Was I a sucker to have made this loan?

Recently a friend contacted me in a panic. She needed $586 immediately or her vehicle would be repossessed.

When I called, she also said she needed something to get her family through until payday. Could I loan her as much as $800?

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I hesitated for a moment. Then I stopped what I was doing, moved some money from one account to the other, and got myself over to Western Union (which thoughtfully tacked on a $44 wire fee).

Before you call me a sucker, hear me out. Then call me a sucker.

"Monica" borrowed from me once before: a thousand bucks three years ago to prevent foreclosure, during a time when both she and her husband were coming off long spells of unemployment. It took a year and a half for them to pay me back, one $50 check at a time, but they did return it.

She's been unemployed and underemployed off and on during the past dozen years. They have three teenagers and are currently paying some of her elderly mother's expenses.

Yet I've also seen evidence that they are not prudent with their money, such as a recent Facebook post saying she was having dinner at Chili's. Or the fact that the last time I visited, they had satellite television.

Then there's the specific reason they were cash-poor when the January car payment was due: Monica's direct-deposited paycheck had been eaten up by Catholic school tuition payments and bounced-check fees.

She had no one else to ask. If I didn't send the money, her vehicle would be gone. Without it, she couldn't get to work (rural area, long commute). Without a paycheck, there wouldn't be enough for the mortgage payment and she'd be carless and homeless.

'I don't know why they're harassing us'

When I called to say the cash was en route, I mentioned I'd sent info on finding a free financial coach. I also suggested she ask her credit union if it had a budgeting specialist who could teach them how to handle their funds.

But I don't have any confidence that she'll use either resource. During our conversation she said, among other things, "I don't know why they're harassing us."

I said, "Because the car payment was due …when?"

"I guess it would have been due on the 15th. It's only a couple of days!" (It was, in fact, six days.)

I said, "Multiply that by half a million delinquent car loan holders. It starts to sound like real money, doesn't it?"

When we hung up, I had a headache.

Yes, I know she is shredded by sandwich-generation responsibilities. Her mom is always calling to demand something. Sometimes Monica is too exhausted to, say, contact Medicare to see if the $80 eye drops are covered. Instead, she just pays for them.

The assisted-living center where Grandma lived until recently is calling, too, to ask for money against the back bill. Those three teenagers are eating machines who grow out of clothes and shoes about every half-hour. One has medical issues that require a prescription and periodic doctor visits.

She spends about three hours a day commuting (no jobs near her -- trust me on this). The minivan was too big and probably financed for too long, plus it costs a fortune to gas up. But it's a little late for a do-over, especially since their credit is shot.

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If I had that much going wrong, I'd be tempted to lie down in the road and pray for a nearsighted trucker. But part of me still thinks this: The only way to deal with cash-flow problems, especially those that result in bounced checks, is to take a hard, hard look at spending.

Am I my sister's keeper?

Chili's? Dish Network? Even Catholic school should be reconsidered, given that there is free public education right down the street. Yes, that's a value judgment. What gives me the right to point out such things?

My signature on the money wire, maybe -- and my fear that one day she will hit an obstacle she can't surmount. What would she have done if she couldn't reach me until after the minivan had bounced down the street behind the repo man's tow truck?

Before I called to say "yes" to the loan, I briefly wondered if I ought to require Monica and her husband to show me some kind of budget or progress toward a smarter way of spending.

Mind you, I wouldn't be harrumphing, "I'll lend you this $800 only if you promise not to spend it on Catholic school tuition." I'd be saying, "I feel very nervous about the way you use money if it takes your whole paycheck to make basic expenses and cover bounced-check fees.

"Unless you take a very, very honest look at your spending and make some hard changes, you will always be living on the edge. I feel that if I lend you money again, it will allow you to put those changes on the back burner."

• If your budget in balance?

My own financial security is an issue, too. As a freelancer I buy my own health insurance and fund my own retirement. Two other line items on my budget: Helping a couple of relatives and making regular donations to charitable causes.

I need to stop lending, period, in order to secure my own future. To say nothing of my present: Shouldn't I take advantage of the opportunities that come my way, rather than staying home 24/7 and sending my nest egg out on ill-considered loans? (That's "loans," plural. More on that later.)

I forced myself to speak this phrase aloud: It is not my responsibility to fix Monica's life.

But could I stand by and watch her car disappear, taking with it her only chance at making a living?

Technically, yes. Personally, no. For now, anyway.

'There's always a rationale'

Someone close to me weighed in on the situation in this way:

"If you don't force them to help themselves, no one will. Then again, how likely are you to really put your foot down if Monica loses her transportation? Or her house is going to foreclose? There's always a rationale. Otherwise, they wouldn't be in this mess.

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"The (worst part) of it is that your very valid reasons for not wanting to keep funneling money into a black hole would sound like entitled (whining) to them. 'I need to fund my retirement' would probably have quite a bitter reaction (silently) from Monica. 'What about our needs now? She actually has a retirement, so what's she complaining about?'"

All true. So is this final point:

"You just can't really afford to keep helping them out, no matter how much you want to. OK, you can technically afford it, but not in the long run. And you shouldn't have to. Which is what you'll need to keep repeating."

The reason I could make the loan without worrying about making my own rent is that I'm frugal. I'm very careful with the money I earn and have only in the past year begun spending a little more than usual, mostly on travel. (Frugal travel, but travel nonetheless.)

But isn't it OK to want such things? And what about the way I feel when money leaves my savings account? Shouldn't I be able to look at the bottom line and feel secure?

I don't think that's entitled whining. I sure can see how others might think that, though.

Even more loans

Counting what I just sent to Monica, I currently am owed $2,900 in personal loans.  Some of this money may never come back. I knew that when I loaned it.

I know now that I have to stop lending. In fact, I thought I had stopped -- and then came Monica's e-mail.

The fact that I hesitated (however briefly) to lend her the $800 shows my growth as a realist. Yet I still feel shame that I hesitated at all. My friend stood to lose everything. Could I have lived with myself if I'd refused the loan, only to head off on a trip to the U.K. in February?

I struggle with this. After church last week I asked one of the ministers for help. She sighed and said, "You are on a very difficult journey."

The good rev suggested gently that I weigh future decisions very carefully. God does not want me to deplete my own resources, she said, nor to wreck my peace of mind -- particularly since doing so might not actually be helping my friends in the long term.

She's right.

If I were the wife of an alcoholic, phoning his boss to say that hungover hubby had the flu would keep things on an even keel in the short term. But it wouldn't begin to address the real problem.

Thus I cannot keep enabling Monica to make poor money choices. Nor can I keep lending money at all. The fact is I alone am responsible for my finances, particularly retirement. My daughter has a chronic illness and I cannot be a burden on her and my son-in-law later in life.

Once again I have declared the bank closed. And if I get another frantic communiqué? Ask me then what I will do. I honestly don't know.

Donna Freedman is the MSN Money Living With Less columnist and also blogs at Smart Spending and Surviving and Thriving.

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