Should I accept his offer? (Full Version)

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Kateers82 -> Should I accept his offer? (7/22/2008 3:08:42 PM)

Hi All!

Ok, long story short.... I have a very good friend who has so graciously offered to pay off one of my credit cards for me because he is greatly concerned about me having to pay so much interest on the card. He has plenty of money saved up to help me, and he said I can pay him back in small increments or just save it all and give it to him in one lump sum. I didn't ask him to do this, but last night he told me he really wanted to help. He really just hates seeing the amount of money I am throwing away in interest. Should I take up his offer? I know we are not to be in debt to anyone, but I am in debt regardless if I keep paying the CC company or my friend. Any advice? He is a really great friend in Christ and I really appreciate his offer. I have never had anyone offer to help me like he has so I am not sure what to do! Thanks :-)[:D]



BlueAdept -> RE: Should I accept his offer? (7/22/2008 3:15:58 PM)

You know this is going to sound bad, but....

Unless you have either a contract that says this is the conditions you have taken the loan under I would not take the loan.

It is sort of like the joke. "I lent my BIL 50 bucks, and haven't seen him or the money since....it was the best 50 bucks I have ever spent!"

Loans between friends, are a great way to end friendships.



Kateers82 -> RE: Should I accept his offer? (7/22/2008 4:16:27 PM)

Thanks. Yeah I have definitely thought about that aspect as well. I thought about writing out a contract and having both of us sign it just to have something in writing. He trusts me to pay him back (which I would most definitely do.) He is on vacation this week so I am taking the time to pray about it. The last thing I want to do is ruin a friendship over money, but he is just wanting to keep me from paying more than I have to. And I have seen those Judge Judy episodes where two people who were once friends are now fighting over a loan! Yikes! [sm=eek.gif]However, he knows I will pay back and I know he is being a good friend. Still not sure what to do! [8|]



jimgood -> RE: Should I accept his offer? (7/22/2008 11:52:42 PM)

I would not hesitate to accept the offer, but I agree that you should put something in writing for the protection of both parties.

One other thought occurs to me. How did you accumulate significant credit card debt? IF you think you have a spending problem you may want to consider having this same friend, or another friend that you trust hold your credit card and approve your purchases. Being held accountable may help you check unnecessary spending.

The worst thing you could do is borrow the money from your friend to pay the debt, then continue accumulating more debt.



BlueAdept -> RE: Should I accept his offer? (7/23/2008 10:56:02 AM)

I know of very few people that borrow money and not intend to pay it back. The issue becomes one of priorities.

Let me give you an example, that could happen and could strain a friendship.

Your friend is loaning you 6000 and you use it to pay off your credit card. You start paying your friend the same amount you were paying the credit card, 240 a month. You make your payments each month for 10 months. Then you get the chance to go on a vacation, where you end up spending more than you meant to. So you skip the next months payment, then Christmas is here and you pay 120 instead of 240.

You start talking about the wonderful gift you got your mom. brother.... someone and your friend didn't get anything from you (not that they expected anything). Your friend has a sudden unexpected bill come up, has to replace the A/C in their house, or something large. Now instead of having the cash to pay for it, they have to use their credit card. They start resenting that you have the funds to go get coffee (or what ever treat) and they can't right now. The next thing you know they are asking you to pay more than you can spare.

That is one reason to avoid mixing loans and friendship. It can really get pretty messy and resentful.



Row1 -> RE: Should I accept his offer? (7/23/2008 2:36:02 PM)

there could be strings attached.
i hear the violin strings of romance.



Harvie -> RE: Should I accept his offer? (7/24/2008 12:23:12 AM)

Put your transaction in writing... spell out the details.

Then accept the offer ... and do your best to pay it back asap.



CoachSteve -> RE: Should I accept his offer? (7/24/2008 3:02:10 PM)

quote:

ORIGINAL: BlueAdept

I know of very few people that borrow money and not intend to pay it back. The issue becomes one of priorities.

Let me give you an example, that could happen and could strain a friendship.

Your friend is loaning you 6000 and you use it to pay off your credit card. You start paying your friend the same amount you were paying the credit card, 240 a month. You make your payments each month for 10 months. Then you get the chance to go on a vacation, where you end up spending more than you meant to. So you skip the next months payment, then Christmas is here and you pay 120 instead of 240.

You start talking about the wonderful gift you got your mom. brother.... someone and your friend didn't get anything from you (not that they expected anything). Your friend has a sudden unexpected bill come up, has to replace the A/C in their house, or something large. Now instead of having the cash to pay for it, they have to use their credit card. They start resenting that you have the funds to go get coffee (or what ever treat) and they can't right now. The next thing you know they are asking you to pay more than you can spare.

That is one reason to avoid mixing loans and friendship. It can really get pretty messy and resentful.



I agree totally with Blue. I would not take his offer. are you current on the CC? if so, you could always try to move it to a new CC with a low introductory offer. I did that, and paid a ton less in interest. if you are behind on the payments you could always try to settle with the CC company for less than you owe. I would not mix friendship and money. That is my .02 worth, and only my opinion. Definitely pray about it, and see what
God says.



Karaboo2 -> RE: Should I accept his offer? (7/24/2008 6:14:05 PM)

Have you considered calling the CC company and just asking for a lower interest rate?? That's what I had dh do when we first got together and he came into the marriage with debt. He was having trouble staying on top of the payments, so I told him to call and explain the situation ... that he was in a bind at the moment, and could he possibly have a lower interest rate so the debt could be paid off -- rather than him paying less than the minimum every month. Most CC companies would rather lower the rate than have the account go into default and to collections, since then they would only end up receiving about half of what is owed.



blessedinnyc -> RE: Should I accept his offer? (7/25/2008 12:18:20 PM)

I think one third option would be to structure this as a business transaction.

Ask your friend what he would charge you in terms of interest for your debt if he were a businessman who wanted to make money.

Then, meet him halfway between what he'd charge and your credit card debt. Explain to him that you see this as a business deal, and that you will treat your payments to him like you do the other credit cards. He should hopefully understand that the interest he gets should compensate for the default risk. Agree to pay him, say, 15% or 12% (nice round numbers for easy math) compounded monthly with a minimum payment of 3% of the outstanding balance calculated at the end of the month.

This is a boon for you and him. He makes money; you save money, and the only loser here is the credit card company.



mvic -> RE: Should I accept his offer? (7/25/2008 1:19:50 PM)

The very fact that you have written here suggests that deep in your mind/heart you have some doubts.

Ask yourself over and again ... why ... why ... why?

Then ask: Why is he doing this? (There are some people who are genuinely generous and genuinely want to help. Is he really such a person?).

Then consider the amount involved; (you need not tell us).

Is it $100 ... $500 ... $1000 ... $5000 ... more?

You see what I'm getting at? Depending on the sum involved and how quickly you are likely to repay it, you should ask yourself yet again ... why? Why is he offering such a great sum?

Discuss this with someone you trust who knows him as well as you. We can't really help you since we don't know this benefactor.

As others suggested, look for alternative ways to repay the Credit Card debts.

Whether you have some contract written or not (and remember, lay people are notoriously ignorant about writing such a contract - and to hire a lawyer would cost you even more) such an avenue is full of potential problems.

How do you think he will feel if you say: Yes thanks ... but let's put it in writing?

I would feel insulted and slapped in the face.



blessedinnyc -> RE: Should I accept his offer? (7/25/2008 3:04:17 PM)

quote:

ORIGINAL: mvic

The very fact that you have written here suggests that deep in your mind/heart you have some doubts.

Or it suggests that the OP is extremely obsessive. I'm the same way. I hate making promises even when I know there's a 99.9% chance I'll be able to follow through, because I can't stand the thought of that 0.1% of the time I won't.

This is a genuine concern, but I don't think it necessarily reflects any lack of ability to repay.

quote:

How do you think he will feel if you say: Yes thanks ... but let's put it in writing?

I would feel insulted and slapped in the face.

I don't think lay people are all that bad at writing contracts. Sure, you may leave in plenty of loopholes, but if you define it in simple financial terms:

1.) You give me $1000 today.

2.) I give you $100/month, plus 1% monthly interest on the outstanding balance, for the next ten months.

It should be pretty clear to most small-claims court judges how the transaction looks. And you just have to do it casually:

"Hi Fred. I really appreciate your offer to loan me money, and Suze Ormann tells me that the only way I can really respect you on this loan is to pay you interest for the bank interest your forgoing and the risk you're taking on me. I think that the bare minimum fair interest rate on a personal loan should be 12%- just for the risk you're taking, and I'm happy to talk about making it higher- just as long as it's below my current credit card rate of 21%. Your potential investment money is really important, and I just want to make sure you get fully compensated for the risk."

When you guys agree on a rate, just say, "Just so you're protected, and it's easy for us to remember what we agreed to, let's just write out how much I owe you, and how much I will pay you back and when."

Then write down the dates you will get the money to him by, as well as the amount of principal and interest. Example:

Fred pays Paul $1000 on August 1st.
Paul pays Fred $100 principal and ($1000 x 12%/12 months= $10) interest on September 1st.
Paul pays Fred $100 principal and $9 interest on October 1st.
Paul pays Fred $100 principal and $8 interest on November 1st.
.....
Paul pays Fred the final payment of $100 principal and $1 interest on July 1st, offsetting all outstanding debt."

Between two laypeople, the lender almost always has more risk that the transaction won't be enforced with the terms he/she expects. So the OP can honestly tell the lender that the contract is for his/her protection. If the OP is concerned about not getting credit for paying back the lender, they can always write paper checks with "loan repayment" in the memo. This would be a relatively casual way to establish proof of payment- just in case.



IonMoon -> RE: Should I accept his offer? (7/26/2008 11:33:25 AM)

Yeah in most cases, I say NO!

If there is any chance of romantic entanglement here on either side- NO! If there is any chance you would have trouble paying it- NO. If there is any chance that it would cause any kind of financial strain for him to be without this money (even if it means just not having enough stored away in his emergency fund), No.

If, OTOH, you are both reasonable adults who won't change your mind later, if you are perfectly sure you can make the payments on time or sooner EVERY month as agreed (I wouldn't go with the just pay whatever or all at once- you want this gone as quickly as possible), then maybe.

But- While it would be nice to not have that interest, I would much rather have to make a credit card company mad than make a friend mad if there is any chance of missing payments, etc.

Tara P



Nmbr1wife -> RE: Should I accept his offer? (7/26/2008 12:42:55 PM)

I say accept your friends offer, but not before drawing up a written contract. But beware, financial spats can quickly and easily end a friendship. So really consider the pros and cons of accepting your friend's offer. If you are not in severe financial debt, then maybe you can handle the credit card payments without his help.



Kateers82 -> RE: Should I accept his offer? (7/26/2008 4:41:48 PM)

Thanks for all the great advice! My friend is a VERY genuine person... he is an amazing individual and is definitely offering this out of the goodness of his heart. However, I think I will decline the offer. Like many of you said, it could potentially harm the friendship. I would pay him back (no doubt about that!) but I don't want us to have a financial connection (if that makes sense!) I am, however, going to ask him to hold me accountable in my spending. I am doing VERY well in my spending habits, but every now and then I get the urge to go get a new outfit or something I do not need. He really is my motivation to stop spending frivolously. So, I will politely decline his offer, but I will then ask him to help me with this in a different way (accountability.) Does that sound like a good plan? Any thoughts?



mvic -> RE: Should I accept his offer? (7/27/2008 10:40:16 AM)

You have a wise head on those shoulders !!!



BlueAdept -> RE: Should I accept his offer? (7/28/2008 10:31:23 AM)

I think that sounds like the best course of action.

Although something else to look at, or into would be adding a third or fourth person for accountability.

I would guess from your post that you are a woman, and he is a man. You did not indicate if he is married, or single. I would guess you are single, since you have not otherwise indicated a spouse. If he is married, then you REALLY need to include his wife in any dealings with him. If he is single then it would be wise to find another either couple, or 2 single women or men to be in your group.

I would also sit down and develop a spending plan (budget). This is how much I make, this is how I plan on spending it.



oceangirl -> RE: Should I accept his offer? (8/17/2008 4:03:55 PM)

I woudl accpt his offer as long as hes a good christian. Let your pastor know too



P31W -> RE: Should I accept his offer? (8/18/2008 9:02:06 AM)

quote:

You have a wise head on those shoulders !!!


I second that!!!!

You have a great plan!!!

As a side note you may want to contact the credit card companies and see if they will lower your rates. It's worth a try and sometimes they do!



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