Today is National Pay Back a Friend Day! That’s right, now is the time to square up with friends or family who have loaned money to you. While today’s celebration is somewhat tongue-in-cheek, it’s essential to understand the etiquette of personal loans from people you know well and what to do if you’re struggling to make things right. Let’s take a closer look.
Borrowing from friends and family should always be a last resort. But to be a good steward of their money, it’s crucial that you remain trustworthy in their eyes. If they don’t feel they can trust you to pay back the money or use it responsibly, they have no reason to help you when you need it most.
Don’t Put Your Friend or Family Member in a Financial Bind
If borrowing money from your friends or family puts them in a negative financial situation, you need to step back. Borrowing money from someone to solve your financial problems by creating bigger ones for them isn’t a kind thing to do. There will always be alternatives that you should consider.
Commit to the Terms in Writing
Just because you’re borrowing money from a friend or family member doesn’t mean you can skip the formalities. In many ways, it’s even more critical because you won’t be worried about meeting unknown expectations. Sit down and write out the terms of your agreement. How much money are you borrowing? How soon do you need to pay it back? Will you be paying interest?
Don’t Be Afraid to Ask for Help
It’s okay to admit that you need help. Getting help isn’t a weakness; it shows your character’s strength that you are committed to getting a hold of your finances so you can pay off all of your debts, including those you owe to friends and family.
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