When Should You Say No to Those Who Want to Borrow Money from You?

By Xin Lu on 24 February 2008 21 comments

I think most of us have been asked to lend money to someone we know. No matter how close you are with the potential borrower, there are certain situations when you just have to say no. Here are some of the times I think you should absolutely keep your money for the sake of your relationship with the other person and the well being of both parties.

1. The money is enabling an addiction - If you know full well that someone has a drug habit or gambling problem, you should not give them money. The best thing you can do is to get them real help such as rehab because otherwise the money will be spent on their habit. If you become an enabler by giving them money they may hurt themselves even further.

2. Your boss is asking you for money
- I wrote about this in an article about crazy bosses . A manager really should not use his or her authority to secure a loan. It is highly unethical and you should not be afraid to report such behavior to the higher ups or even the authorities. If your boss is really your friend he or she should not take adverse action against you even if you refuse to give them money. However, if a manager targets you in a threatening manner because you refused to lend money you know that they should be reported.

3. Good money is going towards irreconcilably bad debt - I read a story somewhere about a very responsible man who had extremely irresponsible in-laws who took out multiple cash out loans on their mortgage and ended up in near foreclosure. They were asking their son in-law for help to cover their mortgage which is now twice their income. I think in cases like this when you know the borrower cannot manage the money you give them you should not let them squander what you earned and saved. What would really help is to teach them to manage money responsibly, otherwise, continually paying off a chronic debtor's debt for them is no different from enabling a drug habit.

4. Repeat borrowers or leeches
- In some families there is just that one person who has a track record of hitting up everyone for cash. If they are perfectly able to work and generate income and choose not to do anything but borrow money then you should refuse to be taken advantage of. Once again, what would really help these people is to teach them to become financially savvy, and that can be done with coaching and perhaps employment opportunities.

In all of these cases, you should think of alternatives to money to help those you do care about. Ask them what the situation is, and look for ways to improve their lives without giving away a bundle of cash. In most of the stories I have heard, relationships actually get worse if money exchanges hands because more often than not the borrower does not pay the lender back. If someone is worth helping you should dig deep and find the root of their problem and help them eliminate it, and if someone is just an opportunistic jerk perhaps it is better to sever that relationship and improve your life. Either way, you must be strong and say no when they ask you for money, even if they promise they will pay you back.

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Guest's picture

Even the best plans with best friends with the best intentions can go wrong. If lending to someone you know, be aware that if things go awry, you're going to have to make a choice between losing the money or losing the relationship (and you can still lose both).

Guest's picture

There are people who will try to extort money from friends using guilt or whatever other means - and often these investments or loans are clearly done only in the name of friendship. The person loaning the money knows the friend is going to use it on something questionable or on a scheme that may not entirely make sense, but still gives it anyways to maintain the friendship..

Linsey Knerl's picture

"Anytime you can't afford to not be repaid.."

We have loaned to people we trusted.  In each instance where we didn't get paid back, we had no one to blame but ourselves.  I'm not going to sue someone over $50, so I just write it off as a bad judgement call on my part, and put them on my "naughty" list.

Someday these people may need a job reference or just a good word put in about them.  This they will not be getting from me....

Great article!


Guest's picture

If you can't afford to lose it, you can't afford to loan it.

Guest's picture

You probably should only lend/give money to people who are your closest friends. Otherwise your gonna end up getting having a bum with a criminal record follow you around asking for more and more money.

Guest's picture

I never loan money with any real expectation of getting it back. That way, if I loan to family and friends, I put it through the same judgment filter of, "Would I be wise to give this person a monetary gift of this size?" It also means I'm pleasantly surprised if I actually get the money back.

Guest's picture

I'd loaned money to a friend, who very quickly abandoned me altogether. Not only did they vilify me when I tried to ask for some back (supporting two people on one person's student loans is really tight, and I needed all I could get back), they managed to drive me away from our social group too.

In more recent times, I loaned virtual money to a friend in a game, and he just disappeared altogether. It was a risk I was willing to take - it was a lot of money, I suspected he might try something like that eventually, but now I don't have to wonder if he'll attempt to rip me off. Probably, he thinks he got away with it, and I'm better off without him anyway. Perhaps in some of the loan considerations, it's worth considering if the money given will 'get rid of' someone who you don't really need in your life again.

One time, I had had to call friends to ask for money. My then-boyfriend hared off to a remote town to hang out with a cousin and had no money to get back, and he'd already drained my bank account. I felt horrible having to ask my friends for help, and hadn't stayed in touch due to the shame - but I'd give a great deal now, to have them back. He can stay away though. :P

Guest's picture

When it comes to friends, there are two types of lending. One is true lending - helping out with a down payment or large purchase or repair. The other is incidental lending - loaning money for a friend to buy lunch if they forget their wallet. In either case, a repeat borrower should be avoided.

In the true lending scenario, you should ALWAYS get an IOU (which is, in fact, a promissory note). If your friend is offended that you ask for this, this is your first red flag. You can find basic forms on the internet. If it's a large amount, it may be worth calling an attorney friend, if you have one. I am currently representing a client who loaned his friend of 20 years about $70K - the friendship is over and they are in Court.

On the other hand, I've never had a problem spotting a friend for a drink or food when we go out. Usually it works out in the end, with the friend paying for something along the way. (I have also, on rare occasions, asked an employee for a $1 to buy a soda, if I didn't have cash and paid it back immediately.) A good rule of thumb is that, if you feel uncomfortable when asked, don't do it.

Guest's picture

I have learned to only "give" money if I do not need and do not expect it back. I refuse to "loan" anyone any amount over $20. I agree with one of the other comments that said if it makes you uncomfortable do not lend the money. I am against lending large amounts of money that is earmarked for something else. I also do not like to borrow money from family or friends. In the last 10 years I have borrowed only from my in laws and paid them back immediately. I do not feel comfortable borrowing money. It definitely can ruin relationships.

Guest's picture

I'd only help in a true emergency, like if I know someone's house burned down or they were in the hospital for something. Even then, I prefer to give to family over friends.

I don't mind paying for lunch or a coffee, basically anything under $20 is a nonissue although I must admit that the next time we're out I'll expect reciprocity. I always get it; I must have a great group of friends.

One of the most awkward moments ever was when my husband talked me into going out with his coworker and wife, at their invitation. When the bill came, they said they didn't have the money for it. My husband looked at me (the card carrier for what I thought would be our half) and I paid. I was especially mad because his coworker ordered multiple beers and ran up quite the tab. We've never been invited to their house, they've never invited us out again, and against my protests they are occasionally invited to parties. They show up empty handed every time - surprise, surprise. I can hardly look at them, I am still livid because I feel so used. My husband feels like they're "poor", which I guess is relative because all I see is their cars, etc. and I know they could've paid if they valued the potential for a real friendship with me.

Does anyone else find that people who know you're saving money and paying off debt will ask for money as soon as they find this information out? A friend of mine told our other friend that she had a large chunk saved, and within a week that friend had a $10k emergency crop up with a loan request. I refuse to feel guilty or obligated because I'm on the road to fiscal responsibility.

Guest's picture

Hi, I felt compelled to reply to your post - YES, I have a situation where people know that I have received a lump sum (my own fault, I TOLD them, "live and learn" hopefully..). I belong to a 12 step program and due to some serious mental & physical health issues applied for Social Security Disability 3 years ago. After being denied twice, the judge approved my Disability case & in addition to having a steady fixed income now (I am so grateful for this respite, many countries one simply starves if unable to WORK)I received a lump sum payment for retroactive months that added up to "a pretty penny." I have gottem myself completely out of debt (the first time in 2 decades I have no credit card balances), was able to have major car repair work done, repaid my parents for dental work, and it feels so wonderful to know that I am given this opportunity to address emotional/physical problems and to have good transportation and a decent roof over my head! ANYWAY, a person in the same 12 step program was someone I thought I could share all of this with, the nature of the "program" is befriending others who have been through similar rough spots in life - and she keeps bringing up specific "crisis" amounts of $ she "needs" for heating oil, overdrawn bank account, it never ends. I don't participate in discussing financial details with her anymore, and I'm polite & tactful about it, but it's CLEAR that she is ANGRY that I am not forking over lump sums to her. It's as if she thinks I've won this jackpot and it's money that "needs" to be SPENT - DISABLED, what part of that do people not understand, Ed McMahan didn't knock on my door and hand me a check, I've been thru some horribly traumatic events in my life that clearly have "contributed" to my eligibilty for Soc.Sec. Disabily criteria! She keeps making blunt remarks such as "people who have money have it becuz they are stingy and greedy"blah blah blah. I don't respond to these remarks and am getting better at letting there be an uncomfortable "pause" & she'll start rattling on about something else...it's obvious that she's needling me and I know there are many people that have similar situations, and get totally taken advantage of and milked/conned for money from these parasite type of people. I'm not "stupid", and I'm not far gone enough to warrant somebody else handling my financial affairs, but it sickens me that I feel compelled to actually LIE and tell people like her that I have put the lump sum in my mother's hands for safekeeping. She was asking of course when I got it, etc., etc., so I just told her that - it was soooo contrived the way she responded and said,"Are you SURE that's a good idea?" and I said "What?" (playing "dumb"), & she said "letting your mother handle your money?" Um, I told her, thx for her concern but yes, I am comfortable with the arrangement. I just can't believe the gall of people, I don't know why this should "surprise" me but it does help to write it out in a forum that touches on a subject that's been quite an issue for me the past 3 months. Thank you for "listening" and any feedback/suggestions is most welcome! Sincerely, Valerie

Guest's picture

First of all, I think you handled the situation appropriately and I am very glad that you did not just give this person your money. People like this are leeches, sponges and con artists who are constantly looking for someone to bail them out. I had a friend like this 20 years ago, when I was just out of college and was starting a good paying career. She was always around on payday, with a need for money that for some reason, only I could fulfill. I was very young and naive and I am now embarrassed to say that I believed her every time. I later found out, from her own family, that she had a history of using people for money. Once I got wise to this, of course I stopped giving it to her. She called one day and told me her utilities were being cut off if I didn't give her money to pay the bill. I told her I would go to the utility company office with her and help her set up a payment arrangement so she could pay the bill herself over time.
Of course, there was no utility bill, she just wanted money for booze, drugs, who knows what. She went through the roof and hung up on me.

Guest's picture

I completely agree with what the previous person commented on...I have been saving up money and living rather cheaply (not going out, not buying things that I don't need) and my friend had commented about that. I told her I was saving up money for a down payment for a house. She called today saying she needs a big favor from me and needs to borrow some money to fix up her car and pay her rent. I feel very uncomfortable doing this. First of all, she is always getting her nails done and going out every weekend and buying alcohol. The other thing is that I have been duped before by another friend who stated she was in dire need for paying her rent, bills. I gave her money which she later spent on buying clothes. She then asked me again later, but this time asked for a loan because she had nobody else who could help her. Of course, being the sucker that I am, I lent her the money...and never got any of it back. When I later was injured and could not work, she kept hinting at her financial problems. I couldn't help her even if I wanted to because I had no income coming in. When I told her so, I didn't hear from her for a very long time. Now that she's getting married, she's contacting me again. Perhaps wishing for a wedding gift. The whole thing has left me so jaded. However, I feel bad for my new friend here who needs money for her car and rent. She says no one else can help her. However, this is my hard-earned money that I saved and I know my limiting of how much I'll "give" her will put a strain on our "friendship." I don't know why I care so much but my parents went through financial troubles and no one helped them and my mom comments on how she had wished someone would have come along to help them the way she now helps others, and the way I help others too. I guess the whole thing is you should only give what you can afford to lose. Never expect it back, that way you'll be pleasantly surprised when someone actually does return your money back.

Guest's picture

I am a manager at a small store that sells lottery tickets and I am constantly being hit on by regular customers who think I should float them a $10 or $20 or $50 to play lottery tickets (gamble). When I say "nope can't do it" they act all offended and leave grumbling! I make only $8.00 an hour and the title manager to me is a fancy name for "slave" (where I get all the added paper work and ordering work and very little pay for it). But many people think I'm making mega bucks as a small store manager (yeah right)! When the last manager quit because he asked for a pay increase and when he didn't get it, he found work else where! I was moved to days and given the title of manager and 10 times the work I had to do when I was just a clerk (.50 cent pay increase whoo whooo, yippee "NOT"). The people who ask to borrow money, are people I hardly know and that is what blows my mind, how they can be so bold to ask me? If these people blew all their money scratching lottery tickets and losing, why on earth would I want to lend themy a $20 to blow on lottery tickets? Then if they lose and I sold them a losing lottery ticket it's my fault so I don't get repaid? I wonder if they hit it big if they would actually split the winnings or just toss back the $10 or $20 they borrowed without interest of course? But, my couriosity isn't that great so I won't lend any money to find out! It don't sound like much, but when 300 people shop a day and if 5 out of 300 gets a loan here and there every day it would start to add up quickly. It would financially hurt if they all wouldn't pay it back ASAP. And if I did it for one person I hardly knew and others got word of it, many would expect me to be their private gambling lender! One of the other sales clerk was grumbling someone owes her $10 bucks and when she asked the person if they had it yet, they casually stated; "nope" and walked out the door with $25.00 worth of scratch tickets they just purchased. So, do I want to be the grumbler or others with MY money? To me it's a lack of self respect, respect of others and deep addiction to their own vices and they have tunnel vision and tunnel thinking on one subject only; "get money to pacify their vices and addictions" at any con game they can use to get YOUR money sucked out of you. Bottom line; borrowers are users with no dignity or self pride. Just another way to steal by being open about it. What's the difference between a pick pocket thief or a person who begs you to open your wallet and lend them money they have no intentions of paying you back? Who cares if they know longer like me! If, they did they wouldn't put me in an uncomfortable position to ask me for money in the first place! To me they could go milk cows on a farm or scrap bubble gum off the high or baby sit on the weekends (stay out of the bars) and get their own money and leave me and others who work hard alone! That is what banks are for and if a bank won't lend them the money or their credit card company.........geeishhhhhhhh why would anyone else?

Guest's picture

There are people who want to borrow money to make even more money. Don't let others push you into giving up your hard earned money so that they can use it to make even more money for themselves. I believe in helping others when they are truly in need but not when they don't have CASH because it's all tied up in their assets. Same principle applies to my friends and family. Once you say yes, they'll expect it next time and get angry if you refuse. Just say NO from the beginning and they won't ask you again. Even better, to those people whose CASH is all tied up in assets and are asking for your money, ask them yourself whether you can borrow some money instead.

Guest's picture

My mother asked me to borrow money for their house payment. Unfortunately, I was still in college and money was tight for me as it was. She then asked me to ask my fiance, which I gladly did. He asked me when she could pay him back since it was quite a large amount. She said a month and he gladly said yes. It has been 8 months and she has only paid for half. Today when he asked her when he might expect another payment (even if it isnt in full) she became upset and said "I had a trip planned for me and my sick husband, now you have made it impossible." I will never allow anyone close to me to borrow money from either I or my fiance.

3. Good money is going towards irreconcilably bad debt: This is completely true. Even if it is your own family... DONT DO IT!

Guest's picture

Most of the time lending money is a huge mistake but lending money more than once to the same person is an even bigger one. You become an ATM to them and it becomes a problem. I'm a 20 year old guy who's taking time off from college for financial reasons. I work as a dog walker and I get paid rather well. My parents are disgustingly irresponsible with their finances and depend on me lending them money way too much. It was my fault for being so nice and tolerant at first. But each week they spend their money without any worries because they know that I can't bring myself to reject a loan from my own parents. I help out with many expenses around the house such as grocery. This whole situation upsets me greatly because it causes a butterfly effect in my finances where I can't keep track of my money and I can't plan with it. I'm a bit irresponsible also but I am trying not to follow in my parents path. My Dad always chops the payments up into small amounts. He never pays it in full, always a fraction of the full balance.

I'm beginning to think that the only way I can ween them off borrowing money from me is to move out, forcing them to straighten themselves out financially. They're like teenagers and what's worse is that they leave bills unpaid. I am losing my religion!

Guest's picture

Although I am 26 years young, I have totally committed myself to not letting extended family members, church members, and associates borrow over $20 bucks from me. Recently (2011) I had earned over $4k from student loans and saved my money for over 5 months; and had no other income other than the money I earned from playing the piano at a church. Anyway, I mistakenly announced how the Lord has blessed me around my aunt. She heard the money I had and called a day later, stating she needed to borrow 1,500k. I loaned her the money graciously; but when I kept calling and asking for it back, she kept getting mad.

The good part is that I prayed about it to God & asked Him to help me get my money back, and thank God my aunt paid all of it back. It took a minute but she paid it back. Now, I see that we as people have to watch what we say and tell to others; especially when it comes down to money. Being frugal is essential and I believe the Lord wants us all to be financially empowered. With that being said; I will only lend to others if they are SICK--ABOUT TO DIE---OR GET PUT OUT ON THE STREETS! Other than that; I am not going to lend over 20 bucks. I am choosing to be very discrete about my finances to everyone. This does not mean that I will not help people-it just means that I am going to be very strict about my finances. But thank God He helped me to recover all of my money back. Thank you Jesus! :)

Guest's picture
Diane Washington

I have recently met a gentleman and he has been having hard times (probably due to mismanagement of his funds). Anywhoo, he lives in Nashville and I in Memphis, TN. He came to see me, then the following week I went to see him. I had to pay my own hotel, food, entertainment, etc. I then asked him to accompany me to a convention in St. Louis. I paid for everything because he said "his finances are messed up" right now. Now he is saying his rent is behind, however, his son, daughter, and son-in-law live with him. I asked couldn't they help out? He rambled something out, but then text me to ask could he borrow $370.00 until the end of the month. I replied back, "what happens at the end of the month?" He said he gets paid. I am a Woman of God and prayed and asked the Lord to direct me. I believe in consulting the Lord about everything. I firmly believe in my spirit that I DO NOT NEED TO LOAN HIM ANY MONEY. (1) Because it is a temporary solution (2) When I tell him to pray and ask God for solutions, he ignores those text messages (3) I feel in my soul he is use to woman bailing him out (4) He only wants to be with me for the fishes & the loaves (5) He is looking for a meal ticket. At this point everything within me says, NO! I have the $370.00, but that is my money that the Lord has blessed me with to take care of my bills. After reading these posts, my answer is a firm, "sorry I won't be able to help you, but I will pray that God does!" I probably won't hear from him, and I really like him. I don't like him enough to be used and walked on like a doormat. I am a Queen with a queen's mentality. Giving to a man is not conductive to who God says I am~ No need to question the issue any further. Thanks for all the posts I have read!

Guest's picture

I just lost a friend that constantly asked for small loans. To make he feel better about it I let her clean my home. Then it was excuses that she could not come over yet still asked for money. She has kids and we felt we were helping to feed them. Then she asked for $3000. To pay off a Title loan I told her not to get. She said she would pay us back. Really? With what? We were buying groceries and clothes for them. I told her we needed to take a break from each other for a while. I feel like I am finally free. I really love her, but we were enabling her. I also think we are not the only ones she was using. Facebook has become the new panhandling tool. That is my story.

Guest's picture

I heard a saying once. "If you lend a friend twenty bucks and never see that person again it was money well spent."