#78 Lending Money

Rule #1: Never lend money to family members or friends.
Rule #2: Under very difficult and rare circumstances where rule #1 had to be broken, speak with your spouse first so both of you make the right well-informed decision together, before notifying or even promising the other party whether you will or will not help him/her, or how much you are willing to help.
Rule #3: Tell the person who needs the money that you are giving him/her the money and that you don't expect him/her to repay that amount.  It is a gift.  In your mind, do not expect this gift back.  If they repay, fine, if not, then you are willing to accept the consequence of losing that amount of money without holding a grudge.
Rule #4: Notify that party that you will help only one time, or up to a certain point that you are able to contribute financially.  If the problem continues to arise, s/he is abusing your kindness and you are not helping him/her.  We know personally of a distant relative whose grandma and uncles and aunts sent money to him to cover college tuition and expenses for over six or seven years yet he never graduated, squandered the hard-earned money, skipped classes and semesters, and continued telling his grandma and uncles and aunts that he still needed the money for school every single year.
Rule #5: Maintain a positive relationship as best as possible without being judgmental about the whole situation.  The other party may feel ashamed, embarassed, judged, and unsecure about the situation which will only jeopardize your relationship further.
Rule #6:  Borrowers are slaves to the lenders.   When a family member, especially an older family member (older sibling, uncle, mother, aunt), borrows from a younger family member, this tilts the balance of power in the relationship and almost often ruins the relationship.  That's why always follow Rule #1.