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Everyday Cheapskate: Should You Lend Money to Family and Friends?

Mary Hunt on

Over the years, I've heard from dozens of readers who have lent money to friends and family members only to become outraged when the deal goes sour. The problem is they write to me after they've made the loan. By now, they've been waiting months, even years, for repayment, and they hope I can wave a magic wand to get their money back.

I tell these readers that I wish they'd written to me before they lent the money. Doing things right from the start makes all the difference in the end. Here's how:


Lend only the amount of money you can afford to give as a gift. Don't tell your potential borrower this, but know in your heart that if you hand over the money, the chances of being repaid in full are fairly slim. That's a fact of life. There's a reason this borrower is coming to you and not to a bank, conventional lender or credit card to borrow money.


This is a legally binding document that, when signed by both parties, creates a contract. A promissory note lays out the details of repayment, including total amount to be repaid, due dates and penalties if the terms and conditions are violated. Search for "free promissory note" online to find a form you can print out, and fill in the blanks.


You can require that your borrower "secure" this loan by pledging something he or she owns that has a perceived value by the borrower of at least the amount of the loan. That could be a Nintendo Switch, a watch or a TV. Whatever it is, take possession of it. Hold it until you receive your repayment.



Because you do not want to become a debt collector and deadbeat chaser, agree on a repayment plan upfront before you hand over the money. Do this while everyone is friendly and eager to make this work. Let the borrower come up with a plan to which you can agree.


Of course there is! These days, isn't there an app for just about everything?

Zirtue is a free mobile app (find it at the App Store or Google Play) and perfect for this kind of transaction. Zirtue is a relationship-based mobile lending platform that allows you to securely lend and borrow money with friends and family. It is perfect for trusted relationships -- people who want to help and not take advantage of one another.

Zirtue lets the two of you set up a formal repayment situation. The borrower pays you 5% interest on the loan and makes the automatic monthly payments you agree on from his or her bank account directly into yours. You, the lender, do not pay any fees, but the borrower must pay a small monthly fee. And isn't that right? The borrower needs to learn about how the real world operates! Borrowing money is not free. A formal lending situation between the two of you will be good for both of you.

Check out Zirtue before you make your decision on whether to lend money to this friend or relative. Knowing ahead how it works will help you make a good decision for whether or not to move forward with making that loan.


Would you like more information? Go to for links and resources for recommended products and services in this column. Mary invites questions, comments and tips at, "Ask Mary." This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of, a lifestyle blog, and the author of the book "Debt-Proof Living."

Copyright 2020 Creators Syndicate Inc.


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