Lend money to this friend -- again?

This post comes from Donna Freedman at partner blog Get Rich Slowly.

Last January I loaned money to a friend who was in financial crisis: Her vehicle was about to be repossessed. The transaction troubled me for a number of reasons, which I detailed at my personal website in a post called "I'm not a payday lender. But I play one on TV."

During my trip to the East Coast I spent part of a weekend with "Monica" and her family. (Names have been changed to protect the profligate.)

When we made a Wawa run, Monica didn't want me to pay for my own Tastykake. She threw it in with her own order, which totaled a little more than $34 and included a coffee cake, a box of doughnut holes, and a $2-plus bottle of iced tea.

I started to feel uneasy. In the next 24 hours, the following additional red flags flew:

• Monica bought about $100 worth of maternity clothes for her married daughter, who right now is still as thin as a candidate's promise.
• They have satellite television and DSL. Her kids have cellphones with text packages.
• She mentioned she was planning to buy a snowblower, which after their military discount would run "only" about $1,000. (This despite the fact that she lives in a state where it doesn't always snow in the winter and the fact that she has three healthy teenagers.)
• Monica also mentioned that her van was about to hit more than 200,000 miles. Her daily commute is about 50 miles each way.

You know what wasn't mentioned? Paying back my $800.

An unsustainable way of life
This isn't just a cranky post about being a human ATM. I knew when I gave them the money that I stood to lose it. Actually, I don't think I will. It took 18 months for the first loan to come back, one $50 check at a time, but ultimately it was paid in full.

After making the second loan I mailed a personal-finance book to Monica and her husband, "Gordon." I also suggested tracking expenses in order to plug money leaks, and urged them to contact a debt management program through the National Foundation for Credit Counseling.

My note concluded, "I know it's not easy to take a critical look at your life and to realize that no matter what happened in the past, you are responsible for the present. Change is never easy. But no one will help you except you."

Monica wrote back, promising they'd work to cut expenses. She said she'd already advocated dumping the TV and cellphones.

Nine months later the television is still on, the teens are still texting, and Monica and Gordon are still living an unsustainable, paycheck-to-paycheck​ lifestyle. Here are a few more details, to show you just how deep their denial runs:

• Companywide layoffs are looming at Monica's workplace.
• Gordon has lower-back issues and is in his early 60s, so there's no telling how much longer he'll be able to keep his job.
• Neither one has any retirement savings.
• They don't have an emergency fund. In fact, they have no savings at all.

That's right: No cash is being set aside in case that layoff materializes or for when the vehicle finally dies. But there's money for satellite television, texting and doughnut holes. Maybe a snowblower, too.

Treats before necessities?
I'd hoped that the first crisis -- nearly losing their home -- would force them to wise up. It didn't. Want to know the reason they needed the second loan? They couldn't make the van payment because it had taken all available funds to pay …

… wait for it …

bounced-check fees and Catholic school tuition for their youngest.

They had money to buy technology and other treats, sprinkling NSF checks along the way, but not for an essential recurring expense. Without a vehicle, Monica couldn't get to work.

But they didn't think about that.

I worry deeply about their future. It's a pretty safe bet that more things will go wrong. When does something not go wrong when you own a home and are raising three teenagers?

And when it does, they'll be right back in oh-crap-now-what mode. Post continues after video.

No more bailouts
In that "payday lender" post, I wrote that I could no longer loan money. But I also admitted that I wasn't really sure what I'd do if she called again, frantic for cash.

Now I'm sure.

Let me be clear: I'm not suggesting you abandon people who through no fault of their own have wound up holding the gooey end of the lollipop. For example, every other week I send $50 to my 88-year-old aunt. She uses the money for medical co-pays.

That biweekly payment is a line item in my budget. What isn't in my budget any longer is bailouts. I'm a freelance writer who funds her own retirement and insurance and makes regular charitable donations. And at nearly 54 years of age, I have finally given myself permission to enjoy some of the fruits of my labors (frugally, of course).

It's important to care about your fellow man. But not if you're enabling rather than helping.

I'm not the loan arranger
If my friends ask for help again, bailing them out won't really help them. It would just allow them to postpone, yet again, the very hard and very necessary work of changing the way they spend.

I'm done. Maybe you should be, too. The next time you write a bailout check, swearing it will be the absolute last loan? Make it stick. Frame it any way you like, but tell your sister/son/frat buddy that you can no longer afford to do this.

Maybe it's that your own financial stability is at risk. Maybe it's that you've given and given and nothing has changed. Maybe you want to use your money on something for yourself once in a while.

Whatever the reason, state gently but firmly that your career as loan officer is over.

You could find some other way to help, such as:

• Offering to loan your personal-finance books.
• Helping to create a workable budget.
• Pointing out sites where people can learn smarter spending habits, such as Get Rich Slowly or MSN Money's Smart Spending blog.
• If need is imminent -- not much food in the house, kids need glasses -- direct them to my previous GRS piece, "Unemployed? Underemployed? Here's how to get help."

If a relative or friend is a financial train wreck, you owe it to yourself to get off at the next station. It will be one of the hardest things you ever do -- and probably one of the most necessary. For your sake, and for the other person's, close the bank and keep it closed.

Readers: Have you had to cut off a family member or friend who needed rescuing but wouldn't do much to help himself? Was it tough? Did you offer any nonmonetary help, and did the person ever wise up?

MSN Money columnist Donna Freedman blogs at Get Rich Slowly and Surviving and Thriving.

More on Get Rich Slowly and MSN Money:

• 8 little-known facts about the Roth IRA
• Layoff-resistant family finances
• How to make separate finances work
• Calculator:Is your budget in balance?
• Your best friends' bank: You
• How do your finances stack up?