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How to Get Friends to Pay You Back (and Other Awkward Money Problems)

Have friends and family recently tapped you for cash? If the answer is yes, then guess what? It’s payback time!

In a perfect world, borrowers would quickly and readily return personal loans but, as we know, that’s often not the case. It may not be that your friend is deliberately dodging you. Last year researchers at Carnegie Mellon discovered that, oddly enough, when borrowers neglect to pay friends and family back, they have actually just forgotten about it. The study also found that delinquent borrowers tend to remember things differently, recalling the loan you gave — whether it was $10 or $10,000 — as a gift. Isn’t that convenient?

Not, of course, if you’re the lender. Now, if you value the relationship more than the money, you could just forgive, forget and learn your lesson. But if you desperately need the money back, it’s your job, however awkward it may be, to go after it — and the sooner, the better.

Ask Your Friend to Grab the Next One

If your friend owes you money from lunch or a night out, make plans for another outing and ask ahead of time, “Since I grabbed the last one, want to cover me this time?” It’s friendlier to discuss the issue beforehand, rather than when the bill arrives in front of others.    

Payback Guarantee: Got Credit?

In the event that your friend is short on cash, the one thing you can follow up with is, “Hey, do you have a debit or credit card, instead?” Chances are they do, and with that, along with your smartphone and a payment app like Square or GoPayment, you’re in business. Just attach the app’s free card reader to your phone and payback — minus a small fee — is just a swipe away.

PayPal is another option, and there’s no hardware necessary. You can send or receive money directly through the app. Plus, it’s free for both parties, as long as you fund the transaction using your checking account or PayPal balance.

The world of friends and money is vast and often awkward. In addition to lending money, here are a few more common sticky scenarios and solutions.

The Free Rider

Carpooling with neighbors is a great way to save money. However, if a passenger never offers to chip in for gas, suggest switching things up and hitching a ride with him or her for the next few weeks. Mention the rising cost of gas and how your car needs a break from the commute. It’s only fair.

Fancy Friends

We’ve all got one friend who seems to have no budget, who likes fine dining, fancy trips and shopping sprees. And from time to time we'll get drawn into the fun, only to deal with the financial hangover later.

Avoid the peer pressure. The next time a rich pal begs you to come along on a trip, be honest and suggest other ways to spend time together. Mention you’re on a budget to save for a specific goal, whether it’s grad school, a new home or to build up your 401(k). Then propose getting together for a dinner party at home or for movie night. True friends should understand.

Office Solicitations

Who doesn’t love Girl Scout cookies? But between boxes of Thin Mints, a co-worker’s triathlon contribution and charity raffle tickets, it’s tough to draw the line for office solicitations.

To help, set an annual budget — say, $50 a year — then prioritize your giving based on causes you wish to support most. You can gently turn down co-workers by complementing their efforts and saying, “You know, I wish I could, but I’ve already used up my charity account this year.” Then help to spread the word.

As for office gift pools — from birthdays to baby showers — if you’re low on cash or simply don’t want to contribute, just tell the organizer you’re planning to offer your own gift and leave it at that.

What are some other sticky money situations you find yourselves in with friends or family? We want to hear from you. Connect with me on Twitter @farnoosh and use the hashtag #finfit.

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