What to do when you lend your friend money and they haven’t paid it back…
So, I owe my best friend $250.
It’s for a group trip we’re organizing, and, as usual, he has taken over most of the planning and organization…which includes booking the flights, hotel rooms, concert tickets…which then means collecting the deposits from all of us. I know I will pay him the money back, he knows I will pay him the money back, but that doesn’t mean that I’m not aware that in the back of his mind, there’s a teeny-tiny bit of resentment over the fact that I do owe him a significant amount (to me anyway!) of money that I haven’t rushed to pay back. It’s sitting there in my bank account, just waiting to appear back into his, where it belongs. Yet for some reason, I’m being a kinduva jerk, taking advantage of the fact that we’ve been best friends for almost 30 (!) years by not sending him his money promptly. Because I know he loves me and he can’t stay mad at me.
Let’s be clear, this is a bit of a jerk move. But some of us—a lot of us—are guilty of this, and we need to stop. Not just because so many people are already stretched financially, but also because it’s the right thing to do. It’s a matter of respect. Actually, let’s all make an oath right now:
“I, (your name), promise to pay back money I owe to friends, family and loved ones on the agreed upon due date, because I love and respect them. If I am unable to pay them back at the agreed upon time, I will communicate this to them immediately and we will work out a different payment plan.” Great!
When You’re the Lender
Now let’s look at the other side of the equation and have some real talk about what to do when you happen to be the one who is owed money. Because I’ve been that person too. Many times. Recently, Coco asked me a question that was too good, and too important to NOT write about. She asked (“for a friend”):
When you lend money to family and friends, how can you ask for it back? I’ve lent money and when I’ve asked for it back I haven’t received a response and there has been no attempt to give it back. What do I do?
Here’s my response in a nutshell: Nothing.
That was not helpful, sorry. Here’s the long version.
So you gave a personal, informal loan to a friend and suddenly they’ve gone silent. Feel free to ask the borrower for the money back two or three more times over the phone, in person, and in writing. I know it’s awkward, but grit your teeth and ask in the most loving way possible. Offer to accept installment payments if they’re in a bind…try to be diplomatic and understanding because who knows what’s going on in their life… If you still get no reply, no straight answer, or straight up rejection, it’s time for you to take yourself through the five stages of grief, because your money is gone baby, gone:
Denial – “I’ve asked them a few times now and no response. I know I’ll get the money back, there’s no way they’re this shady—impossible—I’ve known them for years!”
Anger – “How could they betray my trust like this? I’m so naïve and they suck! I’ve been conned!”
Bargaining – “Well, maybe I shouldn’t be so hard on them; they’ve had a tough month/year/life. I’m going about this all wrong, I just need to reason with them a little more. Maybe if I ask in a nicer way, they’ll pay me back.”
Depression – “I thought we had an understanding. Maybe I overestimated how much they actually care about me and respect me. Is our relationship ruined? This makes me sad and overwhelmed.”
Acceptance – “I’m not getting the money back. It’s time to stop slotting this imaginary pay back into my budget because it’s never coming. I must let it go and move on.”
It’s here, at the point of acceptance where you have to determine if this relationship is worth continuing. I don’t have an answer for that because it’s so personal and there are so many factors involved, but basically, you have to decide whether all of their strengths and the awesomeness they bring to your relationship together outweigh this crappy thing that they did…or even decide if it’s worth it to say anything at all and possibly create ongoing tension when in larger social settings with this individual. Again, this is entirely up to you. Personally, I’ve done both—I’ve forgiven the person and made a mental note never to lend them anything ever again, and I’ve also cut people off.
Where Do You Go From Here?
I’m so sorry you’ve had to experience this. No one wants to be in such an uncomfortable situation with someone they care about. The disappointment, bitterness, on top of the hit to your wallet, is a lot to deal with. But, believe it or not, there is a bright side to this:
You’ve learned something about yourself and discovered a personal boundary: Maybe it’s that money and friendship don’t mix for you, or maybe it’s that you should never lend what you can’t afford to never get back.
You’ve learned something about someone else: for better or worse, whether you still love them or not, they have a not-so-great side, especially when it comes to money. Adjust your expectations of them accordingly.
You’ve helped develop an important life skill: By having the courage to confront this awkward, uncomfortable situation head on, and ask this person for the money back, you’ve reinforced an important skill that we all need to master if we want to be successful in life—how to defend ourselves when we’re wronged, and the importance of confronting the matter, regardless of the outcome.
How to Lend Someone Money (or not) in the Future
Moving forward, here are a series of tips to make sure you don’t find yourself in this situation again:
- Decide if money is something you’d let come between your relationship with others.
- If it is, reconsider whether lending someone money is something you’d ever be okay with.
- Don’t lend what you can’t afford to never get back.
- Always assume you’ll never see the money again.
- Set a hard due date for when you expect to be paid back and follow up on that day.
- Be the borrower you wish to lend money to- follow the promise we made together earlier on.
It seems like money is tight for everyone these days, but even if it’s not, it’s important to be a borrower of integrity. If you’re the lender, be prepared to not get that money back, and determine if your relationship with this person is worth it. If it is, set a hard deadline. I’m not sure if this is quite the answer you’re looking for, but take it from me—someone who’s been in this position way too many times—this is the answer you need.
And on that note, I’m off to go send that email money transfer to my friend right now.