Fiscally Helping Others

With so many scams, opportunities for addiction to strike, and other money sinks, those who are bad with money or victims of bad people, often find themselves strapped for cash.

People hear about all this money that people lose to these fiscal threats but never stop and ask, where did they get that money and why didn’t anyone know?

I did some research since I suspected one of the resources that get tapped when it starts to get bad is borrowing from a friend. Statistics show that victims of fraud do in fact borrow from friends and family. While one in five (18%) with no diagnosed mental health condition, borrowed money from friends and family, those with mental health challenges were much higher, one in three (31%). (Oct 18, 2022)

But they are your friend, why wouldn’t you help, right?!?

Well here are some basic rules I have to help from being an unknowing asset to a victim of that mess:

• Never initially gift (they say lend, you think gift, just go with me here and keep reading) more than your hourly pay rate
  1. The reason is, if you treat it as a gift in your own mind, you don’t damage your friendship.
  2. Lent money returns to be lent again later.
• The second request can be responded to with the results of the first:
  1. Sorry, but you said you would lend money back last time and didn’t. I can’t be confident I’ll get this money back either.
  2. Sure, the same situation as last time or how are you going to pay me back this time?
     • But this time not more than 2 hours of pay. Again, remember they are building trust and proof of needing the help but being able to pay it back.
• The request process can be responded to with the results of the last:
  1. Sorry, but you said you would lend money back last time and didn’t. I can’t be confident I’ll get that money back either.
  2. Sure, but not more than X hours of pay. Again, remember they are building trust and proof of needing the help but being able to pay it back.

Here are the important parts:

• Sometimes unplanned situations cause plans to get away from us, like paying someone back. Did that person tell you, “Hey, this is what’s going on, can I have an X-day extension” or “Can I get you on THIS DAY of the week next week?”
  • This shouldn’t STOP you from helping going forward, but it should stop the “increase” of helping if it happens more than one loan in a row.
• Financial challenges hit all of us. If they have repetitively borrowed money & repetitively paid back to a sum of several hundred dollars, that means not only are they actively budgeting the money to make sure they honor your agreement, but they have a significant situation that has been growing over time. but likely lack the resources/credit to resolve it themselves.
  • This is when you consider discussing cosigning a loan with them and making sure it’s paid on time. Based on the prior habitual payments and solid communication when existing issues happen, you will know when YOU need to help make sure the loan is on time.

Thanks to you & them, their credit will improve. They will lose their reliance on borrowing money from you. And they move forward in their life a better person because SOMEONE helped them when they needed it.

Now, you teach them this rule, and hopefully, the cycle of positive credit building perpetuates in future generations.