How to Get Out of Debt - Family and Friends
Have you exhausted all of your options when it comes to finding the funds to pay off your credit cards or high-interest loans so that you can finally get out of debt? If you have considered a home equity loan, second mortgage, borrowing against your life insurance policy or any of the other tips often found when it comes to getting out of debt and still do not have the funds necessary to get you on your path to financial freedom, your only option may be borrowing money from friends or family.
There are some very real advantages and disadvantages when it comes to borrowing money from the individuals in your life. One of the biggest advantages is that you are not likely to find a lower interest loan anywhere else. Close friends and family may even look the other way if you are late with a payment. They may also lend you the money without asking for any collateral, making borrowing money quick and easy. If you use this money to immediately pay down debt, you may find that the people in your life were able to play an integral role in achieving your financial goals.
While it is important to pay back the money that you have borrowed in any situation, it is especially crucial when you are borrowing from family or friends. Although they may be the first people willing to lend you money when you find yourself in a tight spot, financial issues also have a way of driving a wedge between even the closest of individuals. Financial matters between close friends and family members should be handled with the utmost care to ensure that no one feels as though they are being taken advantage of or used.
This is why it is often recommended that you write out the terms of the loan so that both individuals have something they can refer to and agree on. A written agreement can go a long way towards preventing future problems. Because borrowing money from the people that love you can put you in a delicate situation if you are unable to pay back the money, you should generally try every other avenue available first. If you do end up borrowing money from them, make sure that you do your very best to adhere to a strict payment schedule so that you can pay them back as quickly as possible.