Do friends who borrow money from you and not pay you back dominate a situation? The reality is, that if you allow yourself to be dominated you will be dominated, and you will say to yourself… they needed the money. Who doesn’t? Redistribution of wealth is one thing, but some people spend without thinking about the consequences. I recall an associate I lent a sizable sum to complaining that his ski vacation was only a weekend versus a whole week this year. I felt very critical of the person as I did not have a plan in place for getting repaid, and this was my fault!

So why draw up a document in the future? If they need the money, then they can get it in writing. And they will, because they do need the money. If you are doing them that favour, they can do you that favour. Worse case scenario, tell them that any loan over $100 your advisor has instructed you that you must put a loan document in place.

After deciding on the loan terms in Canada, you can set-up with your Bank email transfers or automated transfers interbank that allow for automating the payments on the loan. The nice thing, especially with family, is you don’t have to be heavy handed, the collections agent or cop trying to get the loan money back when its due. No, in this instance you can relax because you have documented the loan and automated the repayment of the loan, and nothing needs to be said. Automation is the key. Especially with younger people they will treat the loan more seriously.

All of this can be set-up on the internet in less than an hour. A loan document from www.kasu.ca doesn’t take longer than 10 minutes, and to automate the Banking at RBC, CIBC, BMO, or Vancity for example is a matter of online banking access. The cost for the service, a one time $59 fee and the smarts to log in to the friend or families banking account and pre-set the repayments. You can either complain about the vacation, or get paid first. It’s your choice because… they need the money. If it’s automated it will likely not get undone, rather people are more conscious of making sure the funds are in the account and payment is made in these circumstances. So next time you lend money and are critical of how they spend their funds, realize if you are not getting paid it is your fault.