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Comment by alach11 | Hacker News Reader

I loaned a close college friend $7000 last year. Due to life circumstances and lack of family resources, he was stuck in a rural area with no developer jobs. He was having trouble landing a remote job and I ignorantly asked why he wasn’t applying to in-person jobs on the west coast.

He told me that he certainly wouldn’t be able to afford to move and I told him “don’t let that stop you”. Fronting him moving expenses was the best decision I ever made, even though it had a chance of not working out. Six months later he’s making 10x the wage he could get in his rural area, and I’ve been paid back with (unrequested) interest.

I guess my message is: sometimes loaning money won’t work out, but when it does, the ROI (emotionally and for society) is extremely high.

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The risk of them not being able to pay you back and thus destroying the friendship is so high that I wouldn’t recommend this unless you are ok with losing that person as a friend OR you just give them the money without expectation of it being paid back.

Not expecting anything in return has definitely made me happier.

It's on the borrower to worry about paying me back. Me, I don't care.

I've found that this applies to much more than just money.

How does this work in practice, though? I don't know how this would be possible at all. I have loaned money to family members in the past, and been paid back when they were back on their feet. But if a friend or family member borrowed money and never paid it back, even after they were over their financial difficulties, and never mentioned it or made any effort to repay the loan, it would certainly affect my opinion of them; at the very least, I'd expect them to offer some explanation as to why they weren't able or willing to pay me back as we agreed.

So do you actually mean this, or are you just signaling how kind you are?

Asking money back did influence my opinion and that would ruin the relationship over time. That's why I've stopped asking for money and went even further and stopped expecting anything back.

I've picked that up from friends I made in Taiwan. It was mostly paying each other's lunch but there's no reason why it shouldn't work in other areas of life.

Why would I expect a friend whom I value to repay me? I have given, both in gifts and loans both implicit and explicit, much of myself, my time, my money, my worldly possessions over the years. If I held non-repayment against them, I think that would say more about me than about my friend.

A non-friend? Sure, that might be different.

Anyone can be forgiven of anything, if you are so inclined. No "signalling" required.

It is possible to give gifts to friends and not expect to be repaid. Life is not zero sum.

But knowing yourself enough to know you can trust yourself to do this is not easy.

Yeah, I couldn't loan that much. I'd gift a friend at most $ 2K and the expectation that I won't see it will ease my mind more than the expectation that they'd pay back $7K.

If a friend can't pay you back for legitimate reasons, which I admit are subjective, you shouldn't let it affect your friendship.

If it does it says more about you than the friend

you’d be surprised, better just to give them the money and if they pay you back it’s just a bonus

It is also possible that the inability to pay back would negative effect the friend's ability to maintain the friendship. Between feeling they let the loaner down, or feeling guilty they couldn't repay it. Even if the loaner set no expectations, it could create enough negativity to sour the friendship. This doesn't have to be logical or rational, it could be an entirely irrational emotional reaction.

If $7k destroys a friendship, it's not really that close of a friendship.

Sure, there should be some consequences for not paying it back, but incessant mockery and refusal to pay for McDonald's is probably a fair exchange.

"Give people lots of leeway, but only once" has worked out well so far. People can't fool you into making a big mistake twice, and once is just the cost of doing business^W^Wfriendship.

On the other hand, finding friends past age 30 is hard enough that paying random devs random sums of money isn't that bad of a deal.

$7k is an absurd amount of money for 99.9% of the US (Recall the statistics on who has at least 3 months of income saved up? This is a similar amount of cash to have available). I've seen good friendships lost over a lot less money than that.

I agree with the parent - don't give it with the expectation of receiving it back. Save everyone the heartache.

The financial disconnect in tech versus the rest of society is crazy. Casually handing out $7k is a wild statement for most of the world.

But that's irrelevant, it was not a big loan for the OP.

It was for the recipient. And the recipient is the one who'll be feeling the pinch (stress, anger, etc) of paying it back.

    $7,000 / 24 = $300 (roughly an extra car payment)

I am sure it is very nice of you that you protect your friends from making the stressful and angering mistake of becoming indebted to you, but the OP is expressing an attitude towards money that makes it sound like it is less of a mistake to be indebted to them.

So, the context of this specific thread of discussion is "If $7k destroys a friendship, it's not really that close of a friendship."

Which is bogus in my opinion - this is all discussion on why it's bogus. It's not a comment on the original post by alach11.

That's why the recipient should think carefully about how valuable the purchase is.

Relationship dynamics change when money gets involved. Especially when its a lot of money for at least one party.

Not 99.9%, maybe 80% based on income statistics.

I guess that really depends. Paying back $7,000 without interest would still be a $300 monthly payment for 2 years.

Sure. I didn't mean $7k specifically, but rather <amount you chose to loan>. Why loan someone a truckload of cash you can't afford to lose? It's kind of your fault at that point.

We helped my sister in law afford a down payment on a house. She still hasn't gotten a house after 6 months. Am I a bit miffed? Sure. But breaking off a friendship over a down payment seems absurd.

Life happens, and people tend to take a little while to figure it out. Who cares, it's not like we can take the money with us when we go to the next life anyway.

Even if you're able to afford to lose it, setting the expectation that the loan needs to be repaid will stress the borrower. That can be enough, in my experience, to break a relationship.

Unless they're a sociopath, borrowing significant amounts of money from friends is usually considered to be a last resort, they're already in a bad place. Adding another monthly payment to their budget going to put them in a worse place.

Yes, I believe you want to loan money to friends less than what the friendship is worth. In other words, $7k might break the friendship for some, for others not really.

It also depends on how easily money comes to the lender.

> If $7k destroys a friendship, it's not really that close of a friendship.

This is easy to say if you're a software engineer at a top tier company making a solid six-figure salary, but $7k is an enormous amount of money for the vast majority of people. I think I would significantly hurt my relationships if I failed to pay back $7k to any of my friends.

exactly. At times in my life $7000 might as well be $1MM, If you take money from someone pay it back.

It’s not about the amount, it’s rather about how the borrower handles the payback.

If you promised to payback $1 that I lent you, and you don’t despite having it, I’ll equally judge you as if it were $1 million dollars.

Asking for a loan and not paying it back is the equivalent of lying to your friend.

Is a big lie to exploit a friendship enough to in the friendship?

I've had favorable circumstances (parents that did ok, REALLY cheap rent in an expensive city, a regular job) and I've been able to have the same policy, every time my attitude is I will loan money that I could without being too broken up about it set on fire then and there and never with any explicit expectation of good use. if it's returned (some have, some havent been able to) it's a bonus.

now this is a SMALL amount compared to most people but I have friends who have had a really rough time financially.

The GP is unclear as to whether the loan happened before or after the friend obtained a job offer. Loaning moving expenses money to someone who just got a high-paying job offer and needs the moving money to start the job does not sound that risky.

Agreed, though you have to wonder why the company involved couldn't do this more formally?

It is worth wondering about that. My first job out of college offered an interest-free loan (paid back by paycheck deductions over 2 years) for moving expenses.

That's the misunderstanding that sours so many relationships.

You have to go into the "loan" with the mindset that you will work to maintain the friendship if it doesn't work out.

In short, it's a grant, not a loan. You will become this person's benefactor, and you may learn a lot about how their mind/life works. Perhaps more than you want.

When "loaning" money to family and friends as the "lender" assuming it's a gift from the get-go is crucial. Or you just mutually agree it's a gift and move on.

1) If you are going to be financially impacted in any way by not having the loan repaid you should't "loan" (gift) it. Like gambling don't do it if you can't afford to lose it.

2) Assuming #1, the overall psychological stress and potential impact on the relationship just isn't worth it. As the "lender" you should feel good about helping someone while learning something about them in the process.

Personally, in having this outlook with family and friends they essentially get one shot. If all parties agree it's a loan and the debtor doesn't pay back the funds I move on without impact to the friendship but mentally they have a "strike" in my mind that essentially says "they can still be a good person and friend, but money can never enter the relationship again".

I feel like it's a decent balance.

That was the advice I received many years ago and it has worked extremely well.

An additional mechanic is that you tell them that you are not going to remind them to pay you back, that it is not your job to nag them.

A modification I add is to ask them to do it for someone else once they're on their feet again. That's a pretty easy thing to agree to, and the anonymity of it allows the other person to make good on it if they feel that's important without putting any pressure on the friendship.

If I know they are honest I don't worry about it.

Have lent to many friends/family members over the years telling them to pay me back whatever/whenever they can, however they want. Some have taken decades. No one has not paid back. Few have needed a nudge, which I only give after they have climbed out of whatever hole. Honest people will always make an effort to repay their debts. The rest make lousy friends anyway.

This highlights 2 things:

1. Why poor stay poor (you need money to make money)

2. Why successful startup founders skew being from well-to-do families (they can afford to take the risk).

Really applaud you for helping your friend. You truly change their life.

America is definitely the "land of opportunity", more so than most countries, but it's really difficult to bootstrap when you don't have the means.

>but it's really difficult to bootstrap when you don't have the means.

You have to aim a couple rungs up, not all the way up.

Starting from literally zero you can probably retire modestly but comfortably the owner of a respectable tax dodging container storage and dumpster rental business assuming a little luck and work in your formative years (maybe the local street gang will install the love of hustling for a buck into you) to set you down the right path.

Going from zero to C-suite manager type, not so tractable.

I had a friend who needed help once and was talking to my stepfather about it who had a successful business.

His thing was if a friend needs help and you can afford it then do it - and it’s not a loan. Making it a loan makes it a bad business transaction.

I took that to heart with that friend and later my daughter’s nanny needed help and asked for an advance and we gave her the money she needed.

Both amounts were significant but we could afford it and I’ve never regretted either.

It's a bit weird for me. I've loaned out money in various amounts (from a few hundred to tens of thousands). The larger amounts are to people I trust deeply for things like mortgage payment etc. I've gotten paid back promptly but I guess because I was expecting them to pay me back it was more or less of a non event.

I've also loaned some amounts of money to people I figured wouldn't pay me back, but in smaller amounts. Often they behaved as expected and didn't pay me back, but because I was expecting it was also more or less of a non event.

My closest and longest friendship is a guy with a very similar background to me. We both grew up really poor in a small town and it took us a big chunk of our adult lives to achieve some stability. We both would have up and downs financially speaking, luckily almost never at the same time and over the years it was very common for one of them saving the other when the other was down. We never kept a balance of who owed how much to the other but we always knew we could count on each other.

Fast forward a lot of years we both now live comfortable lives and it has been a good number of years since we last had to help each other.

Sometimes I miss the struggling years though. I think that showing off each other our new German cars is not as good a foundation for a good friendship and love as helping each other and laughing about being saved by the other at the last moment from some dramatic stuff like an eviction or bankruptcy

One area of difference here might be that he didn't ask you for the loan, you suggested it. Also, the fact that the loan was specifically to make significantly more money than he'd ever had before meant that it would be easier to repay if it worked out.

It wasn't money, specifically, but when I moved to CA back at the start of 2008 it was because I was in a similar situation. I was effectively trapped in a rural place without the funds necessary to relocate and development jobs near me had completely dried up. A friend (someone I served with in the military and who owed me a favor or three) agreed to let me couch surf his place for 3 months. If it worked out, it worked out. If not, I was outta there. I had a software engineering job by the end of first or second week.

That's legit that you helped out your friend like that. I've had people look at me like I'm crazy for doing similar things for friends. A rising tide raises all boats.

I “loaned” a college friend a few thousand when they were in a tight spot (getting their life back after being charged with a crime they didn’t commit). I might be paid back someday, but I’m also perfectly happy for it to be a gift.

(I call it a “loan” because they preferred to think of it that way. I made clear at the time that it would be fine if they never paid me back.)

> I guess my message is: sometimes loaning money won’t work out, but when it does, the ROI (emotionally and for society) is extremely high.

My personal attitude has always been that you should loan money without the expectation that it be returned. You can't be let down if you had no expectations to begin with.

> I guess my message is: sometimes loaning money won’t work out, but when it does, the ROI (emotionally and for society) is extremely high.

But what if 90% of the time it doesn't work out?

"extremely high"

TIL: Radio on Internet is valuable

Tres commas club

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