This is optimal finance daily, episode 519, the right way and wrong way to lend money to family and friends, part 2,

by JDRoth of Get Rich Slowly.org.

And I'm Dan, the guy who reads to you from some of the best blogs on personal finance.

Now let's get right to part two of this post as we continue optimizing your life.

The right way... The Right Way

Way and Wrong Way to Lend Money to Family and Friends,

Part 2, by J.D. Roth of Get Rich Slowly.org

The Right Way to Lend Money to Family and Friends

When a friend or family member asks to borrow money,

your first inclination is probably to help,

but many people have learned the hard way that friendships and finances make is a typical

poor

poor mix. My interaction with Joe is a typical example.

Not all loans between family and friends and in disaster, of course. In fact, although I've never been able

to find stats on the subject, I'd be willing to wager that most loans go smoothly. But the potential

for trouble is so great that you should think twice before lending or borrowing money.

How would it affect your finances and your friendship?

Even when things do go right, the situation can get awkward.

For instance, in 2011, I made a large loan to a friend for a business project.

That project fizzled.

For the past seven years my friend has always made his payments on time, but he's had a tough time

paying down the principal.

...