Board 8 > Lending Money Question

(+) Yeah! (+)

Hypothetical Scenario:

Lending a non-trivial amount of money (let's say $4000)

Person you're lending to is someone you trust completely. A very close friend, family member, or long time lover.

Amount of money lent is not a huge blow to you. Less than 5% of your savings and an amount you would recover just by working your current job in 1-2 months.

Person you're lending to is able to comfortably pay it back within 2 months based on what you know they earn and their current expenses, and tell you they will.

Do you require them to sign something or do you just take their word for it?

Given those facts, no. Can I see myself suing them for repayment? If not, then I don't need a written promissory note.

Honestly, I can say I'd never lend money that I couldn't afford to lose permanently. Sounds like that's the case for your scenario. Which means I wouldn't bother getting anything signed and if they paid me back great, I'll hell them financially again in the future. If not, then they lose the privilege of ever receiving help again.

No, but i still wouldn't expect the money back. Also as a side note, if they could comfortably pay it back in 2 months i'd be concerned why they just don't get a small loan and pay it back that quickly with minimal interest.

hockeydude15 posted...

Also as a side note, if they could comfortably pay it back in 2 months i'd be concerned why they just don't get a small loan and pay it back that quickly with minimal interest

No idea. Maybe bad credit?

Just curious what sentiment is here.

I loaned one of my relatives 50k many years ago to help them buy a house. We didn't sign anything to make it official but the expectation is that they'll repay me with moderate interest once they're done paying the rest of the mortgage. It was the only way they could afford to buy one (lol Canada's housing market) and in that time the house has doubled in value, so it was a good investment. I won't actually need the money until I retire someday so, hey, someone may as well use it in the meantime. The interest they'll pay me is more than my savings account where it was sitting before.

I really don't think they'll screw me, but this is still money I can technically afford to lose. Don't lend anything if not getting it back will really hurt you. From what you posted, though, this doesn't seem that huge of an amount of money to you, and if they need it right away it's probably for something important. If you trust them, no need to jump through any hoops to sign anything, imo

It's always better to have something written but I've been in a similar situation and just took their word, so I can't really say "yes always" without being hypocritical.

Anything signed won't matter in the court of law most likely. Also, based on personal experience. Never loan anyone money ever that you won't be okay if they never pay it back.

Always sign.

If its uncomfortable to make them sign a contract its going to be way more uncomfortable trying to collect.

Only exception would be for something they legally couldnt have taken a loan out for such as a down payment on a house. I dont want to get them in legal trouble, just cover my ass

Corrik7 posted...

Anything signed won't matter in the court of law most likely. Also, based on personal experience. Never loan anyone money ever that you won't be okay if they never pay it back.

Honestly I think the plan isnt ever to take it to court, but to politely point to the fact you could if it came down to it and to set clear expectations of when the money should be repaid

i think it's probably prudent to get it signed, but in your shoes i wouldn't get it signed

Asking them to sign a contract is likely to strain the relationship. If you lend money money to someone close, have no expectation that you'll ever get it back. If you do, great, but know whether the relationship is more important to you than the money before you push for repayment.

I would keep a spreadsheet with interest added to a new row every month and send it to the person. It helps to keep everyone in agreement as to what is owed and it reminds everyone etc

I wouldn't lend money to anyone I thought I needed something signed from

record a mortgage.

IfGodCouldDie posted...

Honestly, I can say I'd never lend money that I couldn't afford to lose permanently. Sounds like that's the case for your scenario. Which means I wouldn't bother getting anything signed and if they paid me back great, I'll hell them financially again in the future. If not, then they lose the privilege of ever receiving help again.

Yeah, this. If they don't pay it back, it's essentially a gift. But I only do that once, and I'd tell them as much before I gave it to them. If they do pay it back, I'll be open to helping them again next time (as long as I can afford to, obv)

Lopen posted...

Person you're lending to is someone you trust completely. A very close friend, family member, or long time lover.

are you lying about this part?

why is this even a question? is there something about them that gives you pause? are you admitting that you're blinded by infatuation? i feel like i need storytime

i have all sorts of advice for when it comes to loaning to slightly less reliable friends, but you've just said you trust them completely so it shouldn't matter

i do hate having to keep track of stuff in my brain. worst case scenario, just create an email chain where you say "i'm loaning you $4000 for ____ and you'll pay me back sometime this year" and they respond "yep"

banananor posted...

are you lying about this part?

Well

Surprise I'm actually the lendee in this hypothetical, and this is actually why I created the topic.

I went self employed last year and long story short I vastly underestimated my tax bill (thought deductions would give me more mileage) and ended up owing north of $7000.

My girlfriend of nearly 3 years is the lender in this situation. We actually started living together really early in the relationship due to covid stuff-- it was just easier that way, and yeah, I mean we've discussed marriage and such. I did not think this would be any problem

Anyway the alternatives were to

1. Liquidate a bunch of stocks in a dead market, realizing huge losses. Didn't want to do this. Was not on the table
2. Not pay the IRS, file late. I wanted to avoid this because my business is new, but was willing to. I don't know if this is a thing but I feel like if I late file first year I'm gonna get flagged to be more likely to be audited later.

Loan from the bank was kinda off the table. I really don't like owing stuff (which made this really hard for me) so I don't have a great credit score as I only started building credit for my business, and my tax people finished my taxes April 15th so I didn't have a lot of time. I asked if she was OK with it because I'd rather owe her than the IRS and told her to just let me know if she had a problem. Anyway she says she's okay with it and kinda says "well maybe we'll write an IOU or something" and I don't think much of it. Anyway days pass and she still doesn't give me anything, and says she needs that paper, and I'm like "oh you were serious I thought that was just like if I'm slow paying" and she won't give me the money till I write it out. Now it's too late to not pay the IRS cause the payment is scheduled to withdraw Monday first thing and its the weekend cant get a hold of my tax peeps. I let her know I have a problem with that and I would have just late filed with the IRS if I knew she was gonna be like that.

So yeah that didn't go over too well and exploded into a series of major fights and things are pretty rocky right now, because to me it feels like she doesn't trust me, and I've told her that. She insists that she trusts me and it was just how she was raised, but my mindset is more along the line of "I only need a paper if I have any doubt they'll pay me back." Further I had contacted two just good friends and they didn't make me sign anything

So the purpose of this topic is twofold

1. See how normal it is for this mindset to exist among people
2. Determine whether I'm justified in feeling betrayed a bit

What an amazing lopen topic twist.

My big question is if she is legalistic in other things. My spouse and I are technically legally not married due to tax purposes but we signed a contract between us. To us this sort of thing is a no brainer.

If she isn't legalistic at all, as in you don't have defined responsibilities etc. I think it's kind of concerning, but if she is I wouldn't blink

Probably not very legalistic. She's actually been married twice and got gouged both times due to lack of pre-nup (and ironically I'm the one insisting on a pre-nup before marriage. That's more because I wanted her to be at ease as she has more to lose than I do and has gotten gouged before). She's also generally very trusting of people.

I mean it's possible that those bad marriages have made her paranoid too, but I'm not sure that makes it better I dont want marriage baggage on me.

Other factors to consider
1. I got a loan from her one other time. It was just a black friday loan for around $800 to get a great deal on a lenovo laptop (we'd been together a bit over a year then). I said I would pay her back within 2 weeks. No document needed for that but she gave me some passive aggressive crap about non payment a bit after 2 weeks, and I was confused because I'd paid it back. Turns out cashapp didn't send her a notification and the money had been there for a week. Oops. Never really apologized for that either.

2. Her daughter bought some land and she footed part of the bill and made her sign a document for that, so precedent is there. To me that's a totally different beast though because it must be paid over like 10-20 years and is a much larger sum and her daughter doesn't have contractually guaranteed income like me or even stable employment.

I mean, I was much less legalistic on my first marriage and it also screwed me over which directly makes me more legalistic now. I wouldn't call that baggage as my partner is fine with it.

I think you have two different things going on here

1. She wants you to sign a contract to borrow money after having financial issues with previous partners. I don't think there is anything wrong with this
2. She is abrasive to you when you express displeasure about how she feels above. That is a much bigger issue imo. I would probably try to get to the bottom of that one

Hmm. Yeah. Makes sense. She's always been pretty defensive about things, even being called defensive. That's something to figure out down the line, if the relationship survives.

I mean we've discussed possibly breaking up as a result of these fights and I said some pretty awful things during them so I get it.

But like, I was so crushed SERIOUSLY thinking the relationship was potentially over (I'd mulled over what ifs before over smaller issues and it didn't hurt nearly this much) that I feel like I'm just going to trust her that she loves me and isnt trying to hurt me when she does things I don't understand going forward. My heart wouldn't feel so ripped apart by this if the love was fake. I just gotta trust myself on that.

At this point I'm more kinda just wondering if I made a mistake to think this was something to be upset about to begin with, in case this is the end.

Sucks having a moment of enlightenment when it's too late. Like maybe it won't ever feel the same again, or maybe we'll break up outright in a few weeks I don't know. I'm kinda at peace here because if it ends I'm not sure I want to be in a relationship where my partner abandons me for lashing out in a time of difficulty, but yeah, just wish I'd come to this conclusion BEFORE I got upset about the document thing.

I loaned money to my brother twice. The first time we wrote up a contract more for a feeling of formality than anything, he paid me back on time, and all was good. The second time we didn't write up anything because I trusted him. He wound up killing himself and not writing a will. So... Yeah.

Honestly I would go to therapy. I think dwelling on if you overreacted is fairly secondary to the real issue because if it wasn't this it could be anything else. My spouse and I have had dumb fights over dumb things several times before. The content of the fight is less important than the resolution

Lopen posted...

Well

I mean, this would actually change my answer completely.

If I was the lendee, I'd do absolutely whatever the lending party asked if they were willing to lend me the money. As I have no right to their money and I understand that most people do not view their financials the same way I view mine.

Being the lender and the lendee should be two completely different mindsets in my opinion.

IfGodCouldDie posted...

I mean, this would actually change my answer completely.

If I was the lendee, I'd do absolutely whatever the lending party asked if they were willing to lend me the money. As I have no right to their money and I understand that most people do not view their financials the same way I view mine.

Being the lender and the lendee should be two completely different mindsets in my opinion.

I mean I did do it. It's not as if I demanded that it be done without signing anything. I just made it clear that I wouldn't require the same thing and it made me feel a little like I'm not trusted.

I'm more interested in the lender's potential mindset than my own. I know how I feel.

Lopen posted...

I just made it clear that I wouldn't require the same thing and it made me feel a little like I'm not trusted.

It's not about you.

My read is that when she lent you money before, and she thought you hadn't paid it back, it cast a seed of doubt in her mind. It doesn't matter that you had paid and the app hadn't let her know. You should have told her personally and apologized if it caused her any stress.

Now you're asking for more money and kvetching about her wanting a guarantee. You need to be bending over backwards.

You've also put yourself in a time crunch which isn't doing either of you any favors. You're obviously stressed about it. And she's going to be stressed because she's going to feel "I'm his only hope".

I would look to get the money another way at this point, regardless of the hit I'd take. But that's assuming continuing the relationship is important to you. Continuing to harp on the matter with her is not going to help. Apologize (it's all your fault and sorry for any stress) and let her know you've found another way (and don't whinge about the penalties or whatever it caused you).

(but I'm just an internet rando, so maybe listen to some more people too)

The money's already got my man, Im dealing with fallout here. And the stipulations going in were "I'll just late file with the IRS if you mind"

Keep in mind I actually borrowed money from a friend earlier this year (I got billed for some pricey hardware out of nowhere when I was told it wouldnt be billed till June), told her, and she asked "why didn't you ask me?"

I do not think I should need to apologize about the app not sending her a notification(this is way in the past mind you, over a year and a half ago now-- don't think this is remotely in her mind as much as on mine) and her not even checking and taking it out on me without asking. That's completely ludicrous.

Lopen posted...

The money's already got my man, Im dealing with fallout here. And the stipulations going in were "I'll just late file with the IRS if you mind"

Keep in mind I actually borrowed money from a friend earlier this year (I got billed for some pricey hardware out of nowhere when I was told it wouldnt be billed till June), told her, and she asked "why didn't you ask me?"

I do not think I should need to apologize about the app not sending her a notification(this is way in the past mind you, over a year and a half ago now-- don't think this is remotely in her mind as much as on mine) and her not even checking and taking it out on me without asking. That's completely ludicrous.

Oh, well, sorry about that.

My general point still stands that when relationships have difficulty that you've got to think "it's not about me".

Seanchan posted...

My general point still stands that when relationships have difficulty that you've got to think "it's not about me".

The point of this whole topic is trying to understand her mindset, yes. But thank you for assuming.

A year and a half aint nothing, people will remember shit regardless of time if it caused them any stress or heavy thoughts. And seeing as she has dealt with marriage without prenups and lending money out, it stuck with her. This is why communication is so important. Its too late now but it wouldve been better to let her know instead of an app. Going forward I would take that to heart and just be more transparent about things.

I agree that its probably best to get the money some other way and absolutely do not guilt trip her about it either, because its easy to get emotional during a stressful situation.

Also, also stop borrowing money. My two cents.

SwiftyDC posted...

Also, also stop borrowing money. My two cents.

I don't generally. I've had to do it once in my life before these three incidents, over a dental emergency

Starting a business is hard lol

Interesting watching yes skyrocket after I flip the script lol. Honestly though the fact that it isn't a blowout either way is all I needed to see here. That's enough for me to give the benefit of a doubt but also feel like I wasn't being ridiculous by feeling a little hurt by everything.

Lopen posted...

Interesting watching yes skyrocket after I flip the script lol. Honestly though the fact that it isn't a blowout either way is all I needed to see here. That's enough for me to give the benefit of a doubt but also feel like I wasn't being ridiculous by feeling a little hurt by everything.

I think you nailed it. Good luck

(And also it can be about you)

You do whatever the person willing to lend to you asks.

That said, I have gotten screwed almost every time I have lent to people no matter how close they were. So, I just don't let anyone borrow money anymore.

The best was when someone said I don't get my money every month as agreed upon unless I personally drive to their house every month. Lol.

Lopen posted...

I do not think I should need to apologize about the app not sending her a notification(this is way in the past mind you, over a year and a half ago now-- don't think this is remotely in her mind as much as on mine) and her not even checking and taking it out on me without asking. That's completely ludicrous.

I actually find this more interesting than the idea of whether or not to sign something for the loan, I can't imagine myself not at least sending a 'hey, did the money come through?' text or something just to make sure everything was good.

Camden posted...

I actually find this more interesting than the idea of whether or not to sign something for the loan, I can't imagine myself not at least sending a 'hey, did the money come through?' text or something just to make sure everything was good.

I think I actually did and she misunderstood what I meant in the text for the record. This was a long time ago but yeah I do always do that.