Riz Ponti
Why shouldn’t we lend money to friends or family? These famous words from Polonius, Shakespeare’s chief counselor to King Claudius in Hamlet will tell you.
“For loan oft loses both itself and friend.”
Polonius knew that a loan to a friend or family often results in the loss of both the money and the relationship.
Here is a financial story from Riz Ponti about loan and friendship and why it isn’t always wise to be a great friend when it comes to lending money.
During the initial years after graduation, I had a sizeable amount of money saved up from writing feature articles for an online magazine for teens. With no clue on how money matters work, I was very open about my financial situation. Never did it occur to me to keep it a secret (a bad practice, I know!)
A friend who worked and lived in the same area borrowed money, and because I had no other use for the money at that time, I lent her around 40,000 Pesos. For the sake of this story, let’s call her Tin. She was older and earned more than twice my salary, so I felt secure lending her the money. At the time, Tin needed money for her car. Despite not paying for rent or household bills, she was unable to make ends meet with her current salary. She spends a big chunk of her salary on trips, food, shopping and gas. Naïve, I did not bother checking her capacity to pay nor signing a written agreement. She was a friend in need, I reasoned.
A few months later, I started researching about financial investments. I was earning more than minimum but I really wanted to earn enough to go back to school. I talked to an insurance advisor and began setting aside for insurance and mutual funds. Often times, she would voice out her disagreement with this. She said I should spend for myself the money I have now. I wasn’t surprised – she lived that way after all. That’s also why she repeatedly wasn’t able to pay me.
One morning, after Tin spent a night out with her team, she called us crying. One of her sales agents stole Php 10,000 from her bag. She was tipsy and gave her car to him, instructing him to get her bag. This was when he found opportunity to steal money in her bag. Tin was like that, careless about her belongings and finances. I know that should have been a major red flag already but when she called me asking me for more money to cover the amount that got stolen, I still pulled out the friend card and lent her.
Writing this now, I feel embarrassed at how trusting I was. My insurance advisor told me I should be smart about getting my money back if she wouldn’t pay outright. I started making excuses about forgetting money when we would go out and telling her to deduct my share from her outstanding balance which at that point was more than Php 40,000.
I resigned from my then-job and had to live off my savings. Tin, fully aware of this, returned a small amount of money to help me get from my next paycheck in my new job. At that point, she had about Php 17,000 left. This was about a year after the first time she borrowed money. For another full year, Tin did not pay me. We were in the same circle of friends who saw each other regularly. We even had group chats on Facebook and Viber. I was regularly updated about her expenses through stories and social media updates. Yet, every time I ask her if she could pay me, her tone would lighten and she would say she really didn’t have money.
Two years after her first loan, I was surprised to hear that she was going to get married to a man she met online. I was happy for her, but the worry in my heart started growing. If she could spend for her marriage, surely she had money on her. I talked to her but she gave me the same excuse. I was getting impatient. My family, who found out about the loan, was fuming. My mom opted not to go to her wedding.
Tin asked the other bridesmaids and me to pay for our makeup and gowns at around Php 3000 each as our wedding gift to her. I assumed she would just deduct my share from her outstanding balance, but when I didn’t pay her for my gown, she got mad. She had no extra money, she said. I paid for half to avoid the drama. The wedding went on but never did I got a centavo from her again nor hear about it other than empty promises.
That same year, my father had a stroke. I spent my savings and took out a loan to pay for the bills. Tin and our friends were constantly updated about what was happening, even when my mom had to sell several possessions to pay for our expenses. At this point, I was desperate to find money. I was in debt, and the medical expenses were not decreasing. I have always known she had capacity to pay, so when she delayed settling her balance again, I wasn’t able to control myself. I was so mad and so disappointed. I searched any patience or understanding left inside of me, but there was just frustration and hurt. After I confronted her, she stopped replying or taking my calls. I called her and asked our friends. That’s when I found out that they went out the night before. I decided to contact her husband. To my surprise, he had no idea about the loan and they fought about it.
Tin was mad that I informed her husband. A common friend texted me and told me Tin wasn’t going to pay her balance anymore. At the time, it was only Php 500. I checked her Facebook and saw that she unfriended me.
I don’t consider myself financially smart, but this is my story to tell. I hope readers learn from this: friendships aren’t guarantee that your money is in good hands. On the contrary, if you wish to preserve friendships, keep money out of it. Be generous and helpful but not too lenient or vocal. Be gracious in accepting but never be abusive. Being careful with your money does not make you a bad friend, it makes you a smart one. For anyone who owes money to a friend, start cleaning up your debt. It may not appear in your bank records, but dignity is much more valuable than running away from your loans.
