Nov 9th, 2008
Dealing with Owed Money
It’s far more common for me to have money owed to me than to owe anyone money. I’ll often front money for group gifts or do work for folks with payment expected later or lend money to someone who is in need; more often than not the debt is forgotten. This is not just a financial problem, but a social one as well; many relationships are destroyed over debt. Almost every divorce in this country has as one of its two root causes financial issues, which shows just how much of an issue money can be. How to deal with owed money?
Consider Your Options: Yes, in some circumstances (such as work for someone else), you may have legal options (like going to court or considering it a loss for tax purposes), but in general, those aren’t going to make a difference. Another option–the one I most often do–is to just consider it a gift rather than a loan. I basically emotionally and mentally write off whatever I’m owed at the end of a year.
Think About Reminders: Sending reminders to people can’t hurt, and might help. In some cases (like with family), it may be very difficult to give reminders without sounding sarcastic or angry; email might help in that case.
Keep Records: If you are going to have any hope of collecting money, make sure you keep records of who owes you, how much, when, and why. And if you’re doing work for someone with promise of payment, get it in writing. It might not be worth hiring an attorney to draw up an actual contract, but at the very least, keep the emails of the other person for reference later.
Be Wary: Really think hard about lending money. Remember situations when you were not repaid. If you’re considering lending to someone who hasn’t repaid you in the past, remember the old saw about, “Fool me once…” Be very careful about this!
Don’t Lend: Perhaps the best way to handle this situation is to simply not lend people any money. It’s actually fine socially to do so; there’s no expectation that anyone lend anyone else money unless it’s a bank. This would be the ultimate way to prevent such issues.
Having money owed to you, particularly by friends and family, can be a financial as well as a social issue. There are some options for dealing with it, including just considering the bad debts gifts, or even legal options such as legal action or using them as bad debts for tax purposes. As for me, I’m still more likely by far to have money owed to me than the other way around, and at some point, at least emotionally, I just consider all of it another gift.
