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Ask Dave

Should I Loan Friends Money

Charlie says a friend owes him money, but the friend is helping Charlie with a job. Does Charlie pay him for the job or forgive the debt?

QUESTION: Charlie on Twitter says a friend owes him money, but the friend is helping Charlie with a job. Does Charlie pay him for the job or forgive the debt?

ANSWER: Did you have an agreement to pay him for the job? Why don’t you just ask him what his expectation is? “No, I’m just helping you as a favor. I still owe you the money.”

“Well, I’ll let you work some of it off as part of this. Let’s work it out.”

But you just need to talk about it. There’s not a right or a wrong answer. If you agreed to pay him a certain amount, you need to talk to him about the possibility of just knocking that off the debt. That way, you actually get your money, which is a good idea. If maybe the debt and the amount of work on the job are close, you can just knock out the debt—completely forgive the debt—as a part of the work.

Just look at it and talk it through with him. Figure out what’s fair and what he’s thinking. There’s not a right or wrong answer. It sounds like you guys still have a strong relationship. He’s willing to help you with some work that needs to be done. You were willing to loan him money. A real good way to do this would be somehow clear it up as a part of this. It’d be a great thing to have off the back of your friendship, and, by the way, don’t loan people money. Don’t loan people money.

If you have the money and you want to give somebody some money, give them some money. I’m okay with that. Somebody’s hurting, you’ve got a friend in need and you’ve got the money, just give them some money. That’s fine. I don’t have any issue with that, but quit loaning people money. You change the relationship. “The borrower is slave to the lender.” You change the relationship from friendship to master and servant. “Oh, I didn’t feel that way!” It doesn’t matter how you feel. You don’t get to change the facts. It doesn’t matter if you feel the law of gravity or not. You’ll notice it when you hit the sidewalk. The law of gravity is the law of gravity whether you feel it or not. What goes up will come down. He who loans someone money will mess up relationships. Don’t do that.

You need to clear this one up. Then, folks, don’t be in that business. Help people—give them some money, but don’t loan them money.