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Family tied: Is lending money to family or friends ever good idea?

In times of need, you almost always are going to look to your family first for help.
And, there's nothing wrong with that mentality in the least.
But how does money and lending it play into that equation? It's often suggested that money is the great equalizer and can easily come between family and, perhaps even more so, friends.
If you've ever found yourself in a position where you were asked by a family member or close friend to lend you money, you may find yourself torn with how you'll ultimately respond to that request. Your heart immediately tells you that, if you have the money to spare, you'll be writing a check or hitting the ATM before they're even done talking to you.
Financially speaking and thinking more with your head, you may be leery for a number of reasons, most notably whether your friendship might get in the way of actually getting paid back or if your relationship might suffer if that doesn't happen.

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Given that you know the person and have a relationship with them, whether this is your mom or a third cousin, you can't be afraid to ask questions as if you were a bank and they were a prospective client. That means it is perfectly acceptable to ask questions as far as what the money is for, and then determining if you want to loan the money. You can always preface your "no" answer with an explanation that is rooted in common sense and that you're only looking out for their interests as well as yours.
Furthermore, you may know going into this would be transaction knowing full well you're not going to get paid back, despite claims from the other person that you will. Everyone has a friend or family member that asks for money and says "borrow" when they really mean "give." And as much as that frustrates you, it is the reality of certain situations. Knowing exactly the outcome allows you to not harbor any guilt if you don't eventually get your money, and in some perverse way will save your relationship with the other person.
The situation that isn't quite so ideal is the one where you loan money and then never see it again. Worse yet, the topic never gets brought up again, and months turn to years and no one is getting paid back any time soon. That "elephant in the room" approach won't benefit anyone involved.
Lending money is the definition of awkward, but the more you understand the nature of the loan and what you expect to get from it will lessen that feeling and hopefully save a friendship or that next family get together.

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