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Several times over the past two years coworkers have asked to borrow money from me. I listen to the how, why, and what and I have loaned money out probably 6 or 7 times. The amounts have varied from $40 to $1500. A few times they were late paying me back but I have gotten back every cent I have loaned out. I own several properties (in which one of them lives). I am wondering if I have done something wrong in my relationships with them. The latest request is from someone who took what sounded like a very expensive vacation. I live within my means and always have. They have a newer car, nicer phone, and go out for lunch every day. I feel like saying no and telling them why but is it even worth it if the amount makes zero difference to me? Have I done something wrong in my relationships with my coworkers and can it be corrected?

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    This question appears to be off-topic because it doesn't exclusively pertain to the workplace.
    – Jim G.
    Commented Jul 14, 2013 at 12:49
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    @JimG. I disagree. This is about coworkers in the workplace. Commented Jul 14, 2013 at 13:13
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    Whoa. When I saw the title I thought "lunch money; forgot my wallet at home", not $1500 loans. Is this part of the corporate culture where you work, or is it just you who gets asked for such loans? Commented Jul 14, 2013 at 16:49
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    The question is if you are close friends or not. You are essentially functioning as a zero-interest bank, which I personally would only do to family and very close friends. Commented Jul 15, 2013 at 8:40
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    Dealing with coworkers is far different than dealing with family or fellow students.
    – ojblass
    Commented Jul 16, 2013 at 0:28

4 Answers 4

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Bumming a buck off the person in the next cube over for the vending machine is no big deal, and most of the time people will pay it back in a day or so. But you're talking about non-trivial amounts of money here, and this is a big problem because they probably will not attempt to pay it back.

Short term: Your response should always be "I'm sorry, but I have a personal policy of not getting into financial arrangements with people I work with." Be firm and assertive. Remember, it's your money, they are asking you (not demanding). You are in no way obligated to say "yes." If they continue to pressure you, or their response gives you concern about your future career goals with the company, speak with HR.

Longer term: In my workplace, this sort of situation would not be allowed because it creates what they consider an inappropriate relationship or position of influence between two employees. Speak with HR and/or your corporate governance/compliance department about whether this is permitted or appropriate.

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I would tend towards not doing side business with co-workers; unless both parties are very good at compartmentalising their lives, relationship issues in the side business could easily bleed into the co-worker relationship.

I also think it’s really silly to lend money to co-workers. Failure to pay back on time is going to strain the relationship. Failure to pay back at all will strain it further. You even mention in your question that you feel that they are spending the money unwisely, if you perceive them to be wasting your money (even if they intend to pay it back), it may make you react more negatively towards them.

All of this and you still have a responsibility to your common employer to not let it affect your work.

For loans you’ve already given out, that’s done. Try not to let how they spend it bother you.

For the co-worker who is also your tenant, that’s tricky. My best advice would be to hope they leave on good terms. Landlords and tenants don’t always see eye-to-eye on things like rental increases or repairs, hopefully you continue to or can both keep it outside of work.

For future requests for loans, a response in the negative to the effect of “I’m sorry, but I feel lending money to co-workers was a bad idea because it risks hurting our working relationship. We’ve worked together for X years, and I have no reason to think you wouldn’t pay the money back, so if you’d like I can act as a character reference”. Your goal in the rejection should be to make it clear that you aren’t rejecting this individual, but rather trying to correct the earlier mistake of lending money at all. This way, they will hopefully not be offended by the rejection of what may have previously been common practice; however, you must consistently reject all future loan requests, otherwise you are indeed rejecting this individual. Exceptions like “I buy coffee this morning, you buy it next” are fine, the level of abstraction (loaning coffee) is generally sufficient that people will not assume that they can also borrow money from you.

I don’t know if this is something you do or not, but I would recommend not discussing things like your wage, liquid assets, or success of your investments (such as your properties). It may give them the impression, right or wrong, that you have money available, and they may incorrectly assume that it is okay for them to ask for a loan of some of this money. If you are particularly successful, they may think that the amount should be trivial to you. Like political beliefs, I don’t feel that personal finances have much place in the workplace either.

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    In addition, I would add that you should never lend money to a coworker or a friend unless you can absolutely say that you won't care at all, and it will make positively no difference to you, if it is never repaid. Commented Jul 14, 2013 at 13:14
  • "I would tend towards not doing side business with co-workers" - in my company, it is expressly prohibited and engaging in such could lead to termination.
    – alroc
    Commented Jul 14, 2013 at 17:23
  • I am interested in personal finance and the conversations about money and how you are planning for the future have inevitably arise. We have contests concerning who can contribute the most for the 401k. For the younger employees I feel as though it is an important lesson that I wish someone was around to teach me. I have been able to convince 3 or 4 of them to at least contribute the amount necessary to get the full company match. Maybe this public service has come to bite me and I should mind my own business more. I like this answer a great deal but not all of it.
    – ojblass
    Commented Jul 14, 2013 at 18:49
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    @ojblass I gave a presentation last Friday about this subject to some of my fellow coworkers. I wish you luck on your attempts, too, I have very similar perspectives :)
    – enderland
    Commented Jul 14, 2013 at 19:02
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You have gotten lucky so far. Loaning money to people you want to maintain relationships with is almost always a bad idea. You can find all sorts of horror stories about family/friends/coworkers and loans if you search online. This is why a lot of personal finance people are vehemently against them.

  1. It causes the relationship dynamic to change. From your perspective, nothing changes, but they now owe you something. Which means they will perceive you differently. Suddenly you aren't just a friend/coworker but now someone owed money. This sucks, but it's just how it works. This might be the case already since they rent from you?
  2. If they don't or can't pay you back, the relationship dynamic gets really difficult, really fast. Are you going to pursue them legally to get the money back? This will make life at work ridiculously complicated fast.
  3. It's easy to not care about this as the person with the money. It primarily affects those who now are indebted to you and how they perceive you.

I feel like saying no and telling them why but is it even worth it if the amount makes zero difference to me?

I would absolutely do this and stop loaning money. Also consider whether you are effectively giving them a 0% interest payday loan to purchase luxury items. Do you want to be enabling that sort of behavior in any way? I most certainly don't.

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  • I guess all of this parallels don't date your coworkers either... complications arise. I guess I am lucky so far.
    – ojblass
    Commented Jul 14, 2013 at 19:02
  • I feel like it is a lose lose situation as they might hold a grudge if I say no.
    – ojblass
    Commented Jul 14, 2013 at 19:09
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If you look deep within, do you get this question because the people who you lend money to appear to be living a materially satisfying life ?

Do you charge interest on the amount you lend ? If yes, then this seems to be a promising business arrangement. If not, when it comes to money, in my experience it always starts with small amounts which always get repaid. The borrower is also making grounds for a bigger loan amount in the future. When it comes to money, it is always best never to loan it out unless there seems to be a genuine and urgent need (for ex. medical expenses/death/etc) If I were you just for my peace of mind, I would stop this arrangement of providing loans.

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