Is It Ok To Give Cash To Needy Friends?
Yes, it's ok to lend cash to needy friends, but only if you have a clear understanding of your gift and its effects. Money undeniably alters relationships, and giving can greatly complicate, if not entirely undermine, a valued friendship. Yet, money is also one of the most direct ways to provide help. The Times provided several questions to consider before making a gift...
- Grant Or Loan? There are arguments on both sides, but if you're going to give a gift, then make it an actual gift. Granting a debt-laden person another loan is only going to cause more anxiety.
Ask Or Act? Some people are too proud to accept help, even if it's needed. Offering assistance can be a gift by itself, even if your offer isn't accepted.
Act Alone Or With Others? It might seem strange to discuss a friend's financial situation with a third party, but consider if the situation is broadly known or doesn't have direct roots in unemployment.
In late January, Steven Roy lost his job, which provided health insurance for his family. A few weeks later, his infant son Isaac, who is known as Ike, was found to have a life-threatening illness. Within hours, friends of the family from the AustinMama Web community in Texas had erected ikeasaurus.com to coordinate help for the family. A few hours later, there was $4,000 in a PayPal account with the Roys' name on it.
Anonymous Gifts?: Giving through your local religious community may be easier than handing over a gift. You can also use the group Giving Anonymously as a middleman. Sue Barnet, who received a $200 check in the mail said: "I come from a family of extraordinarily independent women, very determined. Sometimes that's not such a good thing. I think I would have just been too embarrassed to accept a direct gift."
Cash Or Other Payments?: Cash is the most direct and flexible gift you can offer, but if you want slightly more control over the gift, you can help pay for things that the recipient's children need, like music lessons or camp. If you aren't in a position to offer cash, consider giving frequent flier miles, although redeeming them might be more of a hassle than a gift.
Helping Out With Cash: A Delicate Art [The New York Times]
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Comments:
usually when giving a "loan" to a friend itt turns out to be a gift anyway as they never repay to "loan". Giving
direct cash is not good as the person may feel that all they have to do is ask for another gift..I suggest take them to a store for the needed goods have them pick out what they need and purchase the item/items for them.. you can do this without making the friend look like a nerd /
bum. be flexible.
Having been on both sides of this situation:
Giving/loaning: No expectations of getting the money back. No more than I can afford to lose (obvious).
Alternate route: "Buy" something off your friend for an inflated price (like coins, baseball cards, whatever) and when things turn around, offer to sell them back for the same price. An interest free secured loan without saying so.
Receiving: Pride comes into play. Easier to accept an invitation for dinner than cash. Offer to cook or clean up afterward.
It'll never come back, whether friend or family. So don't give expecting a return.
@maruawe42: I've always been turned down when I offer to buy the same amount of needed goods as the $$ they are asking. It's treated like "oh so you won't help out ___X___?"
I usually ask not for repayment of the money, but for a gesture of appreciation like a dinner or a birthday gift.
If the loanee cannot follow through with even this, (it's amazing how many won't) I do not consider them worthy of future help.
I've borrowed money from my sister many times in the past, and I've always told her up front when I would be able to pay her back. If ANYTHING came up or there was a delay, I'd call her immediately and let her know. She was mostly OK with it I think because of the honesty. The end result? She has never hesitated to loan us money if we needed it, because she always knew she'd get it back.
The old saying "Don't bite the hand that feeds you." Its a 0% interest loan, and its usually a lot more lenient than credit card or bank loans.
If people are going to go into an agreement, be honest about your situation. My other sister isn't exactly the best at paying her debts and she owes a lot of money to family members. The result? No one gives her money anymore. They offer to pay a bill FOR HER, buy her food, instead of giving her cash.
@Apeweek: Sometimes I ask them to help somebody else down the line. It's generally something people respond well to.
@floraposte: Ditto. I prefer to ask them to "pay it forward" when they can because it frees them from the sense that they owe me repayment, which is what damages the relationship on both sides. And by never asking whether they have done so, it also frees me from any resentment that they haven't paid me back properly or promptly. If they don't fulfill the promise it's between them and their conscience, it's not my problem.
I should relay some personal experiences:
I've held a job since I was 13, and was very careful about saving. Hence, I always had more money than my sister (note that I was still very poor compared to my classmates, my weekly wage was probably 1/4 of their allowance). However I was very gullible.
* My sister kept getting behind on rent. After the first few times, she became very good at "but if you won't lend me the money I'll get evicted!"
* My sister's cat got sick, and she couldn't afford the vet bills.
* My sister needed a ride to pick up her car from the repair shop. Somehow her card got declined! I wouldn't mind just putting that new transmission on my card now, would I?
* My sister NEEDED a 56k modem, and I don't even remember how she convinced me to pay for it. 8 years later she GAVE ME THE MODEM and said that we were now "even" for it.
She never paid me back for any of it. In fact the only check she ever gave me BOUNCED. When I asked her about it, nicely, she would scream and flounce away. The last time she told me that I owed HER money.
* My friend had something (I think groceries?) delivered, while I was there, but couldn't pay for it. I lent him $140. A few months later he had a party that was $5 a head, and was upset that I refused to pay him.
* Boyfriend didn't have enough $ for concert tickets, I lent him $100.
* My grandmother sent me a SOB story in the mail of how she needed money, she couldn't pay all of her bills. The_IT_Crone to the rescue! I spent the weekend selling/pawning things that I knew I could live without, and gave her $400. But I was complained to that my SISTER gave her $800. She who never paid me back, makes 3x what I do, and owes me ~$3k.
*I noted that her apt was VERY bare, that everything had been sold/pawned/etc. So I bought her a TV and VCR. The next time I visited, they were gone. I found out that it was my BROTHER that was stealing her things.
*My sister emptied my grandmother's bank account and went on vacation to Europe.
No one ever paid me back.
/be kind, most of these were before I was 18.
//yes, I was a doormat.
///more like a bear trap now when people ask for money.
Make up a contract and have it notarized for $5. It can make all the difference.
Also, there are some websites that will place a collection on somebodys credit report for a small fee.
@wcnghj: I would love to know what those "some websites" are. I have many receipts that I would love to apply to the scumbag debtors that are my family.
It depends on the friend and how close a friend they are...and you know, how much money I actually have. If I know someone's in dire straits, I'd probably be more inclined to give them a gift card to their local grocery store if that was possible. Since I never have money, and right now have oodles of time due to the fact i'm in my last semester of grad school, I'd be better offering a service (hey do you want me to catsit, housesit, etc?)
@The_IT_Crone: Sounds familar. People really do a number on us until we wise up at 18. I think we realize that sometimes letting them get evicted or fail and hitting rock bottom is better for them long term.
To me it would depend on what they've done with their money in the past and if they deserve more. If someone is in a really bad spot and has been a really solid friend/person and just got stuck for whatever reason i will help them to the end of the world. But if they spent all their time partying/going to bars/pickingup DUIs (well i'm less likely to be there friend at this point but i don't just auschwitz someone for a few bad years) then they're going to be on there own. Hitting rock bottom is a good thing for them.
@missdona: this. My personal rule in "loaning" money is to make the assumption that it's not gonna make it back to me. If it's too much money to part with, then it's too much.
@wcnghj: You have to pay to have something notarized?? I've had probably 50 things notarized for free. Huh.
No, no, no, never. I never lend or ask to borrow substantial amounts of money (never more than $100) from friends or family. Its just too awkward for both parties.
I have a few friends who are facing hard times, rather than lend them cash I offer to pay them to do work around the house for me. Recently paid an out of work friend to paint my living room. Most would rather work than receive a handout anyway.
@missdona: Word. If I'm giving it, I'm calling it a gift. If they treat it as a loan, awesome. But if you want to preserve the relationship, be it family or friend, you have to accept that your money is gone.
@Randy Treibel: Some people never learn, either. My "bad" sister and her husband make enough money to pay all their bills, buy food, maybe toss $200 in a savings account every month. They only have one child, who's 5. They've been married for 8 years, and their financial situation only gets worse over the years. They are habitual spenders- they never "bargain" shop, take extravagant vacations with their tax returns, and would rather go out to dinner or shopping then pay bills. My mother buys her son lunches for school because my sister cries "We don't have food!" all the time.
What's worse, is that it feels like they use their 5 year old as a tool to get what they want from my mother. "Our electric is about to be shut off... we'll have no heat for our lil boy... along with no food" What grandparent can ignore that? His parents are just as guilty, they can't stop helping either for the childs sake. Makes me wanna hit her HARD.
Holy cow, if I was in your position, I would be taking every word my sister said with deep suspicion, and if they called me on it - I would air the laundry.
Sounds like you have wised up, or at least I hope you have
I almost got burned on a roommate I lived with in college,
In one of the buildings, we could build room lofts that took up the whole room, basically make the one room into 2 floors. Cost about $900 and some change. Well I put it all on my credit card because it got me the points and he kept saying he'd pay me back. I'd ask him every week - where is the money Bird?
After about 2/3 the way thru the school year I got kicked off the floor (Frat floor, I was a non-frat member and they wanted a frat person in the room instead). So here I am looking at still being owed $450.00, asking for more than 5 months.
So I paid two of my other friends $10.00 each to help me move my part of the loft. Funny thing about the loft is, when you removed 1 side of it, the other side is unable to stand up anymore. So I walk in the room with my two friends; saws, hammers, and a cart in tow.
Told him he was gonna pay me my $450 for his side and I would be generous to let him have my side for $200.
Can't believe how fast $650 suddenly showed up from him. Some may call it extortion, but I was tired of putting up with his bull and always having to one up someone on a story.
I mean yeah, because no matter how you slice it, it just sounds like you don't trust them enough to use the money for its intended purpose. I'm not knocking this method at all; I just realize that's how people feel.
I neither borrow nor lend, despite my ID :) This rule applies to relatives as well.
When I was 19 and newly married, my deadbeat biodad surfaced to ask for "a loan." He went through his entire plight, which included dining at a local soup kitchen.
I told him that I recalled him not being concerned what my sister and I had to eat when he failed to pay child support for years, and that his situation left me unmoved.
@HIV 2 Elway Resurrected: Yeah. I did the same thing with a handy friend--she could use the money, I got stuff done I wouldn't otherwise have had done. And this is a fine and generous friend who's probably given me considerably more than I've given her, so it was if anything repayment.
@The_IT_Crone: these are perfect examples of why loaning money to a friend/family member can be so daunting. & (on the flipside) why some people who could really use some help may refuse it or are reluctant to ask.
@missdona: When you "loan" money to a friend, you just named the price of your friendship.
Judge Judy is right.
I went through hard times where I was having to borrow money consistently but I paid it back. Very rough time in my life that I'm almost past. I didn't want to borrow but I had little choice.
Now that I have a very positive cash flow and saving finally, I help who helped me if they would need it. I had to rely on my grandma for a car loan but she knows I wouldn't screw her over. Always paid on time and with tax refund put it right to the principal.
Now as for my mom/brother, I wouldn't trust them. I lent them money and never saw it again. So that trust was burned. Grandma wised up to it too after she gave and saw nothing back.
Overall, it depends on the family member. You can't trust all so best to start small, and see what happens if you can start small. If you see any inclination of nothing in return that they said, hammer at it or have them work for it in return if they can't pay it back. Heck, if you don't want to look nosy, see WHAT they are spending and help them figure out something better. Very YMMV on that though of course.
Truer words were never spoken than when that first caveman- or maybe it was something single-celled- declared that "money is the root of all evil". It's like salt- we can't live without it, but it's toxic and deadly when mis-used.
Personally, I'd like to have more of it than I do, but I try consciously to not let its pursuit or containment direct my actions to the point where it impacts my mental well-being. For example, I've danced on the edge of poor-credit health for most of my life (it's been a lot better the last 10 years or so) because in 24 years of marriage I've absolutely refuse to "fight" about money issues with my spouse, because they are so divisive.
For true friends, what I have is yours if you need it (be it money or weed-whacker). If I don't have it to give (or lend, if you insist), I will tell you up front. E.G, my best bud of 30 years was forced into a short-notice, inter-state move, and during a phone conversation (he-MA, me-IL), he indicated that he was momentarily cash-strapped and asked if I could send him 40$ to ship some items.
No problem, I mailed the filthy lucre off, and thought no more about it. Got together with him a couple of months later when he was in town, and he actually told me- as he thanked me for the distribution- that he'd made alternate arrangements for the items, and had actually used the forty for other things.
This bothered me not at all, because he's an old and dear friend, and the trivial amounts we've spent on each other over a few decades amount to diddley at the cliche'd end of the day. If he offered to pay it back, I'd take it, but I'd never ask.
Which is not to say I have no limits to my philanthropy- I'm actually not a saint. "Money=evil" in cases where a true friend says "OMG I need 500$ right now!!!" and I say "well OK, but I must have it back in X of days or I default on my mortgage", and then they don't repay it in a timely fashion... well sir, that's where cracks begin to form in the foundation of our friendship.
I will enter into those sorts of contracts, but with a tad more wariness. And, if it's absolutely necessary, I would propose one to a true friend.
All of the above is equally- if not more- applicable to family. It's easy for $$$ to fuck up even the closest of relationships, and it's always sad. It's harder, but in the long run more beneficial to one's own mental health to just accept that 'people are people', and to be surprised by nothing they do.
Or hire them if they have skills.
My brother in law is a very good contractor who does great work for less than the "meh" contractors in the area. Even when you consider plane tickets, it's still worth it.
\YMMV
\\Just because MY brother in law has mad skillz doesn't mean yours does. Try little jobs first. Having to rip out something done wong could be more expensive.
\\\Make sure he understands code before doing a major job. Father-in-law helped with some aspects.
\\\\Loves my inlaw families. Marry well and you may never have to do heavy lifting work around the house again.
@Jonbo298: I've found that Grandma's won't take their grandkid's money. My grandma fronted the money for my first term of grad school (my work reimburses me but I have to front the money at the start of the semester. I sent Granny a $3000 check which she voided and immediately sent back to me. They just love to pamper their grandkids even as they approach 30.
Yikes. I think if I were you I would refuse to help any family member out, ever again. If they bitch and whine and try to guilt-trip you about it (which they surely will, they sound like an over-entitled bunch of sponging parasites), a reminder of their past behavior should end the conversation. It sucks to be treated like that - I'm sorry.
@Randy Treibel: It's one of those "2 birds, 1 stone" things. I often wish I'd just told her to figure it out for herself the first time she grifted me... but I was like, 13.
@Teradoc: Every time she opens her mouth I have to look at her sideways. Fortunately for me I've pretty much written off my family at this point. Everyone knows she stole that much from me- they just think that I'm more "capable" so "helping" her/them is justified.
@Randy Treibel: Generally they will refuse to tell you exactly what they need the money for. Just "bills" is usually the answer.
I am in envy of your ingenuity. I had a roommate like that. Here's one story:
I was going to the grocery store, and my roommate in my dorm asked me to pick up some stuff for her. Naturally, I was too dumb to ask for cash up front and lo, she had no money when I returned.
This is one time that I got GLORIOUSLY even.
After waiting weeks to be paid, I finally had my boyfriend nude on my bed and covered him with "her" whipped cream, easy cheese, etc that I had paid for. She walked in. I'll never forget...
"but... that's MY Easy Cheese..."
Then pay me for it, wench!
@sendbillmoney: I just want to say that your story made me feel all warm and fuzzy inside.
I can't quite do that, as my grandma really helped out the kids in my family so that they DID get food/shelter. I got shafted, but in doing so missed out on her enabling of their swindling personalities. So, I don't feel entitled to handouts and go COMPLETELY NUTS if I even have to ask someone to lend me lunch $$ because the day our office decided to order in, I didn't have any cash on me.
@aguacarbonica: It's from experience. I've finally realized that if you can't afford/stand the money to NOT COME BACK, then don't give it.
I gave my sister money out of compassion because the (stated) repercussions were dire: eviction, cat dying, etc. However when I asked for the money to be returned (when she was making a fantastic wage) out of equal compassion (got sick, medical bills, had to drop out of college, sobsobsob), she all but laughed at me.
I know that not everyone has crappy family like I do. However while I seem to have a LOT of experience at this, it doesn't mean that everyone else is immune.
Lol, incidentally I replied to the wrong person. I was actually trying to reply to maruawe42 up above. Silly me.
As for your method, I agree wholeheartedly. "Give not begrudgingly" is what I was always taught; if you can't part with it with a happy heart (and not feeling like you're owed something), you'd probably best keep your charity to yourself.
Pasted from below to here, where I actually meant to post it:
"I mean yeah, because no matter how you slice it, it just sounds like you don't trust them enough to use the money for its intended purpose. I'm not knocking this method at all; I just realize that's how people feel."
As a rule, I don't lend friends money. Period. I have lent money to my family members. When I do choose to lend money to my family, I fully accept that I probably won't ever see a dime of it again.
This ruins friendships. Unless you're in a situation that explicitly calls for sharing resources (roommates, for example), no loans should be given or received. I ended up breaking off a relationship with a girlfriend that was otherwise going great because of bad feelings over loans.
I've had to borrow money from my brothers, but I always tell them exactly when I can pay them back - 3 months from then when my education loans come through or the first of the month after I get my paycheck deposited.
Our family's pretty cool with shifting money around - mom had to get some car work done, and it went on my card, she paid me back in installments over a couple of months.
If you know your friends well enough, I don't think it's such a big deal.
One of my friends got screwed over by the company we worked at, by the tune of $2500. He needed about $900 just to stay afloat, and I knew him well enough to know that he'd pay me back. Sure enough, he bent over backwards to pay me back and tried to impart interest which I refused. He even needed help when he moved downstate, to the tune of $500. A month later I was paid in full.
It's all a matter of knowing who you lend to. You should know that they are good for it (without having to take their word for it) before lending.
I heard Virgin Money US (www.virginmoneyus.com) acts as an in-between for loans between friends and family members. I know very little about this service, if it's worthwhile, legitimate, or insane like Richard Branson. It's seems like it would be worth looking into if you were going to jump into the dangerous waters of lending (giving) money to family or friends.
Some services like that, that one is specific to rent recovery, but there are others. I am sure they would still report for you.
Also:
@missdona:
This is absolutely correct. Don't think of it as a loan or it will ruin your relationship with that person. So either don't, or make it a gift.
Either way, there are some people who simply can't manage money, and until they learn how, giving them more is like handing a coffee cup to someone in a sinking ship (to bail water).
@theczardictates: Yup. And I make the point that people have helped me, which they have, so it really is just sending around what's come around.
@HIV 2 Elway Resurrected: It can be tough for parents, too. I've got a colleague whose parents both lost their jobs in the last few months. They were good earners and good savers, so they're not headed soup-kitchen-wards just yet, but she'd really like to pick up a few household costs for them. Which I'm pretty sure won't fly. (I think they might accept being treated to lunch now and then.)
In the words of Judge Judy, "give don't loan."
If you want to help your friend, don't assume it will ever come back to you.