I loaned a close college friend $7000 last year. Due to life circumstances and lack of family resources, he was stuck in a rural area with no developer jobs. He was having trouble landing a remote job and I ignorantly asked why he wasn’t applying to in-person jobs on the west coast.
He told me that he certainly wouldn’t be able to afford to move and I told him “don’t let that stop you”. Fronting him moving expenses was the best decision I ever made, even though it had a chance of not working out. Six months later he’s making 10x the wage he could get in his rural area, and I’ve been paid back with (unrequested) interest.
I guess my message is: sometimes loaning money won’t work out, but when it does, the ROI (emotionally and for society) is extremely high.
The risk of them not being able to pay you back and thus destroying the friendship is so high that I wouldn’t recommend this unless you are ok with losing that person as a friend OR you just give them the money without expectation of it being paid back.
It's a bit weird for me. I've loaned out money in various amounts (from a few hundred to tens of thousands). The larger amounts are to people I trust deeply for things like mortgage payment etc. I've gotten paid back promptly but I guess because I was expecting them to pay me back it was more or less of a non event.
I've also loaned some amounts of money to people I figured wouldn't pay me back, but in smaller amounts. Often they behaved as expected and didn't pay me back, but because I was expecting it was also more or less of a non event.
My closest and longest friendship is a guy with a very similar background to me.
We both grew up really poor in a small town and it took us a big chunk of our adult lives to achieve some stability.
We both would have up and downs financially speaking, luckily almost never at the same time and over the years it was very common for one of them saving the other when the other was down. We never kept a balance of who owed how much to the other but we always knew we could count on each other.
Fast forward a lot of years we both now live comfortable lives and it has been a good number of years since we last had to help each other.
Sometimes I miss the struggling years though. I think that showing off each other our new German cars is not as good a foundation for a good friendship and love as helping each other and laughing about being saved by the other at the last moment from some dramatic stuff like an eviction or bankruptcy
One area of difference here might be that he didn't ask you for the loan, you suggested it. Also, the fact that the loan was specifically to make significantly more money than he'd ever had before meant that it would be easier to repay if it worked out.
It wasn't money, specifically, but when I moved to CA back at the start of 2008 it was because I was in a similar situation. I was effectively trapped in a rural place without the funds necessary to relocate and development jobs near me had completely dried up. A friend (someone I served with in the military and who owed me a favor or three) agreed to let me couch surf his place for 3 months. If it worked out, it worked out. If not, I was outta there. I had a software engineering job by the end of first or second week.
That's legit that you helped out your friend like that. I've had people look at me like I'm crazy for doing similar things for friends. A rising tide raises all boats.
I “loaned” a college friend a few thousand when they were in a tight spot (getting their life back after being charged with a crime they didn’t commit). I might be paid back someday, but I’m also perfectly happy for it to be a gift.
(I call it a “loan” because they preferred to think of it that way. I made clear at the time that it would be fine if they never paid me back.)
> I guess my message is: sometimes loaning money won’t work out, but when it does, the ROI (emotionally and for society) is extremely high.
My personal attitude has always been that you should loan money without the expectation that it be returned. You can't be let down if you had no expectations to begin with.
When I was younger I learned that loaning money to friends, and then asking to be repaid, sucks. You're made to feel like you're some sort of Scrooge character. Now I either simply give whatever is asked, and make it clear I do not wish to be paid back, or just say no.
Initially it seemed logical to say OK you need 100 bucks for this or that and you'll get me back. But then a month later I'd mention it and was met with this sort of "why are you being a jerk about it" response. Now I'm in a position that its not a big deal, but back then even that relatively small amount of money was a big deal. It was a tough lesson to learn that some people just use the term 'loan' to make themselves feel less guilty for asking, or maybe intend to ghost you regardless.
I think this also gets into Americans (or maybe just Southerners?) being weird about money and personal finance. Talking about money is taboo.
Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.
Farewell. My blessing season this in thee.
In cases where I feel I need to, I clarify it's a gift and if they really feel the need to repay later, they can pay it forward or gift back. The key is removing the guilt which is what kills friendship.
I live where I was a born, so naturally, all elders needing a hand for whatever (mostly computing obv.) get my assistance. They always want to pay or they feel really really bad.
Reminds me I need to read graeber's book about non currency debts.. it seems to discuss these relationships.
The challenge is that friends and family are seen as the lowest priority for repayment. Despite the fact that a loan from them was already given in the most kind and generous way, there is an increased expectation for friendliness and leniency when it comes to leniency around repayment that just doesn't come with an institutionalized lender.
Complicating things is that the penalties for not paying others, like a bank, utility company, landlord, etc. are real and tangible. Whereas hurt feelings are much more readily dismissed than an eviction notice or a debt collector.
Well it took me borrowing one video game to learn that lesson. "No, you must've borrowed it to someone else" when I asked.
First game I bought for my own pocket money, which at time, in Poland, was a lot for a kid as it was full price title, Baldur's Gate 1 in nice box with manual and a map, and dubbed gloriously with then-radio/TV stars, hell, the narrator voice was better than original. Needless to say I was pretty salty.
I remember being over $4K in debt in my mid-20s, sleeping on the floor under a desk in my friend's office and showering every morning at a gym a couple of subway stops away. I was evicted from my tiny studio after getting laid off, and couldn't find anything during summer time, was at first recovering from a severe burnout, and also everything is super slow during those months.
My first paycheck paid off all that debt, a couple weeks later I was living in a 1-bedroom apt minutes away from work. I had about $15K in my bank and that's when my self-employed friend needed money to pay rent so he could focus on and make his company successful. I ended up Venmo-ing him more than that (more money than I ever had before in my life back then) over next couple of months, so that he didn't have to stop working on his business and lay bricks instead, or do anything else but making his business a successful company. A couple of months later he got a large order and never struggled since. He's still working on increasing his sales and getting more clients, on a verge of becoming a millionaire. I get to do work and make money creating software for his company, so it wasn't just helping a friend, but a future (now current) source of income for me as well.
I wouldn't give money if I see the person lacks good morals or is an idiot, that never pays back. But looking back and asking myself, "what did I do that year?", I always feel happy that it cost me less than $20K to help save my friend's business and make sure he doesn't ever get his time wasted by idiot bosses or managers.
I was a technically a loan shark at school, in my early teens.
So I had a fairly small allowance which I mostly saved. Other kids were spending their afternoons at the malls shopping, buying cigarettes and eating fast food.
So the richer kids eventually had their allowances lowered by their parents because of some sort of misbehavior, and it turned out this wasn't very effective as they started asking around to borrow money to keep up their habits.
So I gave small sums of money and since I was a very distrustful teenager I had the following terms - if you don't pay me back by Friday I'm gonna round up the sum or increase it to some other arbitrary point. Usually what happened is they would obnoxiously blow me off, but I would get a concession about increasing the interest further. I didn't want to argue over small sums so I just increased them, giving them a way out of the impasse
In a few weeks the debt would simply balloon and I would start to get angry by the way they were treating me. I learned that I wouldn't get my money by cornering them alone someplace and they would make up credible payment arrangements as soon as possible. I ended up collecting everything with several hundred percent of profit. I learned later that interest rates are calculated yearly and these terms were absolutely insane.
Even though the profits were big the sums were in fact quite small for the trouble, so I just stopped lending out the next year and honestly my market was saturated by then.
My clients probably learned much more than me. At a later time in my life I read 'Poor Economics' and worked with fintechs in an IT capacity. What my teenage self was practicing was fairly common in poor developing countries with next payday or next week loans financing many lively hoods.
I have also never taken a loan, and I'm not planning to.
If you run a business, it becomes a necessity. The problem is that expenses like payroll have to be paid immediately, while accounts receivable are erratic. The choice is to keep a large amount of cash in a checking account earning 0 interest, or have a revolving line of credit at the bank.
Having the credit is cheaper than having large amounts of cash sitting idle as a buffer.
In fact, buffer is the right word. If you're a programmer, you use buffers to compensate for the mismatch between input and output.
It's psychologically and socially so interesting. We often want the benefits without knowing how to repay, manage or handle things.
Also you know that in the catholic middle ages, high lending rate was immoral, it was a big topic at the time (and apparently lead to some foreign groups to become the loan guys as an escape hatch in harsh times).
Meanwhile, I go through life wondering if I borrowed $20 from someone and forgot to pay them back for months and kinda hope they would just say something if I did.
I _constantly_ try to evaluate where I stand with people. If they bought the most recent round of drinks, the next one is on me. If we split dinner, I'm thinking about how their total averaged out compared to mine. If I paid for something, I'm thinking about how much I add to their ledger. I have a "disadvantange" threshold of ~$100 where I won't say anything, but if the imbalance continues to tilt in their favor and they don't do anything to correct it, I might start insulating myself from their financial involvement..
I'm sure most people don't care about it as much as I do, but I have this deep-seated need to make sure I'm as square with as many people as I can be and I expect the same from everyone else. It's not just about being owed, it's about owing, too. I wish I knew where it came from. I wish I was better about just letting it go.
> I go through life wondering if I borrowed $20 from someone and forgot to pay them back for months
Same. I sometimes ask my friends to tell me if they think I owe them anything. I try to keep things in mind, but I much prefer to hear if I forgot something than let the relationship detoriate.
Exactly, I don't tend to lend small quantities of money to people because I just assume other people are just as terrible at remembering these things as I am.
I'd rather just give money or buy meals now and then rather than have complicated obligations.
Obviously, it really comes down to who you're lending money to. I've lent money to a few people and generally been repaid fairly quickly. Mostly just a few hundred dollars to be repaid the next pay day, or maybe at tax return time. I suspect a final small repayment may have been missed here and there because those involved (myself included) forgot, but that's about it.
The largest loan I made (a few thousand dollars) was diligently repaid; a little each month once the borrower found work again. I also allowed the same person to stay with me, my wife and young daughter a few years later. To clarify - not because they were incapable of paying rent - they needed somewhere short term (couple of months) and I was happy to assist. Said person is now fairly significantly more wealthy than me and they've mentioned several times how thankful they are of what I did for them. I don't need (or want) anything from them, but if anything ever happens to me, and my family need help, I suspect they'd try help out if they could.
I started my first business when I was 25 back in the 1990s.
It had successes but in the end it went under after about 4 or 5 years operation.
I had to borrow from several friends to avoid being bankrupted.
Maybe around $80,000, which was alot of money at the time. The friends universally said "mate I don't care if you never pay it pack, you just sort out what you need to with it."
Paying the money back became my only life mission. Everything I did was focused on paying that money back.
It took me more than 5 years and I paid every cent back with 10% interest on top.
I operate on the principle that no-one should ever be worse off for backing me. I want people to see me as a person of integrity. Looking after the interests of others who have backed you should be your primary driver.
I can talk about it easily now as it's 25 years down the track, but the whole experience at the time was traumatic.
This is rarely ever the case. If you "loan" someone money once they will just keep coming back and asking for more. Even worse, they will tell people and you will get the reputation of someone who is generous with money, and soon everyone will be asking you for some.
I loan money to people and never expect to be repaid. If someone asks for $2k I give them $5k. $400 give them $1k.
Sometimes I get paid back. Usually not. It’s because people are aware I have money so various people ask.
The goal isn’t to get paid back. Often these acquaintances cut off all contact. The goal is to never be asked for money again and slowly bled out by frequent sob stories. If they know they are already into me for more than they thought they would get, they won’t come back, and I don’t look like a jerk.
That is so surreal to me. I had to loan money from friends for real emergencies and always made sure they get paid - often more than they gave. How can one not be guilt-ridden until their deathbed?
Same. Several years ago I had an ex-GF of sorts reach out to me in SF. She was passing through and wanted to say hi, etc. I had a couple hours before my shift at a bar I worked at so I swung by where she was, bought her a drink, etc. Immediately could tell she was in a bad place, looked like her occasional drug use had become a permanent, more hard kind. About halfway through the drink was a clumsy come on and a push for some cash, she was out of gas, couldn't get home, whatever. I ended up giving her like $40, a big hug, said goodbye. The whole time she is swearing up and down she will be back next week, will pay me back, etc.
I got to work and told a coworker what had happened. She thought I was crazy and was laughing cause I had been conned by an ex. I then explained if I never saw my $40 again it was money well spent. One less person in my life bringing with it their chaos, and our history had made it hard to totally write off.
Sure enough, never heard from her again...
I do not loan money to people, ever. I will give money to people I know to help them out from time to time.
Sometimes people ask for a loan and insist they will repay me. Fine, I will call it a loan because that's what helps them frame things in their own heads. If they repay me, also fine, why would I turn down free money?
But for my own peace of mind, I think of these things as gifts to help a good person out. If I don't think of them as loans, I don't find myself chasing former friends for repayment.
I am not a bank. I am not a debt collector. I do not wish to become a bank or debt collector as a side hustle. If you ask me for more money than I can afford to gve you without repayment, it is far less stressful to say "no" and get the conflict over with on the spot.
Would telling them to go fuck themselves not be cheaper and easier?
Edit: I don’t have fuck you money, so I am actually ignorant of the dynamic you’re describing. I’d rather be known as an asshole with backbone than a rich sap though. One of those looks more like a mark than the other.
I hate that there are two types of people, people who ask for money and have no issues ghosting, and then those who ask and pay back like it's a loan shark coming for them in their eyes.
I have only had to ask to borrow money a few times, and man it hits so hard. I loath the experience. I sent $50 to someone who needed some cash to buy groceries and they said they would send it back when they could but didn't and I'm ok with it.
It hurts knowing how little (depending on wealth) it would take to change someones life. I'm still paying back a loan from someone so I could afford to buy my first house and damn does it still sting. I had to save every single cent just to afford the down payment, and it wasn't enough.
The vast differences in lending experiences in my youth (18) led to me using it as a measure of a person's integrity and perhaps how I view them overall -- for better or worse.
I lent one friend money to help pay for a video card and he paid me back exactly on time when he said he would. I respect him to this day. I lent another friend money to pay for some car parts and he did the whole dodging, partial payment, and then forgetfulness thing. I ended up giving up trying to get payment but wrote him off and never had a meaningful interaction with him again.
In some ways its crappy, judging an adult by something in their youth but I've yet to find a case where someone's character changes appreciably in this regard. You're either responsible and pay your debts or you're not.
It almost always makes more sense to just give money (or frame it as a "payment" for something) than to loan friends / family money. The usual thing I ask is that people do it for someone else later in life if they can. It just makes everything less icky if there's no nominal expectation of repayment. Occasionally I've had things repaid anyway.
I've tried to stop loaning money to friends, but replace by up'ing my giving of money to friends, to the extent I can/want to afford it.
Generally, someone asking for a non-trivial loan is in a really bad place; your loan may likely not be enough for them to get out of it, for whatever reasons they need money now, it's probably not that unlikely they're going to be unable to pay back the money when they optimistically thought they would, the loan probably isn't going to change their life circumstances as much as they hoped.
If that happens, are you willing to let it destroy your friendship? If yes, then why are you loaning them money in the first place, you apparently don't trust them enough or value their friendship enough to give them a personal loan, at least not of the size you gave them, a size which if not paid back would hurt you a lot.
And if you wouldn't end the friendship if they didn't pay it back... why not just make it a gift instead of a loan? Maybe for less than they asked, for what you can actually afford to not see back without being resentful -- because that's what you'd be risking with a loan anyway.
I learned this the hard way. Loans will ruin friendships.
I sometimes say no, sometimes say yes, but almost always make the 'yes' a gift not a loan. Pay it forward, pay it back to me however you think appropriate with voluntary favors or helping me when I need it myself, but not expecting you to pay it back monetarily at a certain date.
Years ago, I had the crazy/stupid opportunity to start a night club in San Francisco. My dad said it would be a terrible idea, the business was hard, etc... but he also said he would help me out. Go dad, I'm lucky to have him. He had a piece of property that we could get a loan against, so we found a mortgage company that would give us the loan and went ahead.
Well, he was totally right, after years of trying, the business totally flopped and I had lost all of the money, as well as a ton of my own. It set my finances back at least a decade or more. Luckily, my dad has a lifelong friend who was willing to buy out the loan when it looked like the company was going to default, so now my debt was really to my dads friend.
Fast forward many years... my dad has retired and needs money. He's had trouble selling the property (although it looks like that is happening now in the next month or two). The property gained a lot of value over the years, so that is good. He will have enough to pay back the friend in full and a bunch left over for himself.
I've been paying my dad back as I can over the years and in recent times, reached the principle amount of the loan... now I'm paying the interest (the principle has ballooned more than 2x).
My current payments have been a lifesaver for him. It worked out that being able to pay him back now when he needs money the most, has been really helpful for him. Had I paid him back in full earlier, it might have been harder for him to come to me asking for a loan, now he has some steady cash flow from me. When the property sells, his friend will get paid back first and I'll just owe my dad the rest of the interest.
This has weighed on me for a long time and is something that I think about almost daily. It sucks owing money. I have no other debt than this. Some day, I'll be free of it and I can't wait for that day.
The reality is that the world is full of shitty people. There is an easy way to find the majority of them. They ask/want to borrow money from non official lenders.
Think about it. Most people on HN how many paths would you have to go down first before you would borrow money from an individual? I'm guessing several options would be tried first.
The reason those people are shitty is they already burnt all those options and have now moved onto individuals to grift in small ways.
The number of people that truly need help from a single person in the form of money is exceedingly rare. This is not limited to any specific place.
Yes I'm aware people can be in different/difficult places in life that make such need more likely, I'm just speaking as a general rule. Usually people that really need help are hesitant to even ask.
This doesn't seem like a fair characterization at all. Any other path towards borrowing money could potentially lead to getting buried even further in debt, and if an exhorbitant amount of interest is charged, could lead to a debt spiral that's really hard to get out of.
On the other hand, asking for money from a close friend means 0% interest, and an implied forgiveness in case it's not able to get repaid. That sounds like a much better option to me (of course, depends heavily on your relationship with your friends, etc.).
Back in the late 90's I had a friend who wanted to open a high-end Italian furniture shop. Dude knew nothing about furniture or retailing. He said "you can afford it so you should lend it to me". I knew the money would never be paid back, and the friendship would be over. So I kept the money, as the friendship would be lost either way.
Seems like the case of wealth that cannot be hidden from one's circles (and the outside world) due to him being so well known as a person in tech at the time of Doom's cultural zenith and being in the news cycle so often.
I wonder if most often the smart move is to make sure that one's sudden acquisition of wealth (say the sale of a startup-now-a-successful-scaleup) is hidden from one's even closest circles to avoid the curse of the lottery winner as well described in the famous reddit thread: https://www.reddit.com/r/AskReddit/comments/24vo34/comment/c...
But I also wonder if trying to hide one's wealth that much comes at the price of social isolation, where you have to reduce your contacts with the outside world to avoid flashing the new possibilities that your wealth opened to you. Or you make sure your lifestyle doesn't change at all, but then you cannot take advantage of your wealth either.
[+] [-] alach11|3 years ago|reply
He told me that he certainly wouldn’t be able to afford to move and I told him “don’t let that stop you”. Fronting him moving expenses was the best decision I ever made, even though it had a chance of not working out. Six months later he’s making 10x the wage he could get in his rural area, and I’ve been paid back with (unrequested) interest.
I guess my message is: sometimes loaning money won’t work out, but when it does, the ROI (emotionally and for society) is extremely high.
[+] [-] luxuryballs|3 years ago|reply
[+] [-] alberth|3 years ago|reply
1. Why poor stay poor (you need money to make money)
2. Why successful startup founders skew being from well-to-do families (they can afford to take the risk).
Really applaud you for helping your friend. You truly change their life.
America is definitely the "land of opportunity", more so than most countries, but it's really difficult to bootstrap when you don't have the means.
[+] [-] mikeryan|3 years ago|reply
His thing was if a friend needs help and you can afford it then do it - and it’s not a loan. Making it a loan makes it a bad business transaction.
I took that to heart with that friend and later my daughter’s nanny needed help and asked for an advance and we gave her the money she needed.
Both amounts were significant but we could afford it and I’ve never regretted either.
[+] [-] yibg|3 years ago|reply
I've also loaned some amounts of money to people I figured wouldn't pay me back, but in smaller amounts. Often they behaved as expected and didn't pay me back, but because I was expecting it was also more or less of a non event.
[+] [-] elzbardico|3 years ago|reply
Fast forward a lot of years we both now live comfortable lives and it has been a good number of years since we last had to help each other.
Sometimes I miss the struggling years though. I think that showing off each other our new German cars is not as good a foundation for a good friendship and love as helping each other and laughing about being saved by the other at the last moment from some dramatic stuff like an eviction or bankruptcy
[+] [-] kybernetikos|3 years ago|reply
[+] [-] scruple|3 years ago|reply
[+] [-] distortionfield|3 years ago|reply
[+] [-] stephencanon|3 years ago|reply
(I call it a “loan” because they preferred to think of it that way. I made clear at the time that it would be fine if they never paid me back.)
[+] [-] falcrist|3 years ago|reply
My personal attitude has always been that you should loan money without the expectation that it be returned. You can't be let down if you had no expectations to begin with.
[+] [-] worldsavior|3 years ago|reply
But what if 90% of the time it doesn't work out?
[+] [-] vmttmv|3 years ago|reply
[+] [-] jmuguy|3 years ago|reply
Initially it seemed logical to say OK you need 100 bucks for this or that and you'll get me back. But then a month later I'd mention it and was met with this sort of "why are you being a jerk about it" response. Now I'm in a position that its not a big deal, but back then even that relatively small amount of money was a big deal. It was a tough lesson to learn that some people just use the term 'loan' to make themselves feel less guilty for asking, or maybe intend to ghost you regardless.
I think this also gets into Americans (or maybe just Southerners?) being weird about money and personal finance. Talking about money is taboo.
[+] [-] bombcar|3 years ago|reply
[+] [-] agumonkey|3 years ago|reply
I live where I was a born, so naturally, all elders needing a hand for whatever (mostly computing obv.) get my assistance. They always want to pay or they feel really really bad.
Reminds me I need to read graeber's book about non currency debts.. it seems to discuss these relationships.
[+] [-] BitwiseFool|3 years ago|reply
Complicating things is that the penalties for not paying others, like a bank, utility company, landlord, etc. are real and tangible. Whereas hurt feelings are much more readily dismissed than an eviction notice or a debt collector.
[+] [-] adql|3 years ago|reply
First game I bought for my own pocket money, which at time, in Poland, was a lot for a kid as it was full price title, Baldur's Gate 1 in nice box with manual and a map, and dubbed gloriously with then-radio/TV stars, hell, the narrator voice was better than original. Needless to say I was pretty salty.
[+] [-] snshn|3 years ago|reply
My first paycheck paid off all that debt, a couple weeks later I was living in a 1-bedroom apt minutes away from work. I had about $15K in my bank and that's when my self-employed friend needed money to pay rent so he could focus on and make his company successful. I ended up Venmo-ing him more than that (more money than I ever had before in my life back then) over next couple of months, so that he didn't have to stop working on his business and lay bricks instead, or do anything else but making his business a successful company. A couple of months later he got a large order and never struggled since. He's still working on increasing his sales and getting more clients, on a verge of becoming a millionaire. I get to do work and make money creating software for his company, so it wasn't just helping a friend, but a future (now current) source of income for me as well. I wouldn't give money if I see the person lacks good morals or is an idiot, that never pays back. But looking back and asking myself, "what did I do that year?", I always feel happy that it cost me less than $20K to help save my friend's business and make sure he doesn't ever get his time wasted by idiot bosses or managers.
[+] [-] dimitar|3 years ago|reply
So I had a fairly small allowance which I mostly saved. Other kids were spending their afternoons at the malls shopping, buying cigarettes and eating fast food.
So the richer kids eventually had their allowances lowered by their parents because of some sort of misbehavior, and it turned out this wasn't very effective as they started asking around to borrow money to keep up their habits.
So I gave small sums of money and since I was a very distrustful teenager I had the following terms - if you don't pay me back by Friday I'm gonna round up the sum or increase it to some other arbitrary point. Usually what happened is they would obnoxiously blow me off, but I would get a concession about increasing the interest further. I didn't want to argue over small sums so I just increased them, giving them a way out of the impasse
In a few weeks the debt would simply balloon and I would start to get angry by the way they were treating me. I learned that I wouldn't get my money by cornering them alone someplace and they would make up credible payment arrangements as soon as possible. I ended up collecting everything with several hundred percent of profit. I learned later that interest rates are calculated yearly and these terms were absolutely insane.
Even though the profits were big the sums were in fact quite small for the trouble, so I just stopped lending out the next year and honestly my market was saturated by then.
My clients probably learned much more than me. At a later time in my life I read 'Poor Economics' and worked with fintechs in an IT capacity. What my teenage self was practicing was fairly common in poor developing countries with next payday or next week loans financing many lively hoods.
I have also never taken a loan, and I'm not planning to.
[+] [-] WalterBright|3 years ago|reply
If you run a business, it becomes a necessity. The problem is that expenses like payroll have to be paid immediately, while accounts receivable are erratic. The choice is to keep a large amount of cash in a checking account earning 0 interest, or have a revolving line of credit at the bank.
Having the credit is cheaper than having large amounts of cash sitting idle as a buffer.
In fact, buffer is the right word. If you're a programmer, you use buffers to compensate for the mismatch between input and output.
[+] [-] agumonkey|3 years ago|reply
Also you know that in the catholic middle ages, high lending rate was immoral, it was a big topic at the time (and apparently lead to some foreign groups to become the loan guys as an escape hatch in harsh times).
[+] [-] Scoundreller|3 years ago|reply
[+] [-] zucked|3 years ago|reply
I'm sure most people don't care about it as much as I do, but I have this deep-seated need to make sure I'm as square with as many people as I can be and I expect the same from everyone else. It's not just about being owed, it's about owing, too. I wish I knew where it came from. I wish I was better about just letting it go.
[+] [-] krisoft|3 years ago|reply
Same. I sometimes ask my friends to tell me if they think I owe them anything. I try to keep things in mind, but I much prefer to hear if I forgot something than let the relationship detoriate.
[+] [-] cmrdporcupine|3 years ago|reply
I'd rather just give money or buy meals now and then rather than have complicated obligations.
[+] [-] Benjamin_Dobell|3 years ago|reply
The largest loan I made (a few thousand dollars) was diligently repaid; a little each month once the borrower found work again. I also allowed the same person to stay with me, my wife and young daughter a few years later. To clarify - not because they were incapable of paying rent - they needed somewhere short term (couple of months) and I was happy to assist. Said person is now fairly significantly more wealthy than me and they've mentioned several times how thankful they are of what I did for them. I don't need (or want) anything from them, but if anything ever happens to me, and my family need help, I suspect they'd try help out if they could.
[+] [-] jjri|3 years ago|reply
[+] [-] andrewstuart|3 years ago|reply
It had successes but in the end it went under after about 4 or 5 years operation.
I had to borrow from several friends to avoid being bankrupted.
Maybe around $80,000, which was alot of money at the time. The friends universally said "mate I don't care if you never pay it pack, you just sort out what you need to with it."
Paying the money back became my only life mission. Everything I did was focused on paying that money back.
It took me more than 5 years and I paid every cent back with 10% interest on top.
I operate on the principle that no-one should ever be worse off for backing me. I want people to see me as a person of integrity. Looking after the interests of others who have backed you should be your primary driver.
I can talk about it easily now as it's 25 years down the track, but the whole experience at the time was traumatic.
[+] [-] labrador|3 years ago|reply
[+] [-] paxys|3 years ago|reply
[+] [-] mym1990|3 years ago|reply
[+] [-] monero-xmr|3 years ago|reply
Sometimes I get paid back. Usually not. It’s because people are aware I have money so various people ask.
The goal isn’t to get paid back. Often these acquaintances cut off all contact. The goal is to never be asked for money again and slowly bled out by frequent sob stories. If they know they are already into me for more than they thought they would get, they won’t come back, and I don’t look like a jerk.
[+] [-] zahrc|3 years ago|reply
[+] [-] fdye|3 years ago|reply
[+] [-] a4isms|3 years ago|reply
Sometimes people ask for a loan and insist they will repay me. Fine, I will call it a loan because that's what helps them frame things in their own heads. If they repay me, also fine, why would I turn down free money?
But for my own peace of mind, I think of these things as gifts to help a good person out. If I don't think of them as loans, I don't find myself chasing former friends for repayment.
I am not a bank. I am not a debt collector. I do not wish to become a bank or debt collector as a side hustle. If you ask me for more money than I can afford to gve you without repayment, it is far less stressful to say "no" and get the conflict over with on the spot.
[+] [-] mikrl|3 years ago|reply
Edit: I don’t have fuck you money, so I am actually ignorant of the dynamic you’re describing. I’d rather be known as an asshole with backbone than a rich sap though. One of those looks more like a mark than the other.
[+] [-] post_break|3 years ago|reply
I have only had to ask to borrow money a few times, and man it hits so hard. I loath the experience. I sent $50 to someone who needed some cash to buy groceries and they said they would send it back when they could but didn't and I'm ok with it.
It hurts knowing how little (depending on wealth) it would take to change someones life. I'm still paying back a loan from someone so I could afford to buy my first house and damn does it still sting. I had to save every single cent just to afford the down payment, and it wasn't enough.
[+] [-] mattw2121|3 years ago|reply
[+] [-] gfd|3 years ago|reply
[+] [-] dudeinhawaii|3 years ago|reply
I lent one friend money to help pay for a video card and he paid me back exactly on time when he said he would. I respect him to this day. I lent another friend money to pay for some car parts and he did the whole dodging, partial payment, and then forgetfulness thing. I ended up giving up trying to get payment but wrote him off and never had a meaningful interaction with him again.
In some ways its crappy, judging an adult by something in their youth but I've yet to find a case where someone's character changes appreciably in this regard. You're either responsible and pay your debts or you're not.
[+] [-] wheels|3 years ago|reply
[+] [-] BlueTemplar|3 years ago|reply
I do have one weird (?) friend that is not a friend any more because she felt she still owed me and kept feeling bad about it.
[+] [-] jrochkind1|3 years ago|reply
Generally, someone asking for a non-trivial loan is in a really bad place; your loan may likely not be enough for them to get out of it, for whatever reasons they need money now, it's probably not that unlikely they're going to be unable to pay back the money when they optimistically thought they would, the loan probably isn't going to change their life circumstances as much as they hoped.
If that happens, are you willing to let it destroy your friendship? If yes, then why are you loaning them money in the first place, you apparently don't trust them enough or value their friendship enough to give them a personal loan, at least not of the size you gave them, a size which if not paid back would hurt you a lot.
And if you wouldn't end the friendship if they didn't pay it back... why not just make it a gift instead of a loan? Maybe for less than they asked, for what you can actually afford to not see back without being resentful -- because that's what you'd be risking with a loan anyway.
I learned this the hard way. Loans will ruin friendships.
I sometimes say no, sometimes say yes, but almost always make the 'yes' a gift not a loan. Pay it forward, pay it back to me however you think appropriate with voluntary favors or helping me when I need it myself, but not expecting you to pay it back monetarily at a certain date.
[+] [-] latchkey|3 years ago|reply
Well, he was totally right, after years of trying, the business totally flopped and I had lost all of the money, as well as a ton of my own. It set my finances back at least a decade or more. Luckily, my dad has a lifelong friend who was willing to buy out the loan when it looked like the company was going to default, so now my debt was really to my dads friend.
Fast forward many years... my dad has retired and needs money. He's had trouble selling the property (although it looks like that is happening now in the next month or two). The property gained a lot of value over the years, so that is good. He will have enough to pay back the friend in full and a bunch left over for himself.
I've been paying my dad back as I can over the years and in recent times, reached the principle amount of the loan... now I'm paying the interest (the principle has ballooned more than 2x).
My current payments have been a lifesaver for him. It worked out that being able to pay him back now when he needs money the most, has been really helpful for him. Had I paid him back in full earlier, it might have been harder for him to come to me asking for a loan, now he has some steady cash flow from me. When the property sells, his friend will get paid back first and I'll just owe my dad the rest of the interest.
This has weighed on me for a long time and is something that I think about almost daily. It sucks owing money. I have no other debt than this. Some day, I'll be free of it and I can't wait for that day.
[+] [-] teg4n_|3 years ago|reply
[+] [-] citizenpaul|3 years ago|reply
Think about it. Most people on HN how many paths would you have to go down first before you would borrow money from an individual? I'm guessing several options would be tried first.
The reason those people are shitty is they already burnt all those options and have now moved onto individuals to grift in small ways.
The number of people that truly need help from a single person in the form of money is exceedingly rare. This is not limited to any specific place.
Yes I'm aware people can be in different/difficult places in life that make such need more likely, I'm just speaking as a general rule. Usually people that really need help are hesitant to even ask.
[+] [-] buzzert|3 years ago|reply
On the other hand, asking for money from a close friend means 0% interest, and an implied forgiveness in case it's not able to get repaid. That sounds like a much better option to me (of course, depends heavily on your relationship with your friends, etc.).
[+] [-] rootos|3 years ago|reply
[+] [-] 8f2ab37a-ed6c|3 years ago|reply
I wonder if most often the smart move is to make sure that one's sudden acquisition of wealth (say the sale of a startup-now-a-successful-scaleup) is hidden from one's even closest circles to avoid the curse of the lottery winner as well described in the famous reddit thread: https://www.reddit.com/r/AskReddit/comments/24vo34/comment/c...
But I also wonder if trying to hide one's wealth that much comes at the price of social isolation, where you have to reduce your contacts with the outside world to avoid flashing the new possibilities that your wealth opened to you. Or you make sure your lifestyle doesn't change at all, but then you cannot take advantage of your wealth either.