Read This Before Helping Friends and Family Financially

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Can We Borrow Some Money Until…? Does This Sound Familiar To You? 

As we move farther along in achieving financial independence, more opportunities will arise to help out others in our life. Many times helping and blessing others is anonymous and unexpected. However, there are many times when our own family and friends may ask for our help financially.

Should we be helping our friends and family financially?

Anyone who follows Dave Ramsey has probably read and heard his belief in lending money to family and friends. He has mentioned numerous times that lending money to family and friends rarely ends well. In fact in his article “The Danger Zone“, he discusses some of the top reasons for not loaning money to friends and family.

Many of Dave Ramsey’s reasons for discouraging lending money are backed by statistical data points. These same reasons were discovered in a money-etiquette survey regarding lending money to friends and family. See below for these statistical data points:

• 57% of people said they have seen a friendship or relationship ruined because one person didn’t pay back the other.
• Almost 50% have loaned $100 or more to help out someone, but 55% don’t get repaid.
• 71% lend money to immediate family members, 57% to relatives, and 54% to friends.

At the end of the article, he simply states that loaning money to friends and family just makes the relationships awkward. He recommends that if you truly want to help out others, it is best to gift them the money to avoid breaking down an otherwise strong relationship.

But, what if?

Now, this may not be the case for everyone. There are many individuals who have a hard time accepting money as a gift and insist on paying the money back. There are also individuals who want to help others out by investing in them and their financial goals. These are just a couple of examples of individuals who responsibly lend and borrow from friends and family.

CEO Dennis Cail had a similar experience with the lack of repayment from friends and family. From these experiences, he believed there could be another way to help friends and family out. A way that could hold them more accountable while also taking out the awkwardness. This thought process is exactly what brought Zirtue into existence.

Zirtue allows you to borrow or lend anywhere from $20 to $10,000 on your terms with those you have relationships with. Lenders can use the app for free while Borrowers pay a low subscription fee of $5.99 a month. All loans are collateral-free, do not require a credit check and have a low flat rate of 5% interest rate.  This is low compared to the average interest rate of 15% or higher for other borrowing options such as credit cards and payday loans.

At the end of the day, you can take the awkwardness out of investing in your family and friend’s personal finance goals by either gifting them the money or lending them the money through Zirtue!

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Have you ever helped out a friend or family member financially? How did that relationship develop after lending or giving them money?  Do you think Zirtue could have helped you during this time? Share your experience with us in the comments.