My 20 year old sister called me last Monday and asked if I had enough credit to co-sign a loan (I do) for somebody (her of course) and my first response was a perfectly enunciated big fat NO.

Why won’t I help my sister out you ask?

I understand that she isn’t at the point financially where I am and that it does take a while to go from being just your average American twenty-something to someone whose stance on debt is such as mine: Debt is bad and must be avoided at all cost or suffer the revenge of the Sith.. no wait that’s a movie.

Gotta love Star Wars

Alright alright, back to the money. I said no to my sisters request and so should you if your friend or your co-worker or a family member asks. Do you really want to be responsible for their debt? Say, they’re buying a $5,000 car. Would you go out today and buy a $5,000 car and give it to them? Most likely not, however if you co-sign for a loan such as a car-loan if they don’t pay it… you’re on the hook.

Many people in my community don’t understand this basic fact, they say ‘Oh the bank just needed my income to give the loan to her, it’s in her name!’ No, no it’s not! Her name might be second on the title to the car (after the banks’ claim), but guess what, you’re next in line – you’re on the hook for that debt!

I don’t lend money to co-workers, employees, family members, friends or strangers. I feel so strongly about this that I’ve said ‘hell no over my dead body’ to a $20 request. See, I loaned $500 to a friend once who desperately needed it. I got the money back including interest within the month but I would never do it again. As soon as the money changes hands your relationship changes, you upset the balance of the relationship because now they owe you something and if something happens or for some reason that loan doesn’t get repaid that relationship is forever unbalanced.  And no, don’t say it won’t happen to you. I’m still friends with this person because we each upheld our end of the bargain, but you know what? To this day we have never discussed it again. It’s not a pretty memory to either of us, it’s uncomfortable.

Just don’t do it.

Have you loaned money to someone before, did it work out, do you think I’m dead wrong?

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