Myth 2 — Lending to Friends and Family Is Good

If you have the money, give it.  But don’t lend it.  At least not to friends and family.

This is yet another myth busted by Dave Ramsey with the help of yours truly.

The myth is: Loaning money to relatives and friends helps them.

If you give money to someone without expecting anything in return, that’s fine.  Any relationship you had with that person you gave to isn’t going to be affected.

But if you lend money to your friend or someone in your family, you’d better be prepared for what can happen.  Be prepared for that relationship to be either destroyed or impaired.

What happens when you lend money like this, even if it’s just $50, is that the borrower becomes servant to the lender, just like, as the bible says, the poor is servant to the rich.

Whether it’s $50 or $50,000 loaned amongst friends and family, somehow this changes the relationship dynamic.

(Kind of reminds me about how the relationship dynamic is changed when you try to pitch your networking marketing opportunity to a friend or family member.)

If the borrower can’t pay you back, he or she may avoid you entirely, out of guilt or shame.  As the lender, you may end up resenting the other person.

Have you had this happen? Tell us about it in the comments! Mr. Ramsey certainly has. He’s talked to thousands of people on his radio talk show about this very thing.

Here’s another, more cautious approach from a Michael Lebovic that you can take to safely lend money to those close to you, if you’re truly set on doing so (or having someone convince you to do so)…

It’s time to break the myth that we’re helping those close to us by lending them money!

The reality is you might lose or seriously strain that relationship.  And why would you want that to occur at all, in the first place?  You wouldn’t.  Don’t even try it.

Of course, Stuart Wilde has even another perspective on this.  In his book, The Trick To Money Is Having Some!, he says that families are units with loads and loads of karmic energy built up in them.  Each person has been through so much and brings into the family unit.

The family unit is a safe unit, one where you can learn about yourself, learn about the other souls and spirits you associate with intimately, and ultimately learn how to play this thing called Life.

He says, forgive debts!  Let people have the safe place they need to become enlightened and learn of love.  That safe place is the family.  You’re all karmically connected, if that’s a word.

Basically, since love is the saving grace of humankind, says, Wilde, how can we possibly let family debt come between us?

Good point…

So, I think Mr. Wilde disagrees with Mr. Ramsey and the dude on the video up there, Mr. Lebovic.

Actually, Michael Lebovic seems to be nearer the middle of the two, preaching caution and prudence before making a loan rather than screaming either, “Here, take my money!” or, “No way, I won’t lend you a dime!”

What do you think?  I know I presented three arguments here:

  1. Don’t lend money to relatives and friends
  2. Do, but only if you take the precautions laid out in that video
  3. Sure, but don’t let it come between you

What are your thoughts on it?

Mine?  Do all three.  Let the situation guide you and your own inner wisdom, but always have safeguards in place.

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