Have you ever loaned money to a friend or family member? Did you really loan it or was it borrow? I guess the question of the day is would you loan money?
I was thinking back to one of my biggest BOZO financial moves and this one was a real DOOZIE! Yep, I was young, stupid, and in love. The perfect recipe for DISASTER! Trust me, as far as finances go I think I’m okay. Where I’m bad at? The personal relationship part of it.
Anyway, I had a pretty serious relationship in college with a guy for about 1 year. He was a nice guy, but terrible with money. A total spendthrift, though I didn’t know it then, and can say it now looking back. But heck he was fun and we had fun together. Were we perfect? No. And his spending issues definitely were a problem, though I did not realize it at the time. Doesn’t everyone have 20/20 vision when looking backwards?
So being the average student he ran up credit cards, drove a a fancy car, and took out student loans, etc. He was a ROTC student so he made a lot more than me with his stipend. I was living and working frugally because my parents weren’t helping me, but had preached no consumer debt. Plus I had student loans.
Anyway, one day he tells me he can’t pay his phone bill. He’s gone over his cell phone minutes and the bill was $300! He can’t afford to pay it so he asks me to loan him money to pay the bill, after all most of the minutes were because he was talking to me! I know it sounds like a cop out, but it really was from talking to me. Anyway, he says he’ll pay me back with his next check. I think about it and figure sure, why not? He’s a good guy, and we’re dating. Why wouldn’t he pay me back? Yeah I’d slap myself too now, but hey I was young and stupid.
A few months later, I end the relationship. I can’t remember why, I think we just weren’t compatible and it wasn’t working out. Of course he hadn’t yet paid me back. And ending the relationship did not make it easy to ask for the money. But I did.
He refused to pay me back and said I had given him the money as a gift. I called him a few times, but he said no way, he’d spent enough on the “relationship” to consider the $300 paid in full. Especially since he had “spent” more on us than I had.
I learned a good lesson that day. Sure it wasn’t a heartbreaking lesson either way, but it was a stupidity lesson. Now when I hear stories about people loaning money to their significant others I can laugh. I call it “paying tuition to life”.
I mean the best thing I got out of the relationship was don’t be stupid with your money and loan it to your partner. It was the first time I had ever paid tuition to life. And now when I “loan” money to people, its not a loan. It’s a gift.
If you want to share your stories about paying tuition to life, leave a comment or better yet write a post and link back.
22 responses so far ↓
1 Grace // Oct 21, 2008 at 11:28 am
You need to watch more of “Judge Judy!” I swear, over 50% of her cases follow your scenario exactly! Her rule of thumb seems to be, if you’re in court because you broke up and NOW you want your money back–it was a gift. If you’ve got any paperwork or the other party has given you ANY of the money back, it was a loan.
2 Meg // Oct 21, 2008 at 12:35 pm
Oh my gosh, you are going to DIE when you hear that I lent – and of course lost – more than 10 times that amount to by BF in college!! Yeah, that’s right, over $3,000. OMG I kicked myself for years over that one until I realized like you that I had learned a very valuable lesson (actually several, but it’s a long story) and only lost a relatively small amount of money (not that $3K is small beans of course).
I felt bad because his parents didn’t help him at all and I had a generous allowance, so I always paid for everything even though he never asked me to. After all, I wanted to go out, to travel for spring break, etc, and I could afford it, and I figured it wasn’t his fault his parents were stingy nor was it my virtue that mine were generous.
But then one month he couldn’t pay his credit card bill. I reluctantly offered to pay it for him to save him the high interest, and he happily agreed. At that time I actually thought we might end up together and his credit would affect me and so I really wanted to help (I was so dumb). Then he got his first apartment and was going to lease furniture. I thought that was ridiculous, so I paid for his living room set. That was the bulk of the loan. He’d pay me back in installments rather than pay interest to the furniture people. Made sense somehow. Of course he never could make a payment…
I kept a detailed spreadsheet of every dollar I lent him, and it was close to $5,000 after adding the $2,500 furniture set or whatever it was. WHAT WAS I THINKING?? The payments never started rolling in, and it drove a huge wedge between us (along with some other major problems), and of course I tried to hold on to a bad bad relationship because I knew if we broke up I’d never get paid back. And I didn’t.
OMG this is such a terrible story when I think back. But hey, at least you got out for only $300!
3 LivingAlmostLarge // Oct 21, 2008 at 1:37 pm
Actually Meg, $300 is what I mentioned here. I guess like you I could have gone on about all the other stuff I paid for, including a tv which he did pay me back for, cell phone, rent, etc. Some stuff he paid back and others he did not. I bought tons of stuff just because it’s in my nature, I like “gift” giving.
But I just recall I guess the $300 because it was right before we broke up and something I did not consider the gift. It was not the first nor last lesson entirely.
Trust me, when females start to really admit and add it all up, it’s a lot more. The $300 was the tip of the iceberg, and I never kept a spreadsheet.
And your $5k is not surprising. I’ve had people (my BIL) co-sign a CAR LOAN. Stupidity runs rampant with love. It doesn’t seem to matter if you are a man or a woman either!
The car loan thing I’ve strangely had a number of friends admit to that. I’ve done more stupid, but the post would be too long to write it all.
4 Amber C // Oct 21, 2008 at 2:41 pm
Somewhere along the way I learned this lesson. My sister use to ask to borrow money all the time. I learned that if she ever needed money that it would be a gift so I would only give it if I didn’t need it back.
Once is a while I will give her $100 or so but never let her borrow $500 or more.
By the way all those times I loaned her money I never saw a penny of it.
5 Meg // Oct 21, 2008 at 3:37 pm
Yeah, it’s one thing to give, but it’s another to do it in the context of a young (i.e. stupid) relationship like many women do. I can totally see how people justify the car loan co-sign, even though it’s so easy for outsiders to scream “don’t do it!” If any of my friends or family had known whta I was doing, they would have freaked out. I guess that’s the line – if you are lending/giving in such a way that you are keeping it a secret, then you know it’s probably a BAD idea.
6 LivingAlmostLarge // Oct 21, 2008 at 4:16 pm
I think it works both sexes. Men and Women can be taken for a financial ride. Yep and car loans seems like such a great idea when you are dating!
They were dating for 2+ years I think, so I can understand how it seemed like less of a risk to him. Too bad they ended it anyway and he got screwed.
7 fengshui // Oct 21, 2008 at 6:07 pm
I have recently sold a car to a close relative who can’t pay me for it. It was only a $900 car, but I still could use the money. However, I’m much better off than he is, so I’m ok. I also paid off quite a bit of my husband’s debt for him before we got married. I paid off a $4500 judgement from a car accident. He never paid me back. Now that we are married, I figure that it will all even out. I’m a very generous person, so I feel good when I help people, especially my family, most of whom are working class and working poor. I’m the first one to have a college degree, so they all look up to me.
8 LAL // Oct 21, 2008 at 7:01 pm
Family you’re allowed to be dumb. I won’t mention what happened with my BIL, the car, and money. But let’s say that he “asked” us for money for this girl more than one time.
We instead bought him stuff he SHOULD have been able to afford if not for giving money to the girl.
So it’s not always men taking advantage of women but women can take advantage of men as well. Sigh. Stupidity gets better with age though.
He and I are both a lot wiser. For some reason my DH never was as stupid as me and my BIL.
9 Mrs. Micah // Oct 22, 2008 at 12:30 pm
I only ever lent someone money once, and that was $400 for Micah to buy two teaching suits. We were engaged and he was about to start teaching & getting paid, so I figured it was ok. And he paid me back right away. My reasoning was that if he hadn’t bought me an engagement ring (though I don’t know how much it cost), he would have had more money for the suits.
It was probably a questionable decision, but it worked out.
I’ve loaned out a number of books and not gotten them back, but then I’ve also borrowed books and not returned them. I suppose we’re all even somehow.
10 fengsui // Oct 22, 2008 at 1:32 pm
Since Mr Micah bought you an engagement ring, perhaps you could have just given him the suits as a gift?
11 fengsui // Oct 22, 2008 at 1:35 pm
I am kind of feeling like a sucker. Perhaps I’m too generous. I make more than my hubby, so I feel that I should pay for more. We keep our money separate and there are times where I’ll pay the car insurance in full for both our cars ($700) and not ask him to pay for half, or we will go shopping and I’ll buy the groceries on my debit card and he won’t pay me back. I just don’t question it since I make more. Should everything be equal? Pay equal even though the pay is unequal, OR prorate based upon salary?
12 fengsui // Oct 22, 2008 at 1:36 pm
“It was probably a questionable decision, but it worked out.”
Can you explain what you meant by this?
13 LAL // Oct 22, 2008 at 3:57 pm
Marriage is a very different ballgame Fengshui. I think you’re taking it way to far splitting expenses. And it depends on where you live. Just because you split expenses, if you live in a Community Property state does not mean it’s all separate. So you can’t judge other’s decisions because it is different laws regarding their actions.
So I don’t think that separate accounts is a bad thing. BUT it doesn’t necessarily mean easy financial break up if you are married in a CP state. Retirement is still included and you still have to make a property settlement, at least according to people I’ve heard from CA.
And splitting expenses is up to the couple. But they should be aware of their state laws if they are concerned.
14 fengshui // Oct 22, 2008 at 10:32 pm
“So you can’t judge other’s decisions because it is different laws regarding their actions.”
I’m not sure what you’re referring to?
The judgement that I was making was Mrs Micah was commenting on her questionable decision to buy her fiance $400 suits, and being paid back right away, when he already spent money on a ring for her. It just seemed odd to me. Engaged is so close to being married. A piece of paper doesn’t change much, in my opinion.
As far as the community property laws, they are so archaic and I wish that they would go away. My hubby and I promised eachother that we would not involve the court if we divorced.
15 fengshui // Oct 22, 2008 at 10:35 pm
“BUT it doesn’t necessarily mean easy financial break up if you are married in a CP state. Retirement is still included and you still have to make a property settlement, at least according to people I’ve heard from CA.”
Not if you don’t take it to court. I have a pension and I’m not giving a dime of it to my hubby. I’ve supported him in the past and have paid things off for him, so I feel that I don’t have to pay him a dime. So, if we divorce, we go our separate ways and not involve attorneys and judges, so the decision isn’t made for us.
17 LivingAlmostLarge // Oct 29, 2008 at 10:52 am
That it’s always men who take advantage of women with money. Also community property is determined where you live.
I’m glad you settled the divorce issues with your husband before hand, fengshui. But what happens if it’s an acrimonious divorce? Without a prenup everything is fair game.
I’m not saying it can’t happen, but the chances are it won’t be perfect.
And community is the way it goes in some places.
21 whitestripe // Feb 10, 2009 at 11:09 pm
well, i got my boyfriend an additional cardholder for my credit card when he went overseas on a holiday with two best friends. he racked up $3000 balance, but paid it off in a month by being really really frugal, including all the interest.
i guess i just wanted to share that SOMETIMES it doesnt end badly.
he’s now my fiance and we’re buying a hosue together
22 LAL // Feb 10, 2009 at 11:24 pm
LOL. That is true, I bought a house with my now DH after just “dating” for 2 years. But for every success there is a failure and I had a lot of failures.
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