You may be taking a big risk when borrowing money from friends. However, it’s not to say you should never borrow from friends or family.
People have different views and values when it comes to finances, and you don’t want to harm the relationship between you and your loved one. Remember that while you may be feeling embarrassed, they are likely processing emotions of their own. So, what if you break your payback promise? Here are few tips.
Don’t Avoid Them or the Topic
Ignoring them or the topic is one of the worst ways to handle the situation. It’s especially uncomfortable if you do so and see them a lot.
Don’t pretend like nothing is going on. If you can’t pay it back and avoid talking about it then you’re putting an additional strain on the friendship. Be honest about your situation and let them know you haven’t forgotten.
Don’t Take Them for Granted
You also don’t want to take the person or relationship for granted when you owe friends. Avoid assuming that because they’re your friend that you can take your time paying back what you owe. Better yet, before you even borrow, set a timeline for when your friend can expect to be repaid. Treat them like you’d want to be treated.
If you take your time and show disrespect toward a friend then you may be on your way to them losing trust in you and harming the relationship. Borrowing from a friend and not paying it back will be a tough situation to bounce back from.
Be Forthcoming About Your Finances
Financial deals can damage a friendship, but they don’t have to if you are open and honest in the process. Be forthcoming about your finances and situation. You have to put your emotions aside and address the issues.
If you want to maintain your relationship and not make the situation worse, be completely honest. It’ll make the situation even worse if your friend senses that you’re not being completely honest with them. Your friend may see it from your side and be more empathic if you’re vulnerable and let them in.
Renegotiate and Recommit
Another option is to negotiate a new repayment plan. Let them know you’re fully committed to getting them their cash. Work out a repayment schedule and then stick to it. Remember that actions speak louder than words.
You may even want to consider looking into creating a contract for borrowing money from a friend that you can present to the person. You can include new details about when and how you plan to pay them back. They may even agree to installment payments if you can’t pay them back in full.
Be respectful of the repayment terms set by your friend. For example, if you buy a car from them and they let you pay them in installments, don’t sell the car to someone else before you’ve paid off your debt.
Adjust Your Spending
If you’re borrowing money from friends then you may want to avoid buying fancy new things. Keep a tight budget and limit your spending. Imagine your friend seeing a big-ticket item at your house and you having to explain to them the reasons why you’re not paying them back. They may resent you for it and your friendship might never be the same.
Pay the Debt Back ASAP
The bottom line is that you should focus on paying the debt ASAP when borrowing from a loved one. If you can’t pay it back right away then make a plan for how you’ll pay it off going forward.
Remind yourself that your friend is not a bank. Even though they may love you and are being nice about it, they do want it back. They have a right to be upset with you. If you care about the friendship then dedicate all your effort to paying them back as fast as you can.
There are several reasons to borrow money from friends and now you know what to do if you find yourself in a situation where you can’t pay it back. Check out our blog for additional tips on the topic of money etiquette.