Talk About a Family Feud
Our friend Joan was in a tough situation. After several electrical mishaps, she found out her entire home needed to be rewired. The cost itself was shocking – $5,000! She didn’t have the cash, and didn’t want to resort to credit cards, so she turned to family — namely her cousin Molly – and asked her for a loan until the end of the year.
Molly immediately said yes – of course – she would be happy to help! Thankfully she was in a position to loan Joan the money, and Joan wasn’t just family, but a dear friend. So far so good, right?
Molly, being ever the practical gal, went over her accounts. She tallied up that she would be losing out on several hundred dollars interest per year by loaning this money out. When she handed Joan the check, she mentioned that there was no rush – just to pay it back whenever she was able – with the corresponding interest rate that it would have been earning in Molly’s savings account.
Joan was beyond horrified and embarrassed! Being charged interest — by a family member? She couldn’t believe it. But from Molly’s perspective she was being generous – after all, she was not only loaning her the money, but not giving her a specified date to repay it by.
Have you ever lent someone money? Have you ever borrowed money from a family member or friend? How did it work for you?
Is Molly cheap or frugal to include interest as part of a loan to her cousin? Is Joan cheap not to have offered to pay Molly interest in the first place? What is the best protocol when lending or borrowing money so it’s fair to both parties involved? How do you manage each others expectations so the relationship doesn’t get damaged? Tell us what you think!| Print