by Leah Curtis

Created on: July 12, 2009

There have been times in my life that I have needed to borrow money from someone and I always pay it back. Most of us do. However, when friends borrow from friends or relatives borrow from relatives, the sheer nature of the relationship lends itself to abuse. Many people feel they can put the money they owe someone they know at the bottom of the list of bills because friends and relatives are supposed to understand when things "come up".

Instead of treating the money that they have borrowed as a loan, people will automatically assume that they can pay back money at their leisure. Often this translates into not paying the money back at all. There are the usual excuses, such as "I didn't know you needed the money", "I was going to pay you back this week but my car broke down" and my personal favourite, the birthday excuse.

It is irrelevant as to whether the person needs the money. When a person borrows money, it must be paid back. If you borrow from a bank, you have to pay it back whether or not their institution needs the money. Cars will always break down and birthdays roll around on the same day every year.

Prevention is better than cure when lending someone money, especially friends or relatives. There should always be something in writing. Even if it is awkward at the beginning, it is much easier to lay out the repayment terms before lending the money. After the money has been spent, it is "out of sight, out of mind", unless there is something in writing. Relatives, especially, tend to forget that the money was a loan and not a gift.

If a person who has borrowed money from you fails to mention anything about paying you back after the agreed upon date, there is no subtle way to bring up the subject so it is best to come right out and ask if the person has the money available. As difficult and awkward as this may be, it is far better than sitting around resenting the person because he's gone out and bought a new stereo system for his car before paying you back the money he borrowed. If no date has been set for the loan to be paid back, this is the time to get a firm commitment, and, if need be, put a payment schedule in writing.

There is not a lot you can do if the person does not pay you back. Lending money to friends and relatives is never a good idea unless you are prepared to forgive the loan if it is not paid back. Never lend more than you can afford to lose. It is also a good idea to know why they are borrowing the money and if they have the means

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