One of the topics on the Suze Orman Show Saturday night was lending money. With the economic conditions we are going through more people are having trouble making ends meet.

She had some ideas to keep in mind before loaning money to someone. Instead of considering it a loan, Suze suggested to consider it a gift. In many cases if people are in need of a loan they may never be able to pay it back. If they do not pay it back it may strain your relationship with that person.

Some things she suggested to consider before loaning money is if you are able to comfortably pay your bills each month, if you have at least an 8-month emergency fund and that you are fully contributing to your retirement account. If you are not able to do these things and loan money to someone, if things change you may be the one looking for a loan from someone else.

The same is true with co signing a loan for someone. One of the main reasons a cosignor is needed is because the lender does not feel that the person will be able to make the payments. If they do not keep up with the payments, you will be responsible for taking over the payments.

One of the callers had loaned $200 to her sister-in-law and had not been repaid. She was wondering about taking her to small claims court to get the money. Suze asked why she would want to do that and cause a riff with her family over $200. The caller said she didn’t want her sister-in-law to feel like she got away with borrowing the money and not repaying that. Suze suggested that she consider it a financial lesson about lending money.

Even though you may feel obligated to lend money to someone, make sure you are in a position to do without the money in case they do not pay you back.

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