Why NOT to Lend Friends Money

Would YOU let someone borrow money?

I was in college and had a roommate, like most of you do when you go to college. My mom helped me build my credit by putting me on some of her credit cards so by the time I got to college I had good, established credit. She also taught me how to live on a budget, no matter how much I made.

One day my roommate came to me and asked me if I would do a cash advance of $1500 for their business. My roommate didn’t go to college but owned a painting business and needed some money to get materials to finish a job and get paid. They told me that they would pay me as soon as the job was done and they got paid.

So I lent them the money. Why?

Because I trusted them. About a week later they gave me the $1500 and I applied this to the credit card. I was worried because my mom had always told me that you never charge what you cannot pay off at the end of the month and to never carry a balance.

Well about a month later, my roommate came to me, again, and said that they needed $1800 for the same reason, but for a different job. Since I got the money quick the first time I didn’t hesitate to drive to the credit union and get the money for them.

Well a week passed, no money, 2 weeks passed, still no money. I was about 4 weeks from graduating college when I asked my roommate if they had the money they owed me. They said the job was done but they were waiting to get paid from their client.

Soon after that, my roommate decided that they were moving back to Michigan and they were gone within a week. Two weeks before I graduated college I called my roommate to ask about my money and found out their phone was disconnected. That's when I realized that I would not be getting my money back.

At that point, I did one of the hardest things I had ever done at that point in my life. I took some inheritance money that my great grandmother had left me and paid off the credit card. Most of you would not do this but I didn’t want to graduate college and start my first “real” job in debt.

To this day, I have never let anyone borrow money. You have to realize that if you let someone “borrow” money, consider it like gambling. There is no guarantee that you will get it back. Are you willing to take that risk?

- Coach Kim