What To Do When Friends Borrow Money and Don't Pay It Back - YouTube

What to do when friends borrow  money and don't pay it back?  

So let me tell you a story. I used to  work at Domino's, and I had a co-worker  

named Courtney. Now Courtney had a debit boyfriend  who just got out of jail and didn't have a job.  

She also had a cigarette habit, and  of course, she had financial problems.  

So she borrowed money from practically everyone  in the store. She borrowed money from Anthony,  

from Jonathan, from Selena, from Whitney, from  this person, from that person like, practically,  

everyone in the store, except from me. She owned  like $200 there, $300 there, $50 there, $80 there.

She just seemed to perpetuate borrowing money. She  never asked me for money I don't know why. Maybe  

because I told everyone that I was saving up to  move out of Texas, and they knew I had financial  

goals, so they didn't want to bother me. But she  did tell me or told everyone in the store one time  

that she didn't have enough gas in the tank to get  her home and back to work the next day. I did feel  

bad for her, and I gave her my credit card and I  said, "Here, buy gas and just give me my credit  

card right back. I don't want to give you money  directly, but I do want to see on my receipt and  

the credit card statement that you went and  bought gas. That's exactly what this is for,  

and I'm not going to pay for anything else." She  did exactly that. She followed my instructions,  

and came back to the store, gave me my card  back. That was a gift from me to her, not a loan.  

But one day, she just stopped showing up to work.  Just disappeared, never came back ever again,  

no one ever saw her. We don't even  know what happened to her. But she owed  

a lot of money to the people in the store,  and of course, no one got their money back.

Next time you think about lending  someone money, think about this story,  

okay? Don't give away your money like  that. But if someone borrowed money  

from you and they're not paying you back,  and you do have their contact information,  

and they are still in communication with  you, then there are a few things you can do.

If you had a written agreement then you can  technically sue them and take them to small  

claims court. You can let them know before you do  that, that you're going to do that so that they  

know that you're serious about it. If they still  won't pay you back, then you will follow through  

with it. Another option is to let them know that  you're going to forgive their debt but they're  

going to have to pay income taxes on it because  you're going to report that to the IRS because,  

technically, if you loan them money and they're  not paying you back, that should be considered  

income to them, right? They should  be paying taxes on it. But I'm not  

so sure exactly what the procedure is to  be able to do this. So you might want to  

contact your tax accountant about your  situation if you want to go this route.

A third option, if this person has the good  intentions and goodwill to want to pay you back,  

and they're in a better financial position  than when they borrowed money from you is they  

can refinance the loan that they have with you.  They can take out a personal loan with the bank  

and take out the amount that they owe you from  the bank and pay you back. Then instead of  

owing you money anymore, they can owe the bank  money. That's an option if you guys have a good  

relationship and this person wants to pay you back  and they have the financial means to do so now.

A fourth option is if this person does have  a very tight budget and they don't have much  

money in their budget to be able to pay you back,  and it's really unlikely they will pay back, but  

you want to keep good relations with this person  is ask them if there are items that have a value  

that they have around the house that they don't  want and don't need anymore. The agreement should  

be that you get to list the price that you're  going to sell it for, and you get to keep all  

of the profit and all of the money that you make  from selling their stuff, you get to keep. If it's  

still less than the amount that they owe you, then  just whatever, call it even and cut your losses,  

and you can go back to the relationship  that you had before. That's an option  

that doesn't affect their budget as much, but you  will still at least get some of your money back.

Then a fifth option, which is, honestly, I think  if a friend who borrows money from you and doesn't  

pay you back, are they your friend? If I looked  at it and I tried to give myself advice, if I were  

in this position, I would say, this person is not  your friend, and I would say, cut your losses. If  

you lend someone like $200, $500, whatever, then I  would consider that your lesson. That's the lesson  

that you learn from lending someone money and they  don't pay you back and you know not to do that in  

the future without some sort of written agreement  or payment schedule, because honestly, if I  

weren't in a good financial situation and I needed  money right now, borrowing money from friends  

and family would absolutely be a last resort. It  wouldn't even be the first option I would go with.

The first thing I would do is I would  sell my stuff to make money immediately,  

right? The second thing I would do is  I would take on a second part-time job,  

and I wouldn't even care if it paid minimum  wage because at least that's a reliable source  

of income where I know for a fact that I  can support myself and I don't need to ask  

other people for money. Then the third option is I  would charge it to a credit card. A fourth option,  

a personal loan from the bank where I would  have a payment schedule with the bank.

Then, finally, the fifth and last option, which is  I would hopefully never have to do this in my life  

is to borrow money from friends and family. But  apparently, not everyone thinks like this. There  

are some people who think borrowing money from  friends is basically gift money that comes with  

nagging attached, and they don't consider it  a priority to pay you back. So there are some  

people that borrow money from friends and family,  knowing full well that someone like you could  

use the money for other things in your life,  but they don't consider it a priority to pay  

you back. Instead, they tell you about how last  weekend they went to Chicago for their birthday,  

or they went to the spa, or they just bought  a new video game. But for some reason,  

paying you back seems to be on the bottom of their  priority list. Right? I don't know if someone like  

that is someone I would call a real friend, and  I don't think that's someone I would be able to  

trust because if I can't trust someone to pay  me back, I don't know. Is that person my friend?

The last and fifth option is to cut your  losses, say goodbye to this person because  

I don't think this person is worth  the time and energy in your life.

Okay, guys. If your friend borrowed  money from you and won't pay you back,  

then, I wish you the best of luck  in dealing with this situation.

As always, the information on my  YouTube channel is free for you, guys.  

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because I keep all of my information free on this  channel, I would appreciate it if you headed over  

to Amazon and bought my book, 1001 Ways to  Save Money: Quit Flushing your Hard-Earned  

Money Down the Toilet. If you already bought  the book, then the next best thing for you to do  

is leave me a review on Amazon. I would greatly  appreciate it. Okay. If you like this video,  

give it a thumbs up, subscribe for more in the  future, and I will see you, guys, next time. Bye.