The advice a flight attendant gives regarding breathing your own oxygen before helping someone else can easily apply to lending and borrowing money from friends and family. When asking to borrow money from someone close to you, it puts the lender in the position of putting your finances above his or her own.

Between friends and especially between families this can cause a whole brood of problems. If not handled carefully and in just the right way a lot of heartache can result. It's not just the consequences that could arise if the loan is not repaid because of irresponsibility on the borrower's behalf. It can ruin someone's credit and cause all kinds of financial upset.

There are also a whole set of emotional consequences, especially between two people who are close such as friends and family.

A lot of people, even those who are related or close friends will rightly refuse to lend money to someone who banks and such have turned away for loans. They smartly realize there has to be a reasonable and obvious reason. A reason so obvious they'd be fools to do what a respected financial institution refuses to do let that person borrow money from them.

If you want to have any chance to get an affirmative response to your request to borrow money be honest up front as to what the money is for. Clearly state what you plan to spend the money on. Being deceitful as to the reason or reasons you want to borrow money can only hurt you in the long run. Especially if the person you're borrowing from is someone close like a good friend or a relative. They are more likely to catch you in the lie, because they know you fairly well.

Another reasonable and smart thing to do when asking to borrow money from someone close to you is to write down the terms and the agreement. Yes this seems like an unnecessary thing to do, especially when it involves family, but you would be surprised how many families end up in court suing each other. Sometimes the closer you are the worse it is.

Make sure you clearly define the agreement and make sure all terms and conditions are within legal limits. Include a fair interest rate and even a repayment schedule. That way if something comes up both parties are protected and this will give the person your asking to borrow money from more comfortable and bring them a little peace of mind. There are even some online companies that can help you write up these documents for a fee.

Which brings us to another good point when trying to borrow money from someone close to you such as a friend or family member, having a third party involved can be invaluable. This third party can witness and if chosen correctly can be an objective and independent observer to the whole deal. This, once again can only help both parties feel more comfortable.

Sometimes another approach that can work, especially when borrowing from those close to you is to present something as collateral. Include any mention of this any document that you may draw up between the two of you. Something to offer the other party as repayment if you are unable to pay up after a certain amount of time is a huge good faith offering to the other person.

Since the person knows you so well they will know exactly what is of most value to you and what is a reasonable thing to put up for collateral in return for the amount of money you are asking for.

One other option in borrowing money from someone close to you such as a family member is offering to repay the money through doing household chores for that person or some service they otherwise would have to pay for.

If you have a skill that a family member or friend can use it can be a huge bargaining chip when asking for money. This makes it less of something for nothing; instead you are offering something in return.

In the end it can be hard to avoid some emotional heartache in borrowing money from a family member or friend if you are not careful and frugal in trying to pay them back. However, following these steps, especially documenting everything can help immensely.

Remember where they're coming from, they are putting your finances above their own when they are asked for a loan and this can really put some people off. Knowing how to make people feel more comfortable in lending you money can only help both parties in the long run.

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