Feeling tension at family or social gatherings
Whatever happens, being able to separate your personal and business relationship with the person you’re lending money to is paramount. It might not be easy but it’s not impossible. Discuss details about the loan when you two meet up in private and keep the topic away from family events or social gatherings, suggests Taveras of Investing Latina.
Try to attend these events without adding more stress to an already tense relationship. If you succeed in separating these two aspects, you’ll be able to really enjoy your family functions or reunions with friends including the borrower.
Bragging about your income
It’s never a good idea to flaunt your income to friends or family, much less when one of them has been asking for your financial help, says Leif Kristjansen, personal finance expert, early retiree, and creator of the website Five Year FIRE Escape.
If you brag about the big paycheck you receive at the end of each month then refuse to help one of your friends or family members, don’t be surprised if you’ll come across as greedy and selfish. Maybe even a bit of a jerk.
Speaking of which, make sure you avoid these 12 Little Ways You’re Acting Like A Complete Jerk Without Knowing.
Not writing off a loss
If. by any chance, the friend or family member whom you’ve given money doesn’t pay it back to you, you should at least write off your loss in your taxes, says Taveras, especially if it was a substantial amount of money.
It is possible for non-business bad debt to become deductible in the year the debt becomes uncollectible and “worthless”, meaning there’s no chance you are ever going to see that money again. Use short-term capital loss Form 8949. See also 14 Most Overlooked Tax Write-Offs You Don’t Want to Miss.
