Dont Loan People Money – Get RICH in the Process

loan-money-to-peopleI might take a lot of bad feedback for this post, but I want to seriously take a look at people that loan people money.  It’s one of the sure fire ways to stop that money working for you and I’ll show you why in a minute or so.


In any case, let me ask you a very frank question – “Have YOU ever lost money to someone that you loaned money to?”  If the answer is ‘Yes’, then you know the tree I’m climbing to make my point is totally true.  It doesn’t take a rocket scientist to figure that if you loan money to people and you lose it, it actually affects your wealth building.


As someone that’s lost hundreds to even thousands of dollars over the years to so called good people, I might be one of the best people to identify losing money by ‘helping’ someone out.  So Listen up!  It’s in your best endeavour to put down your foot from this day forward and operate on a no lending money policy.  There’s a reason why big financial gurus such as Suze Orman constantly preach not to lend money.


It’s one of the single most stupid mistakes you can make financially and can devastate your net worth over time with enough defaults on your lending.


So, I feel you might be asking, “What’s the big deal about lending someone a few bucks?”  Be careful, if you’re willing to let a few bucks go, you’ll also lend hundreds and even thousands of dollars to that same person.  Many times the person being loaned to – will actually justify that you are a good person to borrow money from.  Let me say this to wake you up – “YOU ARE NOT A FINANCING INSTITUTION !”.


Reasons Why It’s Generally a Bad Idea to Loan Money


·         Defaults on personal loans can be very high

·         Those borrowing the money sometimes mean well, but fall into other financial difficulties making it difficult to repay

·         Lending money to people leads to killing your own cash flow

·         If you set a proper budget, this can definitely screw your budget over if you work on a zero balance budget where all dollars should be accounted for.

·         Lending and borrowers not repaying can lead to severed relationships, better to say no the first time.

·         Lending without repayment helps to destroy your wealth building and messes with your financial future.



What to Do to Fend Off Lending


First off, when someone makes a request to loan you money, find out the amount they would like to borrow.  Next, determine just how badly they need the money and their relationship to you.  Ask yourself some real questions – like, “if this person is my family, how long would they take to repay?”  Also, a smaller amount to lend is much less risky than a larger amount for defaults. 



If for whatever reason you actually do feel it’s safe to loan this person money, get it in writing when they will repay and get a 3rd party to witness the loan.  Also, look the borrower in the eyes and let them know that if it’s not repaid, you will have to get the money back through other means (legal-if worth it or otherwise).  Consider having them put up some collateral the same value of the loan – is there any wonder why financial institutions do this?



The above terms are almost enough to turn most people off from borrowing from you, tell them what you need to tell them to get them off your back and have them forget borrowing from you and simply look for a weaker candidate.


Remember, in this life, you’re here to build a life worth living and build wealth on your own terms.  Lending without repayment ruins every dollar that you can have working for you.


It’s not an easy road, but it’s worth it when you finally achieve financial freedom and can live smart like top earners and have the lifestyle to back it.






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Category: Debt Freedom

  • Lisa O

    I think everyone knows deep down that lending money to friends, etc. is a bad idea. It is always good to have this kind of reminder and a list of reasons why. We all know that someone scolding you after the fact is no help.

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  • dwightanthony

    Yes, it can be a very tough decision but well worth it to your wallet or pocketbook in the long run. Thanks Lisa