Next time they ask, just say, You know what? We're a little short this month too. Sorry we can't help. And then just reply the same way every time they ask. Sooner or later they will get the message.

Regardless of how great they are about paying it back, you don't want to tie up your money in their expenses. I don't think it's selfish at all. I wouldn't want to be in a position of lending money on a regular basis either.

Perfect answer from Lowspark!

Banks, loan companies (short or long term) & pawn shops only lend because they make money on the transaction, even just a few dollars at a time gets interest and fees. You aren't allowed to charge interest or fees on a personal loan so the neighbors are getting a free loans at your expense.

LIL

I don't know why you can't charge interest and just keep it between y'all. I loaned a friend $$ once for a new roof and he paid interest. We agreed on the current interest rate on CDs and he was grateful b/c he couldn't borrow money that cheaply. It worked out fine for all of us and I was glad to help him out.

We've done that too, Vannie. Who's to say you can't? You can buy property with owner financing--sold property that way once also. Why not a personal loan? Is it a law, liljunkr? If so, put the cuffs on me!

I think it's wonderful that you've been willing to help them out but I'm with lowspark on this. I think you should stop lending. What will you do if the next time they ask for more money? Will you be able to say no then? It's probably better to just stop it all now.

Either close the bank of Dotmom using the method lowspark suggested, or make them sign a promissory note, detailing the terms of repayment and interest.

The promissory note protects both parties in case of a dispute.

There are Lending Laws and Licensing issues involved. By law just like any other business you have to have the license in order to charge fees or interest. On the other hand anyone can accept a gratuity for any services or favors rendered, including a little extra back on a personal (between friends) without a license loan. I don't think I would ever charge a friend interest or a fee on a loan. If a friend comes to me in need and I can help I will. If that friend offers me an appropriate gift after the fact I may choose to accept or not. Perfectly legal in all aspects.

As for Property and reality, laws vary from state to state and even type of property. Check the contract, property sales and purchases with owner financing usually do not have interest and fees involved. They are straight up contractual agreement you pay so much per agreed upon time over a period of however many years and the deed is signed over to buyers free and clear. Other clauses or provisions in the contract might include repair and upkeep cost responsibility or in case the buyer defaults on the contract (most often property remains and all or a large percentage of the money paid is forfeited to the financier/owner), or the owner/financier dies before contract fulfillment what happens to said property and the buyers obligation to estate.
Law only work if you pay attention to them. I ignore the speed limit laws all the time. I take responsibility for the consequences of my actions. I do not advise anyone else to ignore any laws. I am not responsible for any one other than myself in any way. Any law you may decide, in ignorance or informed and conscious decision, to ignore you own responsibility for the consequences. I am also not responsible to the public for making you take responsibility. I would prefer using gags, blinders and 4 point restraints to handcuffs.

LIL

after a very bad experience with someone that was a good friend note WAS, I learned the hard way not to mix money with friendship. I no longer lend money at all. I agree, just say we were happy to help you when we could but at this point in time we just are no longer able to do that so please understand that, don't depend on us for help, and please don't ask us for more.
You can say you had changes in your financial situation that no longer allow you that freedom, no other explanation is needed. If they get angry then they were not real friends and were not worthy of your generosity or kindness.

I agree, I would stop borrowing the money. I have a good friend that I know is broke living payday to payday. It's really not a fault of hers but she lives alone with her three kids and really doesn't make much money. On the rare occasions that I borrowed her money, I just told her to keep it and considered it a gift. But I can say that it doesn't happen often and it's not normally much money. Just enough to fill her gas tank to get her to work for a couple of days. Anyway, this is a good friend and I know that she would do that for me if the tables were turned. Now if she wanted to borrow a large sum of money, I'm not sure that I would give it to her.

I lent my sister $5,000 several years ago as a personal loan & didn't get a "license". As a matter of fact, an attorney in my law firm prepared the promissory note & had a friend of his in the banking business prepare monthly "pay-off" statements such as his bank used for their loans.

I charged a few interest points below the then going rate, & reported interest payments on our state & federal income tax returns.

The loan was paid off in five years as scheduled, & I'm still Good Friends with my sister.

We loaned a friend 50.00 years ago and it took him over a year to pay it back. Lost a friend and taught us a good lesson. A relative asked us for a large sum, but we knew her immediate family had plenty so after talking it over, said no, so now she really doesn't talk to us much. Found out she had borrowed several time from them but always came up with excuses.
dotmom--just a suggestion--next time they ask, tell them you have some expenses coming up you need to save for and at this time you cannot loan anyone anything---or something to that effect. I agree, once you start, then others will come to you, small amounts, but seem to get larger. Just smile and say sorry, at this time I cannot do it. If they are friends, they might get upset, but will get over it.

Years ago I needed a car for work (at a new job) and borrowed $1000 from my Mom. I then paid her back $100 a month for a year-yeah $200 interest. And I bought her a set of dishes to say thanks. I felt terrible borrowing from a relative.

Next time anyone asks you for a loan, small or large, just tell them things are a bit tight with food, gas, electric rising, so you can no longer help. End it with "I was happy to help you while I/we could". It will make them aware that you haven't forgotten the past loans (as I'm sure they know).

That should nip it in the bud, but you have to stick with it and not give in even once, b/c they will come back later.

I don't loan money anymore...well, after I get the balance due from my sister who borrowed thousands last year. The bank is closed at our house and I don't care who needs it!!

Tell them you'd like too but just cant do it you might want to tell them you'd be happy to work up a budget for them if they give you the info on their income and expenses

Dotmom, so far they've paid you back and in a timely fashion but what if the next time they pay you back just part and never pay the rest or if they don't pay you back at all. I would just say we have some unexpected expenses and money is a little tight right now. We'd love to help you out but it's not possible. They can hardly be angry with you when you've always been generous before but even if they are, you don't need friends like that.

I checked several legal & taxation websites, and there's nothing I found that indicates individuals can't make personal loans AND collect interest on same without jumping through any official hoops.

In fact, if you don't charge interest, theoretically the IRS can charge you for "imputed interest" as far as income received, just as if you had actually received it.

Apparently all states put a maximum interest rate on an INDIVIDUAL's loan to another party (banks, credit card companies, payday loan places are, for some reason, excluded from usury laws)---the current state maximum seems to be 20% per annum, with California currently at 10%.

Except for the most modest personal loan, it was suggested that a promissory note always be executed.

We have to just have to say things are tight right now, (and they could get that way,as my new meds might put us in the donut hole by Oct or Nov) It is never a big amount they want to borrow, One, its 5 or 10, but the other it has been 15, two months in a row. Like I said, they have always paid it back, and I do feel sorry for those who live from the 1st of the month to the next. but what we have is what we have to live on. Thanks for the advice, what I need is a backbone. I do fantasize about putting a sign on our APT door saying.....THIS IS NOT A BANK.

I've loaned money a lot but have pretty much stopped it. I've been stung a couple times by people I thought were friends. I've just decided it has to be something extraordinary for me to do it anymore. It's tough. It goes against many of my beliefs but then again, I worked and work hard for my money. I live a frugal life. When someone is a spendthrift, makes more than me and wants to borrow from me, I've started feeling a bit offended.

In addition to what Minnie_tx said, I'd suggest you say in your own words (and practice it several times so you say it smoothly) I know how it is these days. Let's share some tips on making our money go farther, or economizing, or something to that effect. Maybe mention a couple frugal websites you found interesting and you'll share them or something. Frankly it's what they need. If they have to borrow $5-$15 they're probably not budgeting their money properly. Turn off some lights, quit driving as much, buy cheaper and smarter, etc. Are they borrowing it to go to a movie? Go out to eat? Maybe it's time for them to turn off the cable and the contract cell phone(s)?

Another good thing to do is to get pro-active on it. When you see these people, just mention how much it was for a prescription, to fill the tank, etc. Mention something like, guess we won't take the trip to see ____ at least for a while. And be sure to give a heavy sigh and say oh well, we're all in the same situation in a way, aren't we? Smile, take a deep breath and change the subject quickly. (Nice that summer's here, doesn't the lawn look nice or whatever) How can someone hit you for a loan after that? And the beauty is you're being honest.

I'm one who is opposed to lying to people especially to keep from telling them what they often need to hear but to simply say you just can't do it this time and mention that you understand since you saw your (prescriptions, groceries, car repairs or other honest things) go up and you know how it is to have to tighten your belt.

And certainly to be expected to be a bank for a number of people in the building? That's abominable. And to not give you some interest is pretty tacky too.

I have a relative in Texas who was impacted by hurricanes a few years back. She called in desperation that all the banks were closed, she couldn't cash her paycheck, needed gas to get to work and the stations that were able to operate were only taking cash and would be closing soon. The power was out and she knew it would be out for days so she wanted to get a few supplies since all refrigerated/frozen items would spoil soon. All she needed was to get $200 until she could cash her check and would pay me back next week. Well, next week became next month, then later and later and I did get paid back over 2 years later and she paid me some interest and costs of wiring the money. What ticked me off was when she was talking she had most of the money but not all of it so she couldn't pay me back right then (she never heard of paying something?) and then it was comments about they deserved something special so she bought some special food and they went out to eat, etc. She was buying things that she really didn't need, well, you know how it goes. And was saying how ashamed she was that it was taking so long and she was afraid to even email me, etc. Well, after finally getting it back, she called again within a year or so wanting to borrow again. This time it was only going to be a month to two months because she had a new job, her husband's disability payments would be coming in, etc. Well that took more than a couple months. She's been hinting again and I've just said that things are tight here. I mention often about gas bills in the winter, insurance, etc. For her own good she needed to be cut off. I'm pretty sure she'll hit up my sister who won't do it after seeing the last couple times, well she says that anyway so it could be she is loaning her something! IDK.

All I know is that the Dotmom saving & loan needs to take care of herself. It's easy for things to get out of hand and while I'm sure $5-$10 isn't going to make you go without food or medicine, it cannot go on. That's Buster's catnip fund that's being threatened! ;) Good luck to you my dear. And don't feel bad about protecting you and your husband's (and of course fuzzball's) interests. That's not selfish, that's common sense. A lot of friendships break up over money. That's the way it is. But to me they're not friends if that happens. Friends don't cheat friends out of their money.

Wow was it hot and humid around here today! I'll take 30° over this any day! :)

This is not a good idea, and you should not continue doing this at all.

If people can afford to pay you back, they can afford to manage their money better so they don't have to borrow. Eventually, you will be stung, and we don't want that to happen to you. So please stop. Don't do it one more time.

While I agree with everyone else that you should no longer loan any money, I disagree that you need to give any sort of "excuse" whatsoever. Never, ever, make up a reason for anything that you do or don't do. All you have to say is, "I'm sorry, but we're no longer lending money to anyone." It's a short, simple statement, and it's the truth. No one can fault you for that.

I have to agree with Lindsey ca. Once you even hint of an excuse/reason, it can easily be rationalized by the borrower and you wind up having to explain, and sometimes back yourself into a corner, depending on the tenacity of the borrower.

This can extend from borrowing money, to needing your time or skill; whatever. Sometimes we feel we have to explain, when it is none of their business.

Off my soapbox and to the kitchen for more coffee :-)

Give them a list of addresses and phone numbers to the payday loans services. And tell them you can no longer lend them money.

I agree with Lindsey too. Often we think we have to explain ourselves, but often we do not owe an explanation at all. Dot, you don't owe them an explanation!

Lindsey said it best....keep it simple! No excuses, no explanations... just don't involve yourself any more in their financial problems.