I'll try to be as concise as possible.

One of my oldest, dearest friends has asked me and another very close friend in our circle for a $20,000 interest-free loan which he says he will pay back over the next few years. He needs the loan for: (1) paying off about $12k in credit card debt, for which the interest rates are about to go up, (2) paying for about $3k worth of therapist bills which are not covered by his crappy insurance policy, and (3) $5k for a plane ticket and pocket cash to go to South America and explore opportunities in international teaching.

Some background:

(1) This is one of my top 3 closest friends. He is incredibly loyal. He has helped me with numerous things in the past in my life, and if I ever asked for him for something that was in his power to deliver, he'd do it in a second.

(2) He has had a really rough year. He had to commit his dad to a mental hospital, and dealing with this really screwed up his own work life and cost him his relationship.

(3) He has plenty of experience teaching. He has taught and coached sports at 2 different schools in two different major cities. Right now, he is currently unemployed and has no income. He has almost no money in the bank.

(4) he has completely reduced his expenses to the point of selling old sneakers on ebay and cutting out basically everything other than inexpensive food and cell phone. He is currently living with a friend, and he can't stay much longer.

He wants to go to South America to "find himself." He is the type of person that, although in his mid 30s, is one of those guys that is always trying to figure out his life. That said, one problem I have is that, up until now, all I have heard from him are wild stories of partying, and all the chicks he has hooked up with, and he did a ton of blow the night before and he's never going to do it again, and then i hear the same story over and over.

I think as he is now getting closer to middle age, reality is setting in. He's sees other friends of his doing well, and he feels bad. I think he wants to leave the country just to get away.

I'm not sure what to do. He has never even hinted at asking me to loan him money, and if anything he has been extremely generous (always picking up tabs, sends christmas and birthday presents), and is really a wonderful guy in terms of his personality, loyalty, and compassion.

I am inclined to help him, but on the other hand I don't see some emergency situation here that he can't fix himself. I don't see why he can't just get a job here, hunker down and save, and pay off his debt slowly and work toward the goal of moving to south america. I get up at 5:30am everyday and am at my job at 6:30, and then work until about 6pm, and then work at home for a good portion of the evening. I also have a wife, a 2 year old, and a lot of major expenses. $7,500 (assuming the other guy kicks in his half) is doable but not exactly nothing to me. And this isn't money i'm likely to get back.

I should also add that his parents are divorced. His Dad is in horrible shape in life, but his mother is seemingly decently well off, although he doesn't really get along with her.

I feel like I can't say no, but I also feel like if I say yes, I'm just enabling more random, nomadic, lazy type behavior. Not sure how to proceed here. I'd really appreciate OOT's input.

Thanks very much.

Sorry- it would be $10,000 each. Not $7,500 each.

Don't do it unless you don't care if you never get paid back.

Sounds like he's asking you to bail him out of debt and bankroll his vacation.

**** no. Seriously.



And it also sounds like he won't be having the means to pay you back anytime soon, so you need to follow the old 'loaning money to friends' credo:

Loan it as if you don't expect to get it back, because you probably won't.


Edit: Just read the rest of your post and see you have a wife and young child. This being the case, I'm revising my answer to '**** NO!!!'
And his mom is well off? Pfff...

Teaching English abroad very rarely equals a decent (by US standards) salary. Therefore there's no way he can make enough money to pay you back. YOU HAVE BEEN DENIED, YOU CANNOT AFFORD IT.

This.

i've never dealt with anything of this magnitude before, but i'd say as a general rule that if you thought you would resent your friend if he never repaid you, you probably shouldn't do it. you seem to question his judgment for wanting to go to south america and don't particularly appreciate the fact that he's pissed away a lot of $ over the years and that now you feel compelled to bail him out of it.

i'd only do it if i expected to get paid back without much trouble/friction or that i really felt it would make him happy and change his life for the better even if it took him a long time to repay me (or that he never did).

If he's going to go to South America for a while (or longer), why does he need to worry about paying off his debts now? They'll be waiting if and when he comes back.

All good advice and commentary so far. I appreciate it.

My wife (whom I don't keep things this big from) is totally opposed of course. She has no sympathy for someone in this situation. If he were calling because his dad needed surgery to survive, or something like that, it would be different. This is more for his friends to pay off his credit card bills, pay his shrink bills (and he does need a shrink), and get him a plane ticket to South America. Not exactly a crisis here. And $20k ($10k for each of us) is not chump change to us.

Then again what ever happened to "thats what friends are for?" I'm being too soft feeling this sympathetic, right?

How would you actually respond to the email request without seeming too cold?

Because he has no income now, and won't have a big one going forward, and he wants to pay off the debt so he can avoid the soon-to-be higher interest payments.

Yeah, consider it a gift when you give the money to him, and a pleasant surprise if he ever pays it back.

If you're not in a position to give out that kind of money with no expectation of ever getting it back, don't do it.

Sorry, but...economy, job security, home value, whatever.

you could always help him out with a smaller amount like 2k and say it is all u could afford to give him

+


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No loaning of money.

I have a wife and kids and I couldn't look them in the eyes risking this much money at this point in our lives.

Edit: I don't have a wife or kids - this is what I would say if I were you.

May i ask how old this toolbox is?

I might ship him 1k or something to help him have enough to get a job but there's no way i'm giving a party guy 10k to run off to south america with.

Can't he declare bankruptcy? I know it's harder these days but since he has absolutely no assets I don't see what he has to lose.

Oh, don't loan him the money, obviously.

This would have been my advice having only read the title. After reading the OP, it's obviously still 100% correct.

My age... 33 or 34.

1. Declare bankruptcy: $12k CC debt gone.
2. Therapy? LOL, what a complete waste of money. Jesus, how did you not tease him about this before he racked up a $3k bill? DO NOT SUBSIDIZE THIS.
3. That leaves $5k for a vacation. Uhh....no. "Explore opportunities in international teaching." When he finishes exploring and gets an actual job in South America, then pay for a one way ticket.

True but doesn't this basically mean he can't ever get a loan for a house, if let's say he fixed his life and in 3 years were in a position to be able to get a home loan?

After much consideration because you are such a close friend, I'm sorry to say that I'm currently not in the position to loan out $10,000 to you. I just can't afford it right now. I hope you understand.




The more I think about what this guy is asking you for, the more it seems like he is selfish and immature and this is just the start of his unraveling that is destined to happen.

I'd put it at about 90% that you wouldn't get this money back.

You really think a 34 year old degen with -$20k assets will turn his life around in 3 years and be in position for a home loan? Wow.

I'd be okay with "lending" (most likely giving) him the airfare and maybe money to get him started down there (ie; a month's rent), however, the debts are pretty ridic to be asking friends to bail him out of. Has he has any credit counseling or tried for a consolidating loan? Being out of work probably means he's SOL but it's worth a try.

$15K in debt isn't really a lot to carry if you have any kind of income.