October 16, 2019 7:19 am Written by

Are You a Victim of “Friendly Debt” or “Friendly Debt Rotation”?

We all want to be generous to our friends and family, and if have the funds to do so, and our friend or family member needed some money, many of us would lend them money.

However, by doing this, lending money to a friend or family member, we could be asking for problems; one being what if they do not pay us back?

Lending money to someone comes with risks, the risk of not being repaid, and the risk of losing the friendship, or alienating the family member.

You also have to look at the reason why they may need to borrow money?? And also how much money they require.

A loan of £25 until payday is one thing, but loans of much larger sums, which is to be repaid over a longer time frame, may require some documentation outlining the loan and repayments.

Just to make things clear.

Another question to ask is why have they not gone to a bank or lender for the loan?

It may be they have bad credit, and cannot be approved for a loan.

There are bad credit loans available for that very reason, someone has bad credit. It may be best to steer them in that direction then to become Mr. or Mrs. Banker.

However, there are times when we may pick up the cheque or tab for a meal or drinks, expecting to be paid our friend’s share later, or we may lend someone a small loan, £100 or less.

This is where “friendly debt” and “friendly debt rotation” may crop up.

Friendly Debt

Friendly debt and the rotation aspect of it, are two different things.

Friendly debt rotation is where you may buy something, such as a meal for a friend, with the understanding or agreement, they will pay the next time.

If your friend does not return the favour, they are sort of in your debt.

Friendly debt is clearer, you led a friend money thinking or expecting to be repaid.

A recent survey showed that of the 2,000 people questioned, 25% were owed money by their friends, with average amount being just under £100.

You may not want to travel in that circle of friends.

Then you are faced with the usual issues:

* Trying to get repaid

* Do you appear to be cheap or mean if the amount is a low one, £20 or so

* What happens if you do not get repaid

The Founder of Vibepay, who did the survey, Luke Massie stated, “As a nation, we find it excruciatingly uncomfortable reminding a friend they owe you money. Yet, this reluctance is not just leaving a big hole in our pockets, it’s also destroying friendships.

It is awkward to ask someone to pay you back, and could risk the relationship.

We also don’t want to appear to be impolite, especially when it comes to splitting the bill or cheque. Some of us will even pay more than our share, or if we have had a cheaper meal than others, still split the bill equally.

A spokesperson for VoucherCodes Anita Naik said, “Brits have a reputation for being especially polite and non-confrontational but, as the research shows, this quite literally comes at a cost.”

Buying an extra drink when out with friends might seem insignificant on its own, but each of these small costs can really add up – I’m sure most of us can think of many things we’d rather spend £279 on.”

It’s clear us Brits place value on appearing polite and maintaining harmony with our friends and family.”

The easiest way to avoid all of this is to not lend money, make it your policy.

If you feel you want to make someone a loan, be sure they know it is a loan, what the terms of repayments are to be and are agreed upon.

There is nothing worse than having to chase a friend or family member for money that is owed to you, friendly debt or not.

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