A few years ago, I had a friend and her son living with me that was helping me out after my wife died. They helped take care of the house since I worked over 40 hours a week and in return they could stay for free aside from food and a little extra towards utilities.
At one point my friend asked to use a credit card to get some gas she needed on the way to work. This happened a couple times, usually $40 transactions, and she always paid right away when she got her paycheck.
At some point, these transactions started to mount, however. One month was $400, eventually at one point the balance was up to $800 and she couldn’t pay.
Unfortunately since the card was in my name, and by this point she was no longer living with me, I had to pay off the balances. I do not intend to make THIS mistake again.
– Jeffrey O.
I’ve always been a very strong advocate of never lending friends money. There are a few occasions I might give money to a friend who I know is deserving of the help, but in general I prefer to stick to my guns on this one. It can only strain a friendship (or relationship with family) when it involves money.
Alternatively, if you insist on doing business with family, contracts are your best friend. Contracts keep friends as friends and family as family. That way there is no misunderstanding when it comes to the terms of the agreement. It may sound silly or “over the top”, but if the relationship means that much to you, it’s worth the extra step.
Total flushed down the money drain: $800+