This article from Learnvest brought back a barrage memories of the first and last time I acted as guarantor for my friends.
In my old law firm, one of our clients had an ex-deal with Gold's Gym and was paid with 1 year membership GCs redeemable at any Gold's Gym branch. Our client then sold these GCs for Php12,000 each, payable in 12 monthly installments. Of course I pounced on the deal and informed my friends about this fantastic offer from Gold's Gym. Several friends bought GCs and we agreed that they would pay me Php1,000 monthly for each GC, I would then remit the cash to the client every month.
Sad to say, of the 3 friends who got GCs through me, only 1 religiously paid every month. One always forgot it was that time of the month and the other lost her job and gave back her GC to me, promising to pay me back later.
The forgetful friend eventually did pay me, but only after I demanded the whole amount after he forgot for 2 straight months to remit his payment. The other friend still owes me money and from the looks of it, she has already wiped off that debt from her consciousness, even if she got a new job about 3 years ago.
I'm still friends with these two, but I will never, ever lend them money again or act as a guarantor for them, or for any other person, for that matter. The stress and disappointment are just not worth it.
For me lending and borrowing money involves so much more than the actual value of the transaction, as it really boils down to respect. Do you as the borrower, respect the lender enough to make good on your word? Or will you just disregard the loan, reasoning that the lender has more than enough to not notice that she's out a few thousands of pesos?
I know money problems can't be avoided, but what you can control is how you will honor your word to someone you are indebted to.