Himself a charlatan, Polonius nonetheless has some truly valuable advice. Have you ever had experiences in which you have personally regretted either borrowing or lending money?
Gifting is by far the best way to go! I had to bail a teammate out of jail one night (he was working as a meat cutter at the local grocery store and operating on the "one for you, one for me" policy). I had just received that semester's financial aid check; otherwise, I wouldn't have been able to help. Anyway, I didn't say anything about paying me back, just got him the money and called it good. About three years later I got a check in the mail from him for the same amount...pretty surprising because I hadn't spoken to him since he'd graduated later that spring he was arrested.
It's tough to mix friends and money - relationship killer!
I wish my experiences with lending money were as positive as those already posted. I once helped a family member get caught up on his rent to keep him from being evicted. I paid two months back rent for him--and he moved out a few days later! He also used me (without my knowledge) as a cosigner on a car loan. He then totaled the car, and I had to declare bankruptcy!
I agree with posts two and three - instead of lending, the best idea is to simply gift the money. As far as borrowing, I don't know if I've had an experience where I haven't regretted it. All loans, whether from family or a bank, tie you down. Loans can keep you from experiencing things and enjoying opportunities simply because you are financially strapped to them. The freedom that comes with finally paying off a debt, whether its a school loan or car or whatever, is indescribable. Suddenly, the money becomes yours again, instead of belonging to someone else as soon as it enters your hands.
I too have followed the advice of Amy. We don't lend money we gift it. If we loan money to friends or family we loan it with no expectations of actually getting it back. It's great if we do, but it helps keep the relationships in tact if we don't. Since we operate on this principle we never loan a dime more than we can afford to give because we don't want to be in debt.
We borrowed money once from my dad because we needed a car about six months before we planned to buy one because my car broke. He lent us part of the down and we had every intention of paying the money back with interest, he "gifted" it to us, but we paid him back anyway just to show him that we appreciated the gift, but that we are responsible and can repay our debts if we ever incur any. I think that day was one of those "teacher moments" that we have for my dad because he finally got to see his advice and lessons put into action. :)
I have been very blessed in my life. The times I have borrowed money were for school loans, house loans and car loans...all of which have either been paid in full or what I consider "good" debt.
My father's advice (like Polonius, he gave a lot of it and often), included: If a friend or family member asks to borrow money, first decide if you can afford it, and then don't lend it--GIFT it. I have followed that rule and it is a good one.