On Loaning Friends Money (or, I’d rather give)

True story: A couple years ago, someone I know asked someone else I know (let’s say persons A & B) for a favor. Desperate, tears running down his face, A asked B for $20,000+ to help finish his new home and to cover unexpected medical costs for his child.

B loaned him the money.

Weeks went by. Months. Then a big problem: Lender B’s home business was facing some problems, and he needed that $20K back.

He went to A; A didn’t have it and didn’t know when he would. Bigger problem. B wanted his money; A couldn’t believe B didn’t understand. Suddenly, what had been a good friendship became tense, awkward and stressful.

The good news is that this worked out, sort of. A ended up taking out a home equity line of credit to consolidate all of his many debts into one (same money, but one place owed). He paid back B just in time. The bad news is that their friendship was never the same.

I could tell you a lot of stories like this; you probably could, too. Somehow, when money gets involved, things can get ugly fast, even between good friends. I’ve always thought this, way in the back of my mind. I’ve always felt a little uneasy about the idea of loaning friends money.

When I was reading Total Money Makeover, Dave Ramsey pointed out the Biblical principle at work here: Proverbs 22:7 The rich rules over the poor, and the borrower is the slave of the lender.

Essentially, when you loan someone money, you change the dynamics of peer-to-peer friendship. Now you are one who loaned and one who owes. And that makes things complicated.

In fact, in Hamlet, Shakespeare writes something similar: “Neither a borrower nor a lender be. For loan oft loses both itself and friend…”

So here’s my personal philosophy: If my friend comes to me, needing money, and it’s a real need, I will give–no strings attached–what I can. They can think it’s a loan if they want to, but I’m giving it as a gift–no interest and no payment expected. If I’m unable to give them the money, I can offer to do anything else to help. But I won’t lend.

If I, say, go out to eat with my friend, and she asks me to lend her what she’s owes, I will. But I’ll just give it to her. I’ll tell her, don’t worry about it. If she pays me back, fine. If she doesn’t, it was a gift.

And, if at the end of my life, I’ve paid for more friends’ meals than I’ve been given, if I’ve given more money than I’ve received, if I’ve been the sucker as some would say, I’ll consider it a good life, indeed.

Image: aldoaldoz

Now and Later, Biblically

2 Corinthians 9:6

The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully.

Biblical finance 5.1: specific ways to help the poor

A while ago, I wrote about the Biblical principle about helping the poor.

Today, a new friend gave me a large list of organizations to look into:

WorldVision
US Aid
Samaritan’s Purse
EQUIP
TearFund
CharityWater
AfriCare

Biblical finance 7: Money is not the end goal.

Proverbs 23:4 Do not toil to acquire wealth;
be discerning enough to desist.

I work to make money to save money to provide for the future, to give, to be responsible… yes. But I also work for other reasons: to be productive, to not be lazy, to use my degree, to sharpen my writing/editing skills, to learn, to grow, etc.

Money, as I have said here before, is not the end goal; it is the means to a bigger one(s).

Biblical finance 6: You’re either productive or destructive.

Proverbs 18:9 Whoever is slack in his work
is a brother to him who destroys.

Biblical finance 5: Give to the poor.

In addition to its advice on giving in general, Proverbs is packed full of verses that speak specifically to helping the poor.

14:31 Whoever oppresses a poor man insults his Maker,
but he who is generous to the needy honors him.

19:17 Whoever is generous to the poor lends to the Lord,
and he will repay him for his deed.

21:13 Whoever closes his ear to the cry of the poor
will himself call out and not be answered.

28:27 Whoever gives to the poor will not want,
but he who hides his eyes will get many a curse.

Last Christmas, a friend of mine was a Salvation Army bell-ringer–online.  She sent out e-mails to people, saying she was collecting money in an online red can, so to speak, and the money when to SA. I thought that was a pretty cool idea. Do any of y’all have other favorite charities that help the poor? I’d really like to set up a regular monthly donation to an organization like that.

Biblical finance 4: Listen to wise counsel.

Proverbs 13:18 Poverty and disgrace come to him who ignores instruction,
but whoever heeds reproof is honored.

I think it’s safe to say that most everyone in the pf blogging community listens to wise counsel–beyond the simple reading of other blogs and skimming financial magazines/books, I’ve heard bloggers talk about advice from parents, teachers, bosses and friends.

For me, this particular principle seems fairly easy to follow. A lot of what I know about money–well, OK, probably just about everything I know about money–has come through someone else, be it my dad or my friends or the Internet.  And while I’m on the subject, let me say how much I’ve enjoyed this financial bloging world. It’s already been a valuable resource for knowing what budget software to use, how to invest my money and how to advise a friend. So thanks.

Biblical finance 3: Give freely

Proverbs 11:24 One gives freely, yet grows all the richer;
another withholds what he should give, and only suffers want.

It’s hard to remember my first official financial advice. But I do remember my parents telling me to give freely, and God would take care of your needs.  I’ve seen them put this into practice, and I’m trying to do the same.

For me, the application of this principle means the following:  if someone has a need that I have the ability to meet, without it jeopardizing my ability to pay my own bills, I will.

Biblical finance 2: Laziness –> Poverty

By far the most recurring principle in Proverbs, that laziness leads to poverty seems an obvious point. I get it, mentally at least. I don’t expect, in my head, to become financially secure by sitting at home, watching TV and sleeping the days away.

However.

I do know that I could be very, very content to read books, watch movies and go shopping, most days. I know that usually when my alarm goes off in the morning, I want to stay under the covers. I know that going to work, while something I will keep doing, is not always fun or exciting, and I know that part of me wishes for all of life to be purely rewarding and entertaining.

These are not shocking revelations, I suspect. We all have a little bit of laziness (I hope it’s not just me, at least!). So this Biblical principle about money, though easy to understand, can be difficult to really put into practice. Maybe that’s why it’s so often repeated.

Proverbs 10:4 A slack hand causes poverty,
but the hand of the diligent makes rich.

Proverbs 12:27 Whoever is slothful will not roast his game,
but the diligent man will get precious wealth.

Proverbs 13:4 The soul of the sluggard craves and gets nothing,
while the soul of the diligent is richly supplied.

Proverbs 14:23 In all toil there is profit,
but mere talk tends only to poverty.

More? 19:15, 20:13, 21:17, 21:25, 24:33-34,

Biblical finance 1: Give to God first

Last weekend, I sat down with my new salary information and an Excel spreadsheet and took the time to set my new budget. My only rules were 1) Put as much as possible into savings/investments, 2) Include all necessary expenses (food, insurance, gas, etc.) and 3) Apply Biblical finance principles.

The last guideline results from a two-month-long study I’ve been doing—and still haven’t quite finished—on Proverbs. On a first reading, I marked all the verses dealing with finances. On this second reading, I’m studying each verse, adding it to a growing list of Biblical principles. Depending on your exposure to Proverbs, you may or may not know that its verses aren’t commands, per se, but general observations by Solomon, who many call the wisest man that ever lived.

So I’ve been thinking about a way to include these principles here, since they very much affect the personal aspect of my personal finance, and have decided to post a principle every Sunday. Seems fitting. So, without further ado, here’s principle #1:

Give to God first.

Proverbs 3:9-10 “Honor the LORD with your wealth and with the firstfruits of your produce; then your barns will be filled with plenty and your vats will be bursting with wine.”

Many Christians adhere to a 10% tithing principle, including myself, but I personally see this verse as encouraging generous, thankful giving—honoring God with a large portion of your money—and the emphasis seems to be on attitude more than on amount/percentage. For me, this means more than 10% might be wise.

If you’re interested in this sort of thing, Free Money Finance has run several posts on the subject of Christian giving:
What Christians and Others Give and Tithe
Tithe or Pay off Debt?
Does a Church Worker Need to Tithe/Give Generously?