What would YOU do?

Jenna

Okay ... what would YOU do in my shoes?

I lent someone I know money (£3.5k) about 4 years ago in order to pay off crippling credit card debts. I was happy to do so at the time, the interest rates were at 20 - 30%, and the person in question was getting deeper into debt every month as DDs bounced and charges were applied.

Please keep in mind this is a person who I cared about very much (and still care about); they were deeply depressed about their financial situation and I had the money (a combination of savings and an inheritance) "just sitting there" in my savings account.

I was receiving interest from the money (about £5k) at a good rate, but I wanted to help this person, so I lent it to them interest free. This was on the understanding that they would pay me back £x per month for 3 yrs approx, at the end of which time, the debt would be paid off.

Since that time I spent the remaining £1.5k and, in addition, ran up debts of around £4.5k (now just under £4k - and falling!). The reasons for this debt were many and varied and included just plain over-spending, holidays, a sofa, and ill health. I am currently working hard to pay off these debts, but in a job/industry that I am not interested in (but in a global blue-chip company with good career prospects - even if it's not the industry I want).

I am competent at what I do, but find the actual job itself quite boring (it's quite repetitive, being admin-based, and I can do it with my eyes closed). Yet the workload can be overwhelming (it has expanded since I started at the company) and I often have to work OT (which I am paid for) just to keep my emails and to-do list under control. This hasn't bothered me in the past, as I just thought, "well that's more money towards the debt isn't it".

But I've just been on holiday and had some time to think, and I know I'm doing the wrong thing for myself. My personality is not suited to the job I'm doing - I get very stressed and this comes out at home, and it's badly affecting my relationship. My "head" (the "sensible" me!) says I need to stay with my current company, ask for a raise (I have a review in 10 days) and carry on working hard until my debt is gone & I have savings - only then can I consider changing careers.

In truth I don't hate my job, but I am making myself miserable (I have been really depressed about it since I have got back from holiday), and my heart says I should quit and do something that I am passionate about. Even if I were to start at a junior level, if I am in the right industry I can get qualifications and work my way up - eventually I want to run my own business, though it'll be a few years before I could consider it as a full-time option, of course - the personal debt has to be gone, and I want a sizeable amount of capital (savings not debt!) behind me too.

I know I could get a job such as Reception / Admin (but in the correct industry) fairly easily, I have lots of experience in that area and excellent customer service skills. Only problem is, I wouldn't be as well paid (as far as I can tell from the job offers online) - I could expect a salary drop of £1-2k per year.

Of course it does have the benefits of being in an industry I'm passionate about, getting to meet the right contacts, not being as stressful, and not requiring me to work OT. I'd be less stressed (and so have more energy and a better relationship), more spare time (which I could use to train and get qualifications in the areas I need), and then try for a better paid position in 12 - 18 months as a rough estimate.

This person was supposed to be paying me back £x (100%) each month. They are currently paying me a quarter of that amount - 25% (for a whole raft of reasons agreed at the time, but perhaps no longer valid).

If they were to pay me the additional 75% originally agreed, I could certainly afford a £1 - £1.5k per year drop in salary. It would take 3 years for them to pay me back at that rate, so plenty of time for me to train and take qualifications before the "sub" runs out. Yet as it stands, there's no way I can afford to quit my current job - I only have £5 - £10 "spare money" each week; everything else goes on bills and debts.

I don't want to offend or put pressure on this person - or make them feel guilty for not paying me back faster. But I lent them the money on the understanding I'd have it back by now, and it's really affecting both my health (I have a stress-related condition), quality of life, and my relationship.

Another point to bear in mind is that the person who owes me this money is just about to have a review at their job, too, and they may get a raise. If they don't get one, I know that they are likely to look elsewhere for a better paid job (they are under-paid in their current job at the moment, when compared to other similar jobs online).

And here's an interesting one for you ... they are OK with money, and lead a reasonable lifestyle - but at the end of the day they still go out more often than me, despite being in debt. I don't think there's much of a lightbulb happening, or likely to in the near future. Can I ask them to restrict their lifestyle in order to pay me back more? Is that fair - I knew the risk when I lent to them?

Of course the other factor is - I got myself into my own personal debt, and the cost of servicing said debt is approx. the difference between what they're paying me each month now (25%) and the amount they were originally paying me back (100%). So it could be argued that if I wasn't in debt myself, I could still quit my job, even though they're only paying me back 25% of what we originally agreed.

I am exceptionally confused by all this soooo ... what would YOU do?

DreamerHelen

I think you should talk to your Friend and explain that they are making your life more difficult - if they are a true friend they wouldn't want that for you!!

All you can do is be honest...you want to change your life, clearly your Friend doesn't, but that shouldn't have to be your problem.

I'm sorry if that sounds harsh hun!!

poorandindenial

I agree with Dreamer Helen

Have a chat with them and see if you can come to a new repayment arrangement. If your friend gets upset then show her how much you are having to cut back to accomodate the debt she has to you.

I would be mortified if my friend had lent me money and I was going out on the lash instead of paying it back. I think your friend needs to realise how this is restricting your life.

Jenna

Thanks Helen... no it doesn't sound harsh, it's just such a difficult topic to approach and I'm scared of saying the wrong thing and really offending them. I guess I will need to think it through carefully - I really need to decide what I want from them before I can approach them with this, I guess. Thx for your reply xx

pink_fairy_5

if she can afford to go out and you cant then i think its time to have a quiet word. its unfair of her to not be paying back as agreed. does she know its affecting you? i do think she should pay back more, sounds like youve been a really great friend to lend so much, she needs to repay that kindness by repaying a bit quicker x

Jenna

Hi PoorAndInDenial,

Well they're not quite as bad as all that ... it's not like they're out on the lash every weekend, or anything. I think they just don't have the same attitude towards debt and spending that I do ... I know if I had my time over again, I would recommend MSE, and help with a good budget, suggest debt counselling, and give them all the moral support in the world ... but never lend them the cash. Hindsight, though, eh!

The relationship between us is starting to suffer, though, as secretly I resent them for being so carefree - whereas I feel trapped in my life and my job. I'm not great at communication face-to-face, though (but online is fine as I have time to think my responses through!) ... I tend to just clam up and agree with whatever they suggest. So it could just as well be my fault for not making it clearer - how are they supposed to know they're stopping me changing career, after all?

Cheers for the reply xx

jenjade

i would tell her i need the money back maybe help her look for a 0% card? or something so you are still supporting her

poorandindenial

Jenna wrote: »

Hi PoorAndInDenial,

Well they're not quite as bad as all that ... it's not like they're out on the lash every weekend, or anything. I think they just don't have the same attitude towards debt and spending that I do ... I know if I had my time over again, I would recommend MSE, and help with a good budget, suggest debt counselling, and give them all the moral support in the world ... but never lend them the cash. Hindsight, though, eh!

The relationship between us is starting to suffer, though, as secretly I resent them for being so carefree - whereas I feel trapped in my life and my job. I'm not great at communication face-to-face, though (but online is fine as I have time to think my responses through!) ... I tend to just clam up and agree with whatever they suggest. So it could just as well be my fault for not making it clearer - how are they supposed to know they're stopping me changing career, after all?

Cheers for the reply xx

I agree with your second paragraph completely, you need to help them to understand. I know I sounded a bit harsh (sorry - didn't mean to) but I think she should be making more of a priority of paying you back.

I really think you should have a chat with her, you are right if she doesn't know it is a prioirty then she won't have a chance of doing what you need her to. You shouldn't be worried about doing it, she is your friend and will want you to be OK. I am sure she would rather you spoke to her than that the friendship was ruined because of the resentment, she may have already picked up that something is a bit awry and be wondering about it. Money is always so hard to talk about.

Maybe you could invite her round for a chat about your ideas about changing job and ask her to work through you budget with you and then she will see the situation without you having to raise it on its own.

Jenna

Well the reasons that the amount was dropped were related to them losing their job unexpectedly, and one or two other things - it's been a tough few years for this person, although in the last year things seem to have settled down well for them. So at the time I was very happy for them to pay back less, and I totally understood they couldn't afford more ... we even did a payment break for about a year at one point, but I had to ask (eventually) for them to start paying again - which they did, but said they could only afford this reduced rate.

I presume that they do know it's affecting me, but I guess maybe my subtle hints may not be getting through? I don't really know ... e.g. when I say I can't go out as I can't afford it, or can't buy a new XXX as I need to focus on re-paying my debt, that to me would be quite obvious that I want more money back! But maybe they've not picked up on that sort of hint?

Hmm ... maybe I am just not being direct enough? Yet how do I avoid putting pressure on them if I ask directly for more money?

Thx for the quick response xx

Kevicho

jenjade wrote: »

i would tell her i need the money back maybe help her look for a 0% card? or something so you are still supporting her

Hate to say this, but did you get anything in writing originally?

To be honest if thats the case then you really are relying on them being honest and reliable to repay you, if it went to court (which i know is a long way away from were you are now, but it helps to think ahead) then you wouldnt have a leg to stand on.

Your best bet is to talk things through, say that things have slipped, but you need this money back, if they can set up a standing order then great, or if they can pay it all back then thats good as well.

I have been burned in the past on more than one occasion lending money, just to never get it back, so i guess you can say i am very cynical now when it comes to this, but i wish you luck in getting the money back.

Jenna

Hey Jenjade,

Yeah that's a good idea, I would definitely help them look for a life-of-balance card or low-interest loan ... I would worry about a 0% card as their credit file could still be damaged from the missed payments on those old cards? Also my loan to them did not pay off 100% of their debt, just the worst offenders, so as far as I am aware they still have £? on a 0% deal (which I helped them to find a while ago). What with the credit crunch, if I asked them to re-pay in full, but then left them with a big balance on a high-interest CC ... I would feel dreadful and they could be back at square 1!

Do you think it's fair to ask them for all the money back at once though? The original plan was for them to pay me back a bit each month, so it was affordable, and gradually reduced their debts...

xx