Friends and Money

badbnagdway

Haven't posted in a while but the day before Thanksgiving is already dragging and work is like a ghost town. 

I have the following discussion questions and a story but you can feel free to skip the story and just talk about your experiences:

1. Have you ever loaned money to a friend? Let's say more than $1k or an amount that has some significance to you. 
2. Did the friend pay you back timely? 
3. Did the loan impact your friendship? 
4. Did you find yourself holding a bit of a grudge if, rather than pay you back, they engaged in discretionary spending?

Last night H and I were talking about friends and money. It comes up a lot with him. As background, we make pretty good money for people our age and are (as a couple) fairly responsible with money (H is more responsible than I am to be honest). We put a full 20% down on our house, we have a 15 year mortgage, we both either max or close to max out our retirement contributions. We buy what we want within reason and eat out a couple times a week, we don't take expensive vacations.

Before H and I got together he loaned one of his best friends $8k to pay off a car loan with a very high interest rate and helped the friend and his wife get out of credit card debt. The deal with the loan was that the friend would pay it in full with interest (very low interest rate) in 3 years (yes, there is a note). Well, that period of time has come and gone and the friend has never paid back H. In theory he will pay it back in February when he gets his tax refund but I personally am not holding my breathe. I have told H several times that we need to just have the friend start paying us a small amount (like $200) every month because there is no way this friend can budget well enough to just give H $8k as a lump sum. 

In addition to friend 1, friend 2 is currently renting a condo H owns. Friend 2 lost his job and was unemployed for about three months and probably has only paid rent for about 5-6 months this year (he does have a job now). H decided to just raise his rent a little until he can pay off what he owes in back rent (this time he listened to me when I said I didn't think friend 2 could just pay us back $3k in a lump sum). 

H is glad he has been able to help his friends BUT he cannot help but dwell on the fact that both friend 1 and friend 2 have done a (seeming) lot of discretionary spending. Friend 1 has spent about $10k on vacations in this year alone and bought a second car and Friend 2 has gone on a series of smaller vacations, made some large purchases. Last night he was frustrated again that we live a fairly conservative lifestyle fiscally but his friends are doing all sorts of things we do not feel we can afford to do. I feel like it is slowly ruining his/our friendship with these people. 

sunflower0592

Friends and money are a combination that rarely turn out well. 

littlemushroom

Yes, I have loaned friends money a few times. The first time was in high school and my best friend wanted to go to a journalism camp she and her family couldn't afford. I loaned her the money for it that I had saved from summer jobs. It was less than 1k, but a lot for a high school student (I think more than $500). She paid it back a little at a time with money she earned from a waitressing job she got. It didn't impact our friendship at all. She continued discretionary stuff like going out with friends, etc, and that was fine. She paid me back in less than a year and that was fine with me. I didn't feel like all her spare money should be going to pay me back. However, we had gone over length of time and payment amounts before I loaned the money to her.

I also loaned over 1k to a friend when I was in law school. She had some bad luck with car and medical expenses and didn't want to ask her dad for money. She paid it back within 6 months. Again, not all of her extra money went to paying me back, and I didn't feel like it should. I was happy she was still able to go out with friends and whatnot. I believe we also took a trip together before she had paid me back. This also didn't impact our friendship at all. Again, we had discussed the time frame of paying me back and the payment amounts before I loaned her the money.

Neither friend was able to stick exactly to the schedule we had set up. That was fine. They always made a good faith effort to pay me back and were working on it. Again, I didn't expect every spare cent they had to go to paying me back. So even though they were spending money on other things it didn't bother me.

jenna8984

badbnagdway said:

Haven't posted in a while but the day before Thanksgiving is already dragging and work is like a ghost town. 

I have the following discussion questions and a story but you can feel free to skip the story and just talk about your experiences:

1. Have you ever loaned money to a friend? Let's say more than $1k or an amount that has some significance to you. 
2. Did the friend pay you back timely? 
3. Did the loan impact your friendship? 
4. Did you find yourself holding a bit of a grudge if, rather than pay you back, they engaged in discretionary spending?

Last night H and I were talking about friends and money. It comes up a lot with him. As background, we make pretty good money for people our age and are (as a couple) fairly responsible with money (H is more responsible than I am to be honest). We put a full 20% down on our house, we have a 15 year mortgage, we both either max or close to max out our retirement contributions. We buy what we want within reason and eat out a couple times a week, we don't take expensive vacations.

Before H and I got together he loaned one of his best friends $8k to pay off a car loan with a very high interest rate and helped the friend and his wife get out of credit card debt. The deal with the loan was that the friend would pay it in full with interest (very low interest rate) in 3 years (yes, there is a note). Well, that period of time has come and gone and the friend has never paid back H. In theory he will pay it back in February when he gets his tax refund but I personally am not holding my breathe. I have told H several times that we need to just have the friend start paying us a small amount (like $200) every month because there is no way this friend can budget well enough to just give H $8k as a lump sum. 

In addition to friend 1, friend 2 is currently renting a condo H owns. Friend 2 lost his job and was unemployed for about three months and probably has only paid rent for about 5-6 months this year (he does have a job now). H decided to just raise his rent a little until he can pay off what he owes in back rent (this time he listened to me when I said I didn't think friend 2 could just pay us back $3k in a lump sum). 

H is glad he has been able to help his friends BUT he cannot help but dwell on the fact that both friend 1 and friend 2 have done a (seeming) lot of discretionary spending. Friend 1 has spent about $10k on vacations in this year alone and bought a second car and Friend 2 has gone on a series of smaller vacations, made some large purchases. Last night he was frustrated again that we live a fairly conservative lifestyle fiscally but his friends are doing all sorts of things we do not feel we can afford to do. I feel like it is slowly ruining his/our friendship with these people. 

This is a disaster. Anytime you lend money to anyone, you have to count it as a gift and be aware that it will rarely ever be repaid. I would never in a billion years loan a friend that much money so I think your H is nuts to begin with but that's just me. His "friends" haven't reached out to him about payment plans because they do not intend to pay, and they are not good friends. I'd sue them or just walk away and learn a hard lesson.

Only person I have ever given money to was my high school BFF. She moved to Hawaii and needed an extra $500 for her apartment security deposit and she was frantic. I went and put the money into her bank account back home, and within a month she had mailed me a check for the full balance.

labro

No. I've never loaned money to a friend other than buying lunch or coffee every once in awhile. Large sums of money to friends just doesn't seem like a good idea no matter how much you trust or love them. I'd find other ways to help them first.

badbnagdway

littlemushroom said:

Yes, I have loaned friends money a few times. The first time was in high school and my best friend wanted to go to a journalism camp she and her family couldn't afford. I loaned her the money for it that I had saved from summer jobs. It was less than 1k, but a lot for a high school student (I think more than $500). She paid it back a little at a time with money she earned from a waitressing job she got. It didn't impact our friendship at all. She continued discretionary stuff like going out with friends, etc, and that was fine. She paid me back in less than a year and that was fine with me. I didn't feel like all her spare money should be going to pay me back. However, we had gone over length of time and payment amounts before I loaned the money to her. I also loaned over 1k to a friend when I was in law school. She had some bad luck with car and medical expenses and didn't want to ask her dad for money. She paid it back within 6 months. Again, not all of her extra money went to paying me back, and I didn't feel like it should. I was happy she was still able to go out with friends and whatnot. I believe we also took a trip together before she had paid me back. This also didn't impact our friendship at all. Again, we had discussed the time frame of paying me back and the payment amounts before I loaned her the money. Neither friend was able to stick exactly to the schedule we had set up. That was fine. They always made a good faith effort to pay me back and were working on it. Again, I didn't expect every spare cent they had to go to paying me back. So even though they were spending money on other things it didn't bother me.

I think that is reasonable and a good point. I think it's unfair to expect that someone change their lifestyle or be accountable to you in a very minute way just because you loaned them money. In your examples your friends worked on paying you back in a reasonable time. In H's case it will be four years this January and H has not gotten dime one from friend 1. 

julieanne912

What @jenna8984 said.... if you "lend" money to a friend, then you need to look at it as a gift, not as something you'll ever get back.  If you get it back, great!  If not, move on.  

What's funny is, you and your H COULD afford to take some nice vacations or whatever, if he hadn't lent that money to his friends in the first place.  On the car loan, since he has a note, I believe your H has the right to repossess the car and sell it.  But, that could be a lengthy legal process.  I think your H needs to stop being friends with these people, since it's obvious they don't have any respect or gratitude for him.

If he chooses to continue to be friends with them, he needs to move on and forget about the money he lent to them, but at the same time, stop renting his condo to the friend, and talk to the other friend about possibly selling the car and paying him back.  

littlemushroom

@badbnagdway Oh, I agree that your H's friends have stretched way to far. I think it will be hard to get anything from them now since your H has let it go on so long. They took advantage of your H and that is not cool. I don't think my friendships would have lasted if my friends pulled this with me.

I think you are right that a big part of the problem is the expectation of repayment was to be given the entire amount at once, which would be really hard for anyone at those amounts. A long talk needs to be had with these people about the expectation of repayment and to start making payments in X amount.

jenna8984

If it's been 3 years and he has never tried to pay a dime, he's a grade A asshole who is never planning to. Take him to small claims and get him out of your life.

emmaaa

jenna8984 said:

If it's been 3 years and he has never tried to pay a dime, he's a grade A asshole who is never planning to. Take him to small claims and get him out of your life.

Yeah, if he still owes the full amount I would count your losses. You aren't getting that money back

kvruns

I've never loaned anything or been asked. Right out of college my BFF got a speeding ticket in a construction zone for like $250 or something and she didn't think she'd have the money so I did offer it to her as a loan but she figured it out and didn't need it.

In the 4 years how often as it been discussed, as in has your H reminded those "friends" of it or asked about payment? If not he needs to start. I think if anyone is going to loan a significant amount there should always be a payment, even if it was just $20 a month or whatever but something to show they are invested in the fact that it is truly a loan.

badbnagdway

kvruns said:

I've never loaned anything or been asked. Right out of college my BFF got a speeding ticket in a construction zone for like $250 or something and she didn't think she'd have the money so I did offer it to her as a loan but she figured it out and didn't need it.

In the 4 years how often as it been discussed, as in has your H reminded those "friends" of it or asked about payment? If not he needs to start. I think if anyone is going to loan a significant amount there should always be a payment, even if it was just $20 a month or whatever but something to show they are invested in the fact that it is truly a loan.

So I don't know the answer to that for the period of time before we were engaged because it is something that I found out about when we combined our finances. I do know that within the past year since we got engaged and married he has brought the loan up a number of times with friend 1. Usually after he has brought it up to me and I have told him he really needs to talk about it with friend 1 because it is affecting the way he feels about the friendship. The result of those discussions was that friend 1 is supposed to pay all of it back in February, but again, I am doubtful that will happen. I have been pushing for them to get into a different payment plan with monthly payments. 

I just remembered friend 2, who is living in the condo, was super late paying rent last month (he's had a new job for about four months now). He told H that the bank issued a check to us that was sent to the wrong address and cashed. Now he says the bank has "found the check". All a bunch of bullshit. H works in banking and knows it is a lie. Friend 2 paid his rent in cash like half way into the month. Being paid in cash makes me feel like we're running a drug cartel. 

Blech. 

levioosa

Yeah, neither of those guys are "friends."  

luckya23

I could never do it, because even small amounts I get a bit antsy about (like when BFF asks me to pick her up something at the store, and she's never forgotten!).

OliveOilsMom

I was the friend that had money loaned to me.  I was lamenting to my BFF about my money woes from unexpected tree work that was needed at my house.  I was single and living alone.  I never asked her for the money.  After she spoke with her H, they offered the money to me.  It was just over $1k.  I drafted a note and I was to pay a minimum of $25 back to them per month.  I started with $50 per month and then paid the remainder off in full when I got my tax return.

It worked out well for us (and her son - they were depositing my checks into a 529!).  But I know this isn't always the case.

To OP: I do think your H's friends have taken advantage of him.  And I also don't see why you can't take the lavish vacations, even if they are every other year. Just budget for them like you have budgeted for everything else. 

climbingsingle

I've never loaned money to friends. I have had friends ask, and I've always said no. I'm just not comfortable doing it. 

The only person I've given money to is my younger brother, and whenever I give him money, I don't expect it back. We're not talking about large sums - just a few hundred here and there. But he's my brother, and if he ever needs help, I will always do it. 

pinkcow13

I've been on both ends. When I was in college, I got a credit card at 18. Big mistake. I ended up maxing it out ($500), which doesn't seem like a big deal to some now, but in college, it was a HUGE deal. All I had was a work study job. I'm don't remember how H (boyfriend at the time) found out about it, but he and my roomate got together to lend me some money to pay it all off. (I had money just not the full $500). I paid them back fairly quickly because I was so embarrassed at the situation. I ended up taking a second job on campus to come up with the money faster.

In my early 20's I lent my best friend around $1,000 to help her pay her rent. I didn't give her a time frame to pay me back. Eventually I needed the money, and although I hated having to do it, I had to ask her if she had an idea of when she could repay me. She did end up repaying me in full, although it took almost a year. Not too terrible, but it really isn't the best situation to be in. It really could have gone another way.

ShesSoCold

I once paid a loser boyfriend's $400 phone bill. He never paid me back.

I only remember this because my friends would ask me when I was going to break up with him and I'd say "in 400 dollars".

badbnagdway

It's interesting to see people's reactions because when you're in the situation your own reactions are of course colored by your relationships with people. H is an interesting guy. He doesn't like to spend money when he doesn't have to - he does have his hobbeys and a love of video games - but he likes to shop at thrift stores for non-work clothes because he "doesn't see any reason to spend more than $5 on jeans". (Meanwhile my biggest source of discretionary spending is new clothes). But H is super generous with others. We both are the type of friends who are always willing to pick up the check, give generous gifts, etc. and we don't believe in keeping score for that kind of stuff.

He has gone the step further and loaned friends money/looked past the rent issue. Now this kind of stuff has an impact on both of us I do find it frustrating and I do feel like both of these friends take advantage of his good nature. I don't agree that lending money to friends has to end up badly (some good examples of it working out well in this thread). But I do question the sincerity of any friend who renegs on promises of repayment. If it were me, I guess I just feel like I would make every effort to hold up my end. 

AddieCake

I have owed a friend $6 for a week and a half. He was getting antsy about it, so I paid him yesterday. That was just SIX dollars. 

Wegl13

I would never loan a friend money. Like, any money. Basically, if it's something small, like lunch (you forgot your wallet or whatever), then it's on me don't worry about it. If you decide to pay me back, that's nice, but it will be offered as a gift. Bigger things? Honestly? If it was something that was a big deal (health care, food), and you were a really close friend, then I'd probably do what I could do as a gift. But I LIKE my friends, and I would hate to ruin a friendship over money they didn't have that I *needed* back.

bethsmiles

Your H loaned someone $8k? Someone who had some serious credit card debt and a high interest rate (probably because of a crappy credit score)? You know how to get a lot of credit card debit and a crappy credit score? By not paying money that you owe. I'm sorry but that's not being a good friend, that's just being stupid. I think he either has to let this go or, as others have suggested, take his friend to small claims court.

Honestly, I don't think your H gets to be frustrated that he can't go on fancy vacations when he's lending out thousands of dollars to people.

themosthappy91

bethsmiles said:

Your H loaned someone $8k? Someone who had some serious credit card debt and a high interest rate (probably because of a crappy credit score)? You know how to get a lot of credit card debit and a crappy credit score? By not paying money that you owe. I'm sorry but that's not being a good friend, that's just being stupid. I think he either has to let this go or, as others have suggested, take his friend to small claims court.

Honestly, I don't think your H gets to be frustrated that he can't go on fancy vacations when he's lending out thousands of dollars to people.

Sadly I have to agree... I don't think willingness to loan money is indicative of a person who is an especially good friend as much as someone who is himself not great with money. There's a serious disconnect to me when someone simultaneously thinks it's a rip-off to spend more than five dollars on jeans but doesn't realize what a bad financial move it is to loan someone known to be irresponsible $8,000. It sounds like someone who doesn't have a good grasp on with the value of money- when it's a good idea to spend so you can live a more enjoyable life and when it's prudent to be frugal.

CMGragain

At FIL's funeral, there were several "mourners" that owed him large amounts of money (He had Alzheimer's) and had no intention of repaying it. 

justsie

I have the same mindset as @jenna8984 , anytime I loan money its a gift. If I get it back, great, if not well I got what I expected. It doesn't matter how generous your H is, if loaned someone with poor credit and debt money he made a bad financial move. 

JoanE2012

bethsmiles said:

Your H loaned someone $8k? Someone who had some serious credit card debt and a high interest rate (probably because of a crappy credit score)? You know how to get a lot of credit card debit and a crappy credit score? By not paying money that you owe. I'm sorry but that's not being a good friend, that's just being stupid. I think he either has to let this go or, as others have suggested, take his friend to small claims court.

Honestly, I don't think your H gets to be frustrated that he can't go on fancy vacations when he's lending out thousands of dollars to people.

This.  

We don't lend money to friends.  Ever.  Those things hardly ever go over well.  Whad does the wife of the friend (whose credit card debt was paid off) say?  If you have a note, I'd take 'em to small claims court and then sever the friendship.  And make sure your DH NEVER loan any money again.

photokitty

Never loan a friend or family member any money you aren't prepared too never get back.

Also, I don't know if you can sue for $8k in small claims court. In my state you can only sure for up to $3k. I'd write it off or talk to an attorney. But this is on your husband, not you, you have no legal grounds in this situation.

JaniV123

I have lent money to DH and he has lent money to me (back when we weren't married). And we always paid each other back whether directly or with a gift or dinner etc. 

I have lent my BFF's money and they have always repaid me one way or the other. Also to my mom and she has always paid me back. 

I would be weary of lending such large amounts and to someone I didn't fully know and trust. 

SP29

I agree that one should not lend money unless one is "OK" with not getting it back (of course you would expect them to pay you back, but it should never be a sum of money you are reliant on).

I also dislike loaning money because while I don't expect the person to pay the full sum back ASAP, or not do anything else with their time, I DO judge if I notice they are spending money on "extras"- particularly things I wouldn't spend on myself.

DH has loaned his dad money a couple times, around $1k each. He has paid him back a bit, but he still owes $3k, and the payment is not regular. In one respect, I get it- it's his dad, and his dad is semi-retired; lives off his pension and selling the vegetables he grows on his farm at weekend farmers markets. His monthly expenses aren't high, but he also doesn't bring a lot in, and I know he has debts from when his old business went under. In the grand scheme for us, $3k also isn't a big deal, and I know one day when his dad sells his farm (which he is talking about with getting older) DH would be given a sum of the money that would *more* that cover his "debt". His dad is also different than a friend. But sometimes I think, "well if we had that money we could use it for X...". 

Likewise, DH's sister has gotten herself into some financial trouble. DH's mom is going to loan her the money, but DH went over her finances with her and created a budget for her as well as a payment plan for her debts. While it is none of my business, and also not my money, I do find myself judging when she posts on FB about the concert or restaurant she is at with friends- and I think this is WHY you have debt!! 

OP- I'm with you that DH needs to tell his friend that he expects a regular payment plan with the sum to be paid in full by X date. Your DH is letting himself get walked over by his friends. 

CMGragain

I would be concerned about your DH's lending habits.  He seems to be an easy touch.  Do you really think this will change? 

mollybarker11

I know this is a couple weeks old but I can't get past the fact that Friend 1 borrowed $8000 to pay off a car loan and then BOUGHT A SECOND CAR before paying the loan back?? What kind of person does that?

The above + the multiple vacations + after years of reminders he still continues to push the payment date means that he is NEVER planning on repaying your husband. In all likelihood he is laughing about this behind your backs. I'm disgusted on your behalf.