Lending makes one a slave
“The borrower is the slave of the lender.” These are the words of one Biblical proverb (Proverbs 22:7). Do you agree with this claim? Recently a friend lent me some money and felt I needed to please her and do whatever she wanted. I didn’t see any reason for opposing her. No one would want his or her borrower to feel the same. So, to avoid such discomforts, some feel justified not to lend money to friends.
Friends may always look for you whenever they are in need. Other people may also be tempted to borrow from you. Do not let yourself be in a state of unceasing lending. This can ruin your financial life.• Instead of lending, it is wise to help with alternative ways of fixing the problem. What if you will not be in a position to lend next time? I don’t mean you should turn out to be a mean person who cannot help others. Realistically, it may be inappropriate to lend. What about charging interest?
While it may sound unreasonable to charge interest on money lent to friends and family members, it may be important for you. There are so many risks involved in this situation and it is important to take them into account before making a lending decision. You may have to pay penalties in theIRS. Remember there is a yearly limit tax-free gift. So, to avoid legal tax liabilities, charge interest. Also, to show commitment, some friends include interest in the terms of lending. It is important for borrowers to show themselves thankful and the best way to do that is paying interest on the amount borrowed. Lastly, consider the time value of money. The amount borrowed today may have less purchasing power in the future. How then can you indemnify the lender? Pay interest. It is a nice way of showing you appreciate the help given. Besides, can you get a loan from banks or other institutions without paying interest? It is very unlikely.
Should you lend to friends? There are several factors to consider before making a decision. We have briefly discussed these reasons. Should you charge interest? While it may sound ridiculous, their regulations demand you charge interest. We will hope this discussion has been helpful. We will be glad to see your response. Thank you!