In this article I will take about an occurence which will probably happen a few times in your life. It is a hard period for both sides.

What are we talking about? Yes - it is about lending cash to your family and friends. I will tell you what you need to look out for and how to handle unexpected happenings.

Many people, including me, have a strong, personal rule to never lend money to their friends. I've set up such a rule because experience taught me that nothing good can come from such "help".

Instead I always offer other ways of help - buying food, repairing a car etc. The thing is that majority of such loans are used for unnecessary expenses.

Of course - it is not a rule that when you lend a money to your family it will for sure turn out to be bad. My personal statistics say that majority of such transactions end in a good way but it does not mean that you can stop caring and perform unplanned steps.

There are two sides to the whole aspect. Your lending will change two things - your financial stability and your relationship with your friends and family.

When your peer asks you for money - saying "no" will hurt your friendship less than saying "yes". Why?

Because if you say yes - you will have to ask for your money in the future - and if they won't come up with funds on time you will have to do it again and again. Every time you will ask, your relationship will be hurt more and more.

I've had such situation - I've gave a way money to my uncle. I've thought that he was in need for cash to buy food or something equally important. Later, it turned out, that he bought an iPad with my cash. Can you imagine that?

And the worst thing was that he never repaid that. I don't talk with him for over a year now. It literaly looks to me like a stealing.

So what are the steps you should take when someone wants money from you?

Take a long talk - discuss every aspect of the transaction. What will be the lended money used for. When will it be repayed. What happens if the borrower doesn't have cash on time. Will there be any formal statements? Will you secure the transaction with help of your lawyer?

Never lend amounts of money which will hurt your own budget - sometimes poeple ask for loans which go in thousand of dollars - just like if you had infinite money. Never lend money which you could use to pay for your primary needs.

Always state everything clear so there is no miscommunication later.

Write everything down with help of your lawyer.

Every problem which will arise needs to be taken care of immediately - if you won't care for that, it will bring only bigger truble in the future. It is important to analyse everything when co-signing a loan.