The Almighty Dollar

Restoring some fiscal sanity in our -- negative savings rate -- lives

3.08.2006

When money comes between friends

To borrow or not to borrow? To lend or not to lend?

The Loaner makes good money, has saved up a sizeable emergency fund, but has put very little towards retirement.

The Borrower makes a salary that is modest but plenty for one person to live on, has credit card debt in the low thousands and no savings, but has put a significant amount towards retirement.

Both are in their early 30s, single, and sociable.

Last fall, a popular comedy show announced it was coming to town this spring, and advance tickets went on sale. My friends begged me to go, but I refused primarily for two reasons: the show didn't appeal to me, and I thought the tickets were too pricey at almost $100 per person. To get the best seats, the Loaner quickly bought tickets for the two of them, and the Borrower promised to pay him back.

Last week, they went to the show and had a fun time. But the Borrower still hasn't paid back his loan.

During the several months between purchasing the tickets and attending the show, these two friends frequented many bars and restaurants together and in groups. Yet no money for the ticket has exchanged hands.

The Borrower hasn't forgotten about the loan, but says he needs to pay off parking tickets and other debts first. The Loaner, who has since seen the Borrower spend money on social outings, is becoming increasingly annoyed by the excuses.

Surely you are shaking your heads, because at some point, we all have been the Loaner, the Borrower, or both.

Who do you think is at fault here? Is the Loaner wrong to be upset? Is the Borrower wrong for having fun instead of paying back the loan sooner?

In my next post, I want to examine the two perspectives. (Personal disclaimer: Having been burned before, I have decided not to loan money with the exception for emergencies.)