Is Money ending your Relationship

By Vanessa Papas

Across the country, bankruptcy filings are on the rise. It’s easy to fall into debt, especially when you’re not only taking care of yourself, but giving out money to family and friends who have fallen on hard times. There’s more pressure now to lend money to needy loved ones in the recession, but if there’s anything that’ll potentially mess up a relationship, it’s greenbacks. If you don’t mind never getting paid back for your ‘loan’, then by all means go for it and help out a friend or family member. But that’s a pretty tough commitment to make, even for millionaires. Just ask Oscar-winning actor Richard Dreyfus, who filed a lawsuit against his dad and uncle for never repaying the R50-million loan he’d given them in the ’80s. Think they’re still friends? Not even acquaintances. So how then does one navigate the tricky subject of family loans? Eunice Sibiya, head of consumer education at FNB, gives her expert advice.


We’ve all know about helping a family member financially. In some instances, the only option to help is to get a personal loan or use your credit card.
Only Lend What You Can Afford: While you might feel the need to help a family member who is in great financial need, you must be careful not to lend more than you can afford. Even though a reputable credit provider such as a bank will do proper affordability assessments before giving you a loan, the fact that you are the one taking out the loan means you are the one responsible for the repayments.
Set Clear Rules From The Outset: Lending money to family members may be a good gesture, however it must be done within a set of rules to ensure that commitments are honoured while preserving the relationship. Prior to handing over money to a family member, both parties must commit to a repayment plan.
Learn To Say No: If you feel that lending your family money will do more harm than good, be honest with your family in order to save your relationship. Sometimes saying no when your family asks to borrow money may be the best way to keep harmony in the family.


Don’t Offer Them An Easy Way Out: When you constantly lend your family money, you are giving them an easy way out instead of encouraging them to work through their financial challenges. Perhaps encourage them to see a qualified professional who can help them manage their finances.
Charge Interest: Charging interest to a family member or friend might seem unnecessary, but it’s the fairest way to protect yourself. Not only will a fair interest rate inspire your family member to pay you back in a timely manner, but it can also protect you from being charged gift taxes on the money you lend.
Get It In Writing: An oral contract still comes down to your word against someone else’s – and even if you trust your loved one, you could land in hot water without a written agreement. Having written details that both parties agree to by signature is also a great tool to prevent misunderstandings. Should legal action ever become necessary, a written contract is nearly ironclad in court, which protects you far more than a mere handshake.

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