Ever heard the preposition “Lend me money against my cheque, I shall return in 10 days!” or something similar. Borrowers are all around us. Often such preposition causes a dilemma. Accept or not to accept? What should be the excuse? If amount is small it is even more embarrassing. If a person from whom it is being borrowed is ill or indisposed, it should be embarrassing to borrower but it is not.
The debt business:
Long time ago I met a publisher who told me that ‘Borrowing’ is a latest business. Presently I am suing him in court for counterfeiting my books. But as an unscrupulous person, he knew the mentality very well. But it can not be generalized. But as far as strangers are concerned lending money is complete NO. But there are people around us act to be friends, neighbors, relatives etc. After are we are not going to sue them if they default. What about them? So the question is how to decide to lend or not to lend money? These are the factors I have formulated to decide the answer:
1. Amount of money.
This is most important principle. Lending money is no less than a gamble. Never lend an amount which we can not afford to lose. Better still, lend only as much as which is not going to disturb the sleep. Generally an amount of about 10% of monthly income is comfortable to throw away and every one throws it away on frivolous shopping any way. If purpose is genuine, even if lent money does not come back, it should cause no heart burning.
2. Purpose of Borrowing.
Never lend money for vague purpose. The purpose for which money is borrowed must be clear like bright sun. But it must not be experimental like gambling or speculation on stock market. Worse still is investment. One borrower asked money to pay the installment of fourth house. Imagine fourth? He had rental income from two, while he lives in one. This is most vague purpose. Another wanted to save loss from a speculative transaction, by paying more margin. This means postponing loss. Money can be lent to help through difficult but unforeseen time. Not for someone who walked into a booby trap assuming himself to be lucky. Similarly long-term financial commitments can not be financed for ever by borrowing money. Unless entire debt is paid, partial payment on credit card is like pouring oil over sand. Debt will continue to accumulate.
Life style of borrower
Never lend money to a person with opulent life style. Most often extravagant life style is perceived as a sign of wealth and prosperity but in the long run it is not. Those who do not believe should watch a documentary with the title ‘Money’ shown on Discovery Channel. Such rich people are more in debt than any sane person with open eyes would like to be. Search Google with “lend me money please” and read such stories from rag to riches on good fortune and riches to rag on debts.
The nature of relationship between proposed debtor and proposed creditor is irrelevant. Ignore it completely. It may be relevant for gift but not for lending or borrowing money.
Avoid people with opulent or extravagant life style or speculative habits. Sooner or later they will come to borrow. If we lend money, do not expect to get it back preferably ever. Be sure that by lending money we have made an enemy and lost a friend. A borrower does not like the face of creditor. It is humiliating. If there is no choice, give away small amount as gift and tell the borrower to manage with that only.
© Sandeep Bhalla