Letting Family or Friends Borrow Money
After I posted ‘The Debt Shoebox’ story, I received an email asking me exactly how Mr. Money and I dealt with the debt shoebox. The person was curious why I wasn’t more upset about the debt and what exactly came of the situation. What I did at that time wasn’t something I’d probably openly advocate, but I am so thankful it worked out for us. I let Mr. Money borrow cash from me to pay off a lot of his debt.
These are actual pages from the notebook I used to keep track of his debt repayment. This totally makes me laugh! I remember a lot of the time he would just pay all the rent one month ($650) and I would deduct $325 from his balance because that was my part of the rent. Six years later I think it’s hilarious that I tracked it this way!
At 19, I had about $3,000 to $5,000 saved up in my savings account (I can’t remember exactly), which I think is a pretty decent amount of money saved up for someone that age. The amount of debt he had wasn’t horrible, but it was something I knew he needed to take care of quickly. I do remember he had balances of about $2,000 on a student loan, $360 American Eagle credit card, $200 Discover card, $100 BP credit card, and $300 RadioShack card. All of those minus the student loan had gone to collections. Ugh. He had set up payroll deductions to pay on the student loan, and nothing else on the others. We called the companies and settled on an amount, they drafted the money from my checking account and he was free and clear. But not with me. He now owed me money, which we kept track of in this book. Every time he made a payment, I’d subtract the amount he’d paid from the amount he borrowed.
Being older now and definitely more mature and financial savvy, I realize that the decision I made to let him borrow money probably wasn’t the smartest. I am thankful that it all did work out though, and here we are now, married for over four years. At least it all worked out.
Have you ever let friends or family borrow money? Would you advise people to do so?