Nikita Kazakov
Nikita Kazakov
4 min read


Bottom Line — Here’s what I learned about lending money and how to minimize the chances of getting screwed.

“Can I borrow $50 from you?” He asks.

“Hmm. When can you pay it back?” you look at him with unease.

“In 5 days bro, I swear you’ll have it” looking at you in despair.

You’re stuck in a crossroad. Either you lend the $50 and feel good about yourself or you refuse, and this guy thinks you’re heartless. You didn’t ask for this. Why couldn’t he ask someone else!?

Sooner or later, someone will for ask for a loan.

When the deal goes sour and you hear “I swear I’ll have it next week”, you’re hearing BS words. Then you nag at the guy and he’s upset. Either way, you’re in the dumps and it wasn’t even your fault.

How do you handle borrowing / giving loans gracefully?

You’ve heard don’t lend money to friends or family. That’s a cop-out because certain circumstances call for exceptions.

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

— Polonius from Shakespeare’s Hamlet

Lending in times of trouble

Look, I’ve had situations where close friends were in temporary dire straits because of a life situation. Two important things here: close friends and temporary.

Temporary means this guy isn’t always broke. He’s not experiencing money problems every month. Close friend means he hasn’t given you a reason to distrust his intentions in the past.

Friends show their love in times of trouble, not in happiness. — Euripides

When you’re on top of the world, everyone wants to shake your hand. It’s when you’re in the dumps that you’ll see which friends are there for you. Money is only one way of solving issues, not the only way, and usually not the best way.

What about don’t lend money to family or friends. Just gift it instead. Does that make sense?

Gifting might be fine with $10. If you have to “gift” a couple hundred of dollars, that’s an expensive gift.

I know you’re thinking:

If you lend them money, you risk not getting the money back. You also risk breaking a friendship with that person if the deal goes sour.

If either of those things happen, actions will speak louder than words. You’ll clearly see who the borrower really is.

Actions speak louder than words

I look at it from a different perspective.

If you ask me for a loan and I agree, you just realized that you’re an important person to me and I’m willing to spot you in your time of need.

When the deadline comes and you don’t pay, your actions are crystal clear where words of promises were muddy. I see an honest portrait without filters.

It could have been worse. What if the situation was more serious and this guy betrayed my confidence then? It would have been a harder blow. I’m so lucky because I only lost money.

A Bronx Tale (1993) — Money Scene

Reme_mber A Bronx Tale (1993)_ with De Niro?

Some punk owes another kid $20 but evades him because he can’t keep his promises. The kid gets angry and starts making senseless threats. His mentor stops him and says these lucid words of wisdom:

What’s the matter? What have I been telling you? Sometimes hurting somebody ain’t the answer…You don’t even like him, there’s your answer right there.

Look at it this way: It cost you 20 dollars to get rid of him. He’s never going to bother you again.

He’s never gonna ask for money again. He’s out of your life for $20. You got off cheap.

Properly Lending Money

First: If your gut says no, then don’t lend money. Don’t let another person guilt you into it. It’s your money, you earned it, and you owe it to nobody.

Second, ask why they need this money. It’s your business to know how this money will be used. You’re essentially a bank here. A bank doesn’t write loans without an underwriter. Use your judgement to see whether the reason is good enough.

Third, you will absolutely ask this important question to the borrower: “When will you absolutely, 100%, have this money back to me by?”

Insist the borrower use a margin of safety. If they feel like they can return the money in 2 weeks, encourage them to say one month so that no unexpected delays are possible.

You want a date with no excuses. Go ahead and write this date down in your calendar and make sure the borrower knows the exact date as well. Send them an email that day with what you agreed on so that there are no doubts of dates in the future.

The rules are strict. Both parties know what’s at stake. There is no ambiguity.

What happens if they are late

You told them to use a margin of safety. They did and they are still failed to deliver the money on time.

You decide what happens. I had this happen twice. One person was late for a couple of days, with good reason, and I accepted it. After all, s#it happens.

The other guy was a distant relative who borrowed a semi-significant sum of money and played the avoidance game. His character shined through clearly. I don’t ever have to worry about him. I got off cheap.

Originally published at on June 15, 2016.