Lending money to a friend or relative
Are you willing to lend money to your friend or relative? One day, you might get a call from a cousin. He wants to borrow $2500 for a used car. His old car was wrecked last week. He could not get a car loan due to insufficient credit or income. What are you going to say? “Oh, I don’t have that much money.” Or “Sorry, I can’t lend you again. You still owe me $300. Remember the loan for your Florida vacation?” Or “Sure, I’ll send it to you right away.”
This is a challenge. It’s hard to make you and your cousin both happy. In your heart, you know once the $2500 is lent out, you may never get it back. That’s your hard-earned money, and you could use it to pay house bills, save and invest it for your retirement, etc.
Money is such a sensitive topic. It could hurt the feelings and friendship. It’s hard to say No, but sometimes we have to, in order to protect ourselves financially. I feel it may be related to the culture in some ways.
Chinese culture does not like to say No directly:
I grew up in China, and lived there for 30 years . In China, if a lady asks you: “Do I look pretty wearing this dress?” You’d better say Yes, no matter what the truth is. Over there, Yes does not always mean yes. But No means more than just no.
The place I grew up is a small village in northern part of China. My family was very poor. My dad was a school teacher, and didn’t make much to support a family of four. My mom is a home maker. When I went to the college in Beijing, my dad had to borrow money from his friends, to cover my college expenses for 4 years. At that time, there was no student loan available.
The college was not that expensive in China back early 80s. Tuition and room was free. Because of my family’s low income, I got good stipend from the school to cover the food. All I had to pay was books, clothes, and other miscellaneous expenses, which were covered by the loans my dad got.
My dad’s friends were not rich either. They were so nice, generous, and supportive. I really appreciate all their help. I was able to finish the school, get a good job, and help my dad to pay off all the loans quickly.
Even now, borrowing money from each other is still common in that village. Once a while, some people went to my parents’ place, and wanted to borrow money for a new house, son’s wedding, etc. My parents are not that poor anymore. My dad was retired, and has a decent pension. For his friends who helped us before, my dad was more than happy to help back. But some relatives simply wanted money to gamble.
In China, face is everything. To many people, face is more important than life. Saying No directly seems so rude and unacceptable there, and friends could become enemies. They feel that, being rejected is losing the face, is humiliating, or at least is disrespecting.
If you don’t want to lend money, you have to pretend like this: “Yeah, I fully understand your situation. I really wanted to help you, but just don’t have the means. My kids just spent so and so much, and I have nothing left at hand.” Actually the money is just hiding at the drawer 5 feet away, and is giggling at you quietly. Everyone knows it’s a lie, but feels more acceptable, as the face has been saved.
I would love to say: “No, I won’t let you gamble away my money!” But my parents wouldn’t agree with me. Having lived in US for 20+ years, I learnt to be direct and honest. That’s what I value the most.
Take care of yourself first:
Taking care of yourself is not selfish. Only when you are in a great shape (financially, physically and mentally), you will have more energy and means to help others.
If someone asks to borrow money from me, I would take care of myself first in this way: keep being honest to myself, and ask the following questions before making the decision:
- How much chance will I be paid back?
- How long will it take to get it back?
- Do I want to charge interest? If yes, what rate?
- Does it hurt me financially and emotionally if I’m not getting the money back?
- Do I feel comfortable about treating the loan as a gift?
Did you ever lend money to someone? What’s your experience and suggestion?