However, when you borrow from these people and default in payment, you may end up ruining a great relationship. Money is a sensitive issue. There, thus, ought to be some rules when it comes to borrowing from friends and relatives.
• Last resort: Let borrowing be your last option, and only when you genuinely need the money. Consistent borrowing may portray you as irresponsible, and alienate your friends.
• Borrow from someone you trust: There are friends and relatives who will lend you money and then spread the word to all who care to listen about your ‘inability to sustain your lifestyle’.
• Why do you need the money? People will be willing to help as long as they are sure the money is for a worthwhile cause. Borrowing to pay your rent makes some sense, but borrowing to offset a loan you took to go on holiday in Dubai is frivolity.
• Keep your word: If you borrowed money to pay your mother’s hospital bill, do not divert it to other things, like reupholstering your worn out sofa.
• Sign an agreement: Sign a contract that indicates the amount borrowed, terms of repayment and due date. Let both of you sign it as a binding document.
• Lump sum payment: If you have agreed to repay the money in six installments, keep to this schedule. It may not be easy to pay a lump sum at the end of the six months, so pay the monthly dues to avoid conflict.
• Serious business: Money does not come easy. To avoid ruining your relationship because of money, steer clear of personal feelings. Treat it as serious business transaction where defaulting is not an option.
• Spend wisely: If you borrow Sh10,000 from your aunt to start a small business because you are financially down, yet the next time she meets you, you are buying a perfume worth Sh5,000, it gives the impression that you take the money you owe for granted. Why not use that money to reduce the amount you owe?
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