If You Lend, Be Prepared to Lose

Whatever the situation, do not give money that you absolutely need repaid. Chances are you will never see much, if any, of it again. You have to be comfortable with that outcome -- even if you decide to offer help in the form of a loan. Give the money with no expectation of repayment.

Lisa and her husband had agreed that if they bailed out the brother, the money would be a gift. Recognizing that, she still wanted to know what conditions they could put on the cash.

"Can we put a disclaimer on the money that they must see a credit counselor?" she asked.

I think that's a perfectly reasonable request but one that is not enforceable. Once the money is handed over, you have no leverage other than perhaps guilt or nagging.

If you ask someone to use a cash gift in a certain way, such as for college tuition or catching up on a mortgage, the recipient should honor your request to the best of their ability. However, once you extend a gift, the money or item is no longer yours to control. You have to leave it to the person's conscience to do the right thing.

Before giving someone thousands of dollars to save a home, you should ask to see a written budget and the underlying documentation, such as pay stubs, bills, etc.

Yes, this is an intrusive demand.

Yes, the person or couple might balk, refuse or even cuss you out.

But if people are asking for a significant amount of money, they need to prove to you that your money won't be wasted. They need to prove their financial situation has improved. Or they need to demonstrate they are becoming better money managers. Otherwise if you bail them out, and a few months later they are behind again on their mortgage and the lender forecloses anyway, you've done what your mama told you never to do -- throw good money after bad.

If you're not equipped to help someone establish a budget, then require that the person see a qualified credit counselor. Send the person or couple to DebtAdvice.org or call 1-800-388-2227. DebtAdvice.org is a service provided by the members of the National Foundation for Credit Counseling.

Even if a friend or family member's foreclosure is looming, don't let that person's desperation result in your giving money that in the end will just postpone the inevitable. Help if you can, but in a way that means your generosity won't be in vain.