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Was I a sucker to have made this loan?

Part of me says 'yes.' Part of me had to do it.

By Donna_Freedman Jan 31, 2011 8:55AM

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?

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.

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."

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.

"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.


More from MSN Money:

Jan 31, 2011 5:57PM

You are a good friend to 'Monica', and certainly not a sucker. She did pay back the previous loan, so I think you'll pay you back someday. I hope she appreciates what you did.


It is certainly ironic that you are a professional journalist in the field of household finances, and yet this good friend of yours is apparently not familiar with your articles on living below one's means, budgeting, and distinguishing needs from 'wants'.  Doesn't she have any understanding of  a) how you live frugally and b) what you do to earn the money that you are very kindly lending to her?

Feb 1, 2011 3:27PM
@Brazil123: I agree that she and her husband must re-think the way they approach finances. This is their second wake-up call -- and the last one with which I will be involved. I wrote and told them so, that after this they must sink or swim on their own. That it is madness to have satellite TV and cell phones without being able to make basic expenses each month. That they stood to wind up in a shelter with their kids because they couldn't get real about money.
As hard as it feels, I will stick to my guns. No more bail-outs. Two of them in three years are enough.

Jan 31, 2011 2:34PM
Refuse her once and she'll be too embarrassed to ask ever again.  All you have to do is say that you are pretty cash strapped lately and you can't loan out anymore money, period.  She's come to you again because you loaned her the money, so she knows she can count on you to help pay her bills.  She won't learn if you keep doing it and it's not your problem if she loses her car, house, whatever.  And if she ever pulls the line, "but we'll lose the car if you don't give us the money" - then you need to get out of her life for good.  We've loaned money twice in our lives - one was $20 that never got returned (no big deal) and the other was $100 that I was really nervous about doing.  It was for my husband's work buddy, and I was afraid he wouldn't pay us back, or he'd come back later for more.  We got paid back when he said he would, but I would hate for him to ask for money again.  Especially when it's only $100 - if you don't have a $100 to spare to pay for something, then you have a problem.
Jan 31, 2011 2:50PM
@ C Eliz: Yesterday I wrote to her, explaining that the bank is closed. If I "help" them I am enabling them to postpone vital changes in the way they use money.
After all, they spent on a satellite dish, cell phones and private-school tuition without thinking about an essential recurring expense (i.e., the car payment). This cannot continue.
Thanks for reading, and for leaving a comment.

Feb 1, 2011 11:31AM
You are a total sucker and enabler. the best way to help someone in Monica's situation is to let her go broke. Obviously Monica does not think she needs to take responsibility for her irresponsible finances. Once she hits rock bottom and loses everything, she will be forced to become real. Of course this is harsh, but for people like Monica this is the only way for her to learn otherwise she would have sought out help already.
Feb 1, 2011 6:41PM

I'm in a similiar situation so I'm definitely interested in the responses you receive:


I have a long time and dear friend who recently purchased her first home. As to be expected, money’s been extremely tight for her throughout these first few months of home ownership and as a result, she frequently calls and asks me for small loans which she promptly repays me in full. My issue is that when she moved into her new home, her boyfriend moved in with her. He hasn’t held down any type of job in the last couple of years and has no desire to find one. She supports him fully from putting a roof over his head, food in his stomach, and gas in his car.  Therefore, whenever she calls to request another loan, I become furious knowing that my hard-earned money is going towards keeping her afloat until her next check comes when there’s a grown man in her home who contributes nothing! Neither she nor her boyfriend has any children so there’s no reason to keep him around “for the kids’ sakes”.


I budget my money wisely saving 20% of my gross income in retirement and savings and while I don't want to see anything happen to my friend, I don't want to help a grown person who isn't willing to help themselves.


Thanks for posting your story and letting me know that I'm not alone in this dilemma.

Mar 4, 2011 11:39AM

This may sound harsh but its a lesson that has kept me in check for all my life. To learn how to swim, you must drown. My mother gave me an allowance and once i spent it, that was it! if I lent it out, no more from mommy! It taught me very valuable lessons in money management. To this day, I have NEVER had to borrow money from a friend...EVER.


I had a friend that would ask for minimal amounts of money from me here and ther ($20 or $40) to get her through to the next paycheck. Then I saw her with a pair of $900 shoes and $1200 pocketbook and that was the end of my rope. She would ask me for money for groceries and I would tell her if she cant eat her bag and shoes then she should starve!


I feel sorry for noone because there is always a way to manage your money and live within your means. if you fall on hard times you must manage it appropriately. I have gone without TV for 6 I could eat. Rented a room instead of an apartment. lived off of sandwiches. What makes everyone else entitled to live extravagantly and come to me for a handout:?  I wouldnt feel bad saying no in a new york learn to swim you must drown!

Feb 1, 2011 4:40PM

I think this is all easy for us to say, until it's one of our friends.  And like you said, she did pay you back.


They certainly could cut some frills.  However, I think your judgment about the tuition may be too harsh if those kids are actually getting something there, whether it is the quality of the education or the quantity of opportunities, that they would not get in public school.  Being a musician, I can imagine this kind of scenario without too much difficulty.

Feb 25, 2011 12:34PM
Donna, you are a good person but I think you should know that it's okay to say no or offer a less amount instead. Unless your friend and her family learn to change/overcome their financial issues, it appears they will always turn to you for a quick solution.
Have similar issue - relatives hurt by recession (job cuts, decreased revenue from them) and bad financial choices. Their parents are helping to keep them in their home so their young kids can stay in their (excellent) school system. What upsets us is that one of them does not have a GED and is still pushed to get it, but appears not to be motivated enough to do so. Plus, the parents hardly hear from them unless there's a problem.
P.S. If you have a chance to go to the U.K., and can afford it, do it!

Feb 4, 2011 3:22AM

OMG, Donna. I could have written this post, but you wrote it better!!!. I have a friend who owes me $4600 and another who recently asked me (who I politely refused, letting friend #2 know I'd just lent out $4600 to friend #1). IF I hadn't lent my friend the money, he would very likely have lost his business (very long story) and the downward spiral would have started, just like with your friend. Like your friend, he hasn't been 100% irresponsible, but he hasn't been as responsible as he should have been, either. That's what makes it so hard. If these folks literally sat around and did nothing all day, it would make it easier to say "No". But the dilemma is they work hard but have a crisis mindset that keeps them like hamsters on a wheel that moves faster and faster. When the crisis abates, they go back to their old behavior. I don't really have any answers...but you really did hit on the sense of inner conflict that the lender feels when these situations arise.



Feb 1, 2011 3:24AM
@Chickadee: I hope that after this she takes personal finance a little bit more to heart.
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