let him.