The Friends and Family Plan

Recently while exploring a pastoral blog, I saw an interesting comment on money. This pastor claimed that money could be spent, given away, saved, invested, or loaned out. He claimed these were the only five options. I thought this odd as loans are a form of investment. For example, I give you $100,000 to buy a house. You give me a mortgage that pays 5.5% interest on the outstanding balance for the next 30 years, guaranteeing me an income in my old age. I speculate that the pastor was thinking in terms of no interest loans made to friends and family, a subject I have never covered in this blog.

My advice is very simple.

Do not loan any money to a friend or a family member that you can not afford to lose.

On the day you give such a person any money, consider it lost or given to God. Otherwise, you are risking the destruction of that friendship or the alienation of the family member.

That said, one of the costs of human relationships is sharing your bounty with less fortunate friends and family members. Knowing when to lend and how much to lend should be a subject of prayer and serious reflection. Often lending or giving money to the wrong person at the wrong time will actually exacerbate already bad situations. Credit card junkies and drug addicts will not be made whole with your money.

I do not consider the small loans we give one another at lunchtime or at the coffee machine a part of this discussion. That is just something we do. Different people have different feelings about the nature of these small gifts of fellowship. Some will repay every penny. Some will consider it a gift they will repay by showing similar generosity to another in a similar situation. In either case they are not worth worrying about unless your office contains one of those people who are always taking and never giving. Such people cause these informal systems of good will to break down.

What I am discussing is sizable loans made to friends or family members. Sizable, of course, is a function of your wealth at any given point in time. I have made a number of such loans. I have always considered such money lost until proven otherwise. Generally, my results have been pretty good.

Only once did the recipient of such a loan fail to repay anything. I knew that would happen and told my wife, “You know that money is gone.” As a condition of this loan, I required my wife to promise if that loan was not repaid, we would never loan another penny to the person in question. This is probably a good rule of thumb in such situations. Throwing good money after bad seldom accomplishes anything positive.

On two occasions with two different individuals, I made loans to folks who had no real means of repaying those loans at any time in the foreseeable future. When they asked me for money, they were honest about their situation and promised to repay when they could. And they did. One repaid me in small amounts over an extended period of time. It was not money he could easily afford, but he repaid every penny. The other didn’t pay me anything for a couple of years, then repaid it all over several months once his situation improved. Actually, he paid a little more than he borrowed. Both showed themselves to be honorable in my eyes and I believe also in the eyes of God. May their reward be great.

One such loan was something of a disappointment. The individual in question borrowed money under well defined terms (so much a month for so many months payable on the first of each month). This person was capable of meeting these payments. I was just offering a better rate (0%) than the finance company. Over the term of the loan, this person was late on a number of the payments. When this occurred, I simply told them, as scripture suggests, to consider that payment forgiven. Although this person accepted my generosity, I don’t think they liked it very much. In the course of time, I discovered I did not really have a friendship with this person, rather they considered me an acquaintance.

Don’t be guilt manipulated by irresponsible friends or family members, but from time to time, after prayerful consideration, don’t be afraid to lend money to others who find themselves in an unfortunate bind or are just in need of a little help to greatly improve their situation. Such loans are gifts made to God. Trust him to repay.

Exodus 22:25-26 (NIV)

If you lend money to one of my people among you who is needy, do not be like a moneylender; charge him no interest. If you take your neighbour's cloak as a pledge, return it to him by sunset.

Psalm 37:21 (NIV)

The wicked borrow and do not repay, but the righteous give generously.

Psalm 112:5 (NLT)

Good comes to those who lend money generously and conduct their business fairly.