A loan repaid.

thI got a big surprise in the mail the other day: a check for $850. That’s the amount of the loan I made to a friend 15 months ago, plus the Western Union fee to get it to her.

In fact, it’s $6 more than I sent. I guess I should consider that interest, or maybe bus fare and aspirin.


Frankly, I was surprised that “Monica,” whom I wrote about before, was able to send it to me in one fell swoop. Not much has changed in her life since she called in a panic, one step ahead of the repo man. I assumed she’d send $50 at a time, the way she repaid a previous loan. But as the months wore on, I’d started to wonder.

Naturally, I was delighted to get the money.  It went straight back into the emergency fund. I’m also a little nervous, wondering if she overextended in some other way to make this repayment.

Breathing normally

When I think about her future, my head hurts. Monica and her husband still have three kids at home. She doesn’t have a pension or an individual retirement account. Heck, she doesn’t even have a replacement vehicle fund even though her van has a couple of hundred thousand miles on it.

I’ve lent money to her and others because I felt that I should. After all, I have that emergency fund, and a 401(k) from my newspapering days, and a Roth IRA that I’ve been able to fund fully for the past few years.

But I have those things because I’m careful with my money. I save where I can so I can spend where I want — and that’s on security as well as trips to Alaska.

And I’ve also got:

  • No real job security. (Of course, I don’t know anyone who is convinced of the stability of his job. But freelancing = risk.)
  • The need to buy private health insurance, which currently costs about $5,000 per year. (No machine runs for 54 years without some maintenance issues. My recent surprise surgery certainly proved that.)
  • Some $2,100 in loans still outstanding ($350 of which I’ve pretty much written off because the couple split up and both parties work low-paying jobs).

Thus I need to put on my own oxygen mask first, and pray that everyone else I know can secure his own strap and breathe normally.


A conversation I don’t want to have

Right now I’m also praying that I will keep the bank closed if the fertilizer hits the ventilator once more. The no-lend reasons listed above are valid. I know that. But guilt has been a strong force in my life thus far and old patterns are the devil to break.

Over and over in my mind I rehearse a technique shared with me by a personal finance expert. When someone asks for a loan that you cannot give, you should offer something else – help with budgeting, say, or a list of agencies that might help in the short term.

If that person says, “But I need money and I need it now,” your response must be a gentle but firm, “These are your options. If you choose anything but these options, our conversation has to be over.”

Here’s hoping this particular conversation doesn’t start up again. Because I know what the answer must be, and it’s an answer I truly don’t want to give.

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  1. What’s the adage… Neither a borrower or a lender be? That’s what I’m striving for on both sides.

    I’m very happy (and amazed) you were repaid. Any coincidence it was in tax refund season…?

    • Donna Freedman

      @DogsOrDollars: Good question. Last fall she said she had a plan to pay me in full by the end of the year. Almost three months later it happened, so maybe it did have to do with a tax refund vs. a previous plan.
      Whatever. I’m going to broach the subject as in, “Now that you know you can save, what about starting an online bank account and automating monthly savings? Call it the ‘This Car Has To Die Sometime’ fund?”

  2. It’s tough when you want to help someone financially but you know, deep down, that you shouldn’t. I try to help in any way I can that does not involve parting with money because, based on my own experiences, lending money and not getting it back only makes a bad situation worse. Relationships end or they are never the same. I’ve just allowed one of my kids to move back home because they are in financial trouble but will I give them money to bail out? Heck no! There is no money to give, the kid must learn a lesson sooner I hope rather than later. I agree that it’s prudent to offer help of any kind but the monetary kind because we cannot inflict the financial choices that we’ve made on others. Glad you got your money back!

    • Donna Freedman

      @Quest: As noted in the previous two articles, it wasn’t just that I wanted my money back (although I did) — it was that I was terrified for their unsustainable, paycheck-to-paycheck lifestyle. Bouncing checks and skipping car and house payments is no way to live. The first loan, a few years ago, was so that the bank didn’t foreclose on their home.
      Hoping, hoping, hoping that this is the start of changes in their lives.

  3. You see helping others as a fault, I see you as a gift. And no, you don’t have to give someone a loan to help them. Teaching them to save money is the best gift that you can give. And you have given that gift to thousands and thousands of people.

  4. ImJuniperNow

    Funny you should write this now, as I’m staring down at my $500 million Mega Millions ticket which I have no reason to believe will not be the winner tomorrow night…..

    Seriously, I’ve been thinking a lot lately about all the spendthrifts I’m surrounded by and what, if any, moral or ethical obligation I have to bail them out. These are people for whom a big screen TV is more important than paying real estate taxes. A couple with two children whose husband has been out of work for a very long time and whose wife decided at the moment he lost his job she should return to college and not work (along with refusing to touch any of “her” savings). A single Mom who blew a nominal inheritance and now wonders how she can pay her kids’ cellphone/internet/car bills.

    My mother bankrupted herself morally and financially to support a son who was a deadbeat father/drug addict/alcoholic. And no good came of it.

    I give freely to the local foodbank, pet shelter and other charities. Am I wrong to feel no obligation to help out people I actually know? Or have I answered my own question?

    • Donna Freedman

      @ImJuniperNow: I think you did answer your own question. Knowing what you know about the people around you, it might very well be the equivalent of tearing up the cash and tossing it into the wind.
      I, too, donate to the food bank and some other charitable concerns. But I’m closing down the Bank of Donna. No more personal loans.
      Thanks for reading, and for leaving a comment.

  5. What about offering them a finance book – I’m thinking of the time I gave my brother (going thru a messy divorce) the book “Total Money Makeover” by Dave Ramsey. He is turning his life around because of it and it’s fun to see him in control of his money and financial future. I’m thinking of getting him tickets to the latest Dave Ramsey show as a gift – he would be thrilled.

    It’s tricky though – but I approached my brother by saying “We just went thru some financial hardship and this book really inspired us. Maybe you would enjoy it too” He appreciated that I wasn’t trying to lecture him or judge him and that I really had been in a similar financial hole.

    • Donna Freedman

      @Den: I did send them a PF book last year, after making the second loan. Not sure whether it’s had any impact.

  6. Bareheadedwoman

    I grew up in a “all money talk is rude” society and somehow I missed the memo but then again, my three favorite subjects are religion, sex and politics. I’m one of the blunt, say it nice but mean what you say, people that usually drive other people nuts by my oblivion to social memes. I’ve always been up front and honest about whatever my situation is and I’ve never had any personal issues with saying “no, sorry, I don’t have it, that’s too rich for my blood”–even and especially if it’s because of a recent indiscretion: “sorry, I screwed up my taxes this year and am barebones myself.”

    I can offer all sorts of sympathy and empathy for your resource plight. If I can help, I do (which may include alternates i.e. I’ll babysit for free while you pick up some OT); if I can’t help, I don’t and say why “would if I could but…” and most people are more uncomfortable with my comfortableness in a simple statement of why…rather than the “no” itself. I’ve had more fights with my partner over wanting to disclose “why not” than about whether we should. He is of the camp that having to be careful is something to hide at all costs and his self worth is tied up with his bankroll. It’s just something about society I plain ol’ don’t understand.

    But on the other hand, my being open and honest about where I’m coming from has led me to some very interesting conversations and friendships with people who were happy to run into someone that COULD have a frank discussions about something so personal without getting all twisted in a knot.

  7. So glad you were repaid. I tend to be the family ATM but I fall into a bit different situation than most. I care for my grandmother and terminally ill mother. At 31 it’s a big responsibility being the breadwinner (for the most part)… still, I would rather do this than be without family or spend on the newest gadget while my mom doesn’t get the best care possible. Can I afford it? It depends. I pay all my bills on time and I am almost done with my student loans but I know I would have been debt free a long time ago had I not assumed this role. But, these are people who are not spending on frivolous things and even if I buy the groceries, it’s priceless having someone cook so I have food waiting after a long day of work.

  8. I have found it true from personal experience, we feel differently about friends and relatives we loan money too. We can’t help but judge them on their choices, since we have skin in “their” game.

    I have learned to just say “No I can’t” and stop there. If I think they are open to learning more about financial management, I’m willing to help with information, but no cash-I look at it as poison to the relationship…

    • Donna Freedman

      @Dr. Dean: Offer them free subscriptions to your blog! 😉

  9. Glad you were repaid. We have faced a similar situation with a relative asking us for money. Her car had died, and she wanted to us to give her $1100 to buy another car. She was practically demanding we do it… and we really just do not have that kind of money to give up at the moment…. especially when she hadn’t done her tax return, and she still owed money on the car that had died. My husband helped her do her tax return and she got nearly $4,000 back in about two weeks. We’ve tried offering her help (in terms of teaching her about money, etc), but she refuses to listen. It breaks my heart to see a family member choose to ignore things that would make her life so much easier. I guess you can lead a horse to water, but you can’t make ’em drink.

  10. Phew! I count my blessings. We have umm..needy relatives, but they always ask their parents for money. The only relative I give money to (and she does not ask for it) is my cousin who has an autistic son. I’m happy to give her the money to help pay for the programs he needs.

  11. I think you’re very generous for helping your friends and relatives the way you have; I’m sure they’re grateful for it. And I’m glad to hear that your friend finally paid you back, because that must show that she really is grateful and is taking responsibility for the loan. It is definitely hard to say no, especially when the person asking is close to you, but there’s only so much you can do.
    I’ve never been asked for a loan from anyone since I don’t earn a lot of money, but I often get stopped on the street by panhandlers. I wish that I could help all of them, but I don’t even carry cash with me most of the time. So I try to help in other ways. I buy Streetwise papers (the homeless people sell them and can earn a small living from them). Sometimes I give the people on the street sandwiches (instead of money), and usually they’ll say thank you and take them. But sometimes they’ll get mad at me and refuse the food; I’m not sure why.

  12. teinegurl

    Glad for the update!

  13. I’m glad to hear that it worked out….having been on both sides of the equation at different points in my life, I really hope that your friend can do something equally generous when you or another need a hand.

  14. Ro in San Diego

    I am so happy for you Donna. You are one of the most generous frugalistas I’ve met, if I don’t count my local group of frugalistas in our local coupon clipping club. We band together to help each other stick to our budgets and that’s rare these days.

    I had one bad experience with lending money the 8th week of work as a young woman. I remember with clarity how it stung when the gal I lended $78 to vanished from my life, conveniently unavailable to repay the loan (phone disconnected, left town). As a result I rarely lend money, and when I do there is a signed, witnessed promissory note! Family members included!

    As recently as yesterday, someone I barely know asked for a handout. Through the intermediary I said no and gave a mostly true excuse. The truth is I didn’t want to help them.

    I see no reason to support others who make poor financial decisions unless I want to! And I frequently want to! But sometimes, if the requester is a “taker”, or someone I barely know I will decline, after giving helpful advice that might ameliorate their immediate bad luck. I see a handout to someone who I don’t want to help as punishment for my good decisions, and I just don’t do it.

  15. Groundy

    I watch my husband’s side of the family squander money all the time. His one brother came and ask for a substantial loan, just for a vacation. We can’t afford many vacations for ourselves. Take one maybe once in 7-10 years. Knew we would never see the money either, so we had to turn it down. Like you said one time-there is a difference between need and want.

  16. Andrew Herrera

    I have been receiving your emails for a while and just catch glimpses of what you write, this article drew my attention and I appreciate all of your ideas and perspective.

    The idea of lending money is interesting, as a very young non-profit professional, I have little money to lend. Though I will never forget a nice man from Argentina giving me a ride and $5 when I needed it most. This man and others helped me when they had little to offer, but at the time I had even less. The generosity of people was a beautiful glimpse into the potential we all have to help those in need. For the generosity of strangers I received when I was in need, I find it increasingly difficult to say no to people, even strangers. While providing handouts is the opposite of sustainable, sometimes people just need some water, a ride, or to eat and I hope that for some, they too pass it on.

    How do you balance the need to educate people on financial responsibility without offending them or being condescending? You offer some great suggestions but do you think that education or loans with caveats are necessary all of the time? Do you ever give money or other support (food, a ride, a jump) to strangers and is direct support always better than a cash handout?

    • Donna Freedman

      @Andrew Herrera: I give money to strangers on just about a daily basis, with zero suggestion as to how they should spend it. I buy snacks or meals for people with “homeless, hungry” signs at least once a week.
      As for “caveats,” this was the first time I’ve ever given someone a PF book. The reason I gave it is that the first time she borrowed from me she was on the verge of losing her home. (My loan forestalled foreclosure.) At that time I suggested PF books. I don’t know if she read any.
      The second loan came when she was about to lose her vehicle (and, thus, her job). I decided that while telling her that I would loan no more, I would also provide links to credit counseling/budgeting experts and also send a book. Whether she’s used them, I don’t know.
      The linked articles provide a much more thorough explanation of why I did what I did — and what they did that made me worry so much.
      Thanks for reading, and for leaving a comment.

  17. jestjack

    Man what a timely article! I am feeling the pressure from Family to “lend” about $4K for real estate taxes that are past due. I am already owed just shy of $1K from the same family members. As you point out it is very difficult to say no. And what makes it more difficult is when the folks in distress ….just won’t listen…They don’t want my “help” OR “advice” just the dough. Like you, I’m torn between helping someone and “lending” money I may never see again. It is troubling…..

  18. Now A Country Mouse

    The good news is once you start saying “no” to requests for loans, you will no longer get asked!

    Usually the folks in my life who need financial assistance fall into the same script, but a different circumstance every other year or so. And when I have had to reply that I am “just not in a position to lend”, they always end up with a plan B that saves the day. So basically even if I did lend them money it would be like putting a band-aid on a 12 inch gash…wouldn’t really help in the long run.

  19. With the exception of a single loan to a son to help him when he started a job after grad school and was totally broke, we give instead of lend. The biggest gift was to the family of a cousin who was terminally ill with brain cancer and her husband was heroically trying to raise their kids, take care of her and earn a living at a job that provided health insurance. That gift has been one of the most rewarding ways we have ever spent money. Even if you make a loan I think it is important to be clear in your own mind and heart that it may well be a gift. If you can’t afford that gift then you can’t afford a loan.

    • Donna Freedman

      @Juhli: Both the loans to my friend were made with the knowledge that it might not come back. I knew their finances were wrecked. In fact, any money I lend is, in my own mind, given with the attitude that I might never see it again.
      But I’ve decided I can no longer do this, for the reasons I noted in the linked articles. Short form: I’m in my mid-50s, single, a freelancer, and paying for my own health insurance and retirement. If things went south for me, I don’t want to be the one asking for loans — I want to be living on my own devices because I was careful with my money.
      Can’t do that if I keep sending money out. More to the point with this particular friend, I can’t keep enabling her to make bad decisions. I told her that (in very careful terms) and that there would be no more loans. Here’s hoping that they finally get it together, however late in the game they begin.
      Also on the subject of giving: For a couple of years I’ve been regularly giving money and drugstore gift cards to my elderly aunt; I send money to my daughter and my niece, both of whom are in tight financial circumstances; I give money to people on the street who ask; I donate to a local food bank, two local scholarship funds and a handful of other nonprofits. There’s no question that I will continue to give. It’s just that I don’t want to become someone’s fallback position, i.e., I don’t want that friend to think, “Well, I know I should be more careful but we’ve managed OK so far — nobody’s actually pressed charges for those bounced checks — and if the repo guy or the mortgage lender gets too cranky we’ll just ask Donna for enough to get them off our backs.”
      Thanks for reading, and for leaving a comment.

  20. 998Fbird

    Donna, great news that the money came back!
    I support you 100% to no longer ‘loan’ money to friends who are irresponsible.
    I love my friends and family, but I seem to be the only one who is careful with and respectful of money.
    Recently I told my DS, DSS, and close friend that I can no longer help with money.
    Also, my DSS owes me money for a car which was totaled and I told him he must pay back the loan, car or no car.
    When I was young and stupid with money my dad sent me a check to help and he enclosed a little ditty and some really important info:
    “IF YOU OUT GO EXCEEDS YOUR INCOME THEN YOUR UP KEEP WILL BE YOUR DOWNFALL. PS: The well has run dry and there won’t be anymore loans. Love, Dad.”
    I have come to realize that sometimes the best help we can give is to let people fall down and figure out how to get back up themself. Like a baby learning to walk.
    Often when I’m unsure of how to proceed I pray for guidance…last time I ended up with a bunch of new bills of my own I have to pay. Not fun, but message received loud and clear.

  21. Virginia

    Glad to here you got your money back.

  22. margaret

    Donna I have followed your blog for some time now and I find you to a very wise, down to earth woman. I also do not believe in wasting anything, and if I have no need of an item I try to share with others. I live very frugally, but want for nothing, because I spend wisely and utilize my material resources to the full extent I can. I am shocked at the lack of basic insight many people have about how to be responsible for their own lives, and how to live within their means.Their is much imaturity in America, which is allowing other nations to use this knowledge to their advantage. Hope this society wakes up soon to reality.


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