Love and Loans Can Be a Volatile Mix

Love and MoneyThe following article is a guest post.

Should you give financial help to a family member or friend in need? It can be enormously difficult to say no to loved ones, particularly adult children or one of your siblings when they find themselves in a desperate situation with no savings, investments, credit, or other resources to get themselves out of the bind. Even if you can spare the money, you need to consider how the relationship will be affected should your loved one be unable (or unwilling) to pay you back.

An alternative to directly loaning money

If you want to render financial assistance to your loved one but your budget won’t allow an outright cash loan, a guarantor loan might be just what you need. In such loans, your family member or friend is the primary borrower, but their promise to repay the loan is backed up by your good credit and your contractual agreement to repay the loan should they prove unable or unwilling to do so. There is some risk involved, but the fact that the borrower has primary responsibility to repay the loan, and that their performance will directly affect their credit standing, could motivate them to make good on their agreement. Should the borrower fail to repay as agreed, you would essentially assume their role as borrower, and how well you are able to meet the loan agreement’s terms will affect your credit score, and by extension your ability to get future loans and credit.

One important point: Being a co-signor or co-borrower is different than being a guarantor. If you’re a co-borrower, you are a partner in the enterprise for which the loan is intended, and should therefore get a share of the benefit, such as sharing ownership in a car or house. If that isn’t the case, don’t sign on as a co-borrower. The down side is that you will be legally responsible for the entire debt – not just your share – if the other person doesn’t make repayments on the loan. Should neither of you be able to pay the debt, you will most likely both end up with a default listing on your credit report, which will make future borrowing considerably more difficult for several years. You could end up needing to get a guarantor loan yourself.

Do your research before making a commitment

If you have carefully weighed the risks involved with being a guarantor for somebody’s loan, make sure that both you and the borrower have a thorough understanding of the commitment you are about to make. It starts with choosing a lender. Today there are many lenders who cater to people with less than stellar credit, but not all lenders are alike, and it’s important that you choose the one that can give you the best deal. Even with the limitations inherent in a guarantor loan – such as higher interest rates – some lenders will give you a better deal than others. Transparency regarding rates and fees, so that you are able to make an apples-to-apples comparison of what different lenders have to offer, is paramount, but might not be a strong suit on the lender’s website. Good customer service is also important, but like transparency, you will be better informed if you can find objective information and reviews, which are more likely to appear in places other than content that is published by the lenders themselves.

What to do if you get in trouble

Say you have lent your friend or family member money or agreed to act as guarantor on a loan for him (or her), but it is becoming pretty obvious that he is not going to keep up his of the deal. How can you best convince the person to live up to the agreement without allowing the situation to escalate to the point where the two of you become estranged from each other? There are several things you can do; here are a couple of examples.

Give the person a gentle nudge – It is possible that the person has been preoccupied with other matters, and has simply overlooked their commitment. In such cases, a friendly, even humorous reminder might be all it takes to get the situation resolved.

Offer to set up an alternative repayment plan – If the person is experiencing a short-term cash shortage, you might offer to cover the payments for a brief period, with repayment at a later date, or by some sort of barter arrangement, whereby you hire them to handle some projects you’ve either been unable to do or that you simply don’t want to do. You might even get the person to pick up the tab for lunches until the amount in question has been repaid. In any case, you need to be clear as to what is expected.

There are any number of other ways that the loan can be brought up to current, but it is essential that you are both clear about the details, and that you can resolve the situation with your relationship intact. A worst-case scenario would have you seeking a judgment against the non-paying person, but you would do best to avoid such an alternative. If it just doesn’t look like you are going to get your money back, it might be better for your peace of mind, if not your finances, to simply write off the debt and consider it a gift, if you can afford to do so without compromising your own .well being or harboring resentment over having lost the money.

Some people insist love and money don’t mix. They can sometimes mix successfully if handled with great care and with full recognition that they are a potentially volatile combination. Whether it’s a direct loan, a co-signed loan or a guarantor loan, think carefully before committing yourself to helping someone out financially, no matter how much you may love the person in need.

Five Grocery Shopping Mistakes You Should Avoid

Bag full of healthy fruits and vegetablesGoing to the grocery store can be an expensive affair. We all have the story of the time we went in to spend $10 and ended up spending $100. However, with a little planning and good decision making, any grocery shopper can keep his or her bill low. Here are five mistakes every shopper should avoid to save money at the grocery store.

Buying Name Brands
These days almost every name brand item has a generic substitute. In most cases these generics have the same level of quality as the name brand. Sometimes they are even made at the same facility, but with different packaging! Make sure and go for the generic items unless you have some reason not to do so.

Buying Too Many Perishable Items
It is easy to overestimate how much you will use before another trip to the store. Be careful not to buy to much of any perishable items at the store. For example, it can sometimes save you money to buy the half-gallon of milk instead of the gallon if you will only use half a gallon before it goes bad, even if the gallon is cheaper per ounce.

Going to the Store When Hungry
Everything looks good at the grocery store when you are hungry. If you go to the store before eating you may find that you stuff your cart with more than you need, and with several unhealthy items as well! Try to go right after a meal to avoid impulse buys and to avoid getting more than what you need.

Not Making a List/Not Sticking to the List
It can be easy to think that you know everything that you need before going to the store and can figure it out when you get there. However, if you don’t make a list, you will find that you might make a bunch of impulse buys and come home with several things you don’t need. You will probably also waste time by wandering around the store trying to remember exactly what you need. Also, keep in mind that you need to stick to that list when you get to the store!

Ignoring Sales and Coupons
If you do not pay attention to sales and coupons, you can miss out on some serious deals. Make sure and check the local paper before you go to the store and see what coupons you can find. Clip those and take them with you. Also, see what stores are having sales. You may have to visit 2 or 3 stores to get everything you need, but it can be worth the effort.

Saving money at the grocery store can take some work. However, if you avoid the mistakes listed above, you can get the same groceries you get every month for much less!