Over the years I’ve heard from dozens of readers who have lent money to friends and family members, only to have become outraged when the deal goes sour. The problem is they write to me after they’ve made the loan and have been waiting months, even years, for repayment, without success, hoping I can wave a magic wand to get their money back.
I always tell these readers that I wish they’d written to me before they lent the money. Doing things right from the start makes all the difference in the end. Here’s how:
1. Accept reality
Lend only the amount of money you can afford to give as a gift. Don’t tell your potential borrower this, but know in your heart that the chances of you ever being repaid in full are fairly slim. That’s a fact of life. There’s a reason this borrower is coming to you and not to a bank or conventional lender to borrow money.