How to deal with the deadbeat, the cheapskate and the moocher
Ablang
Kathy Kristof | Personal Finance
February 8, 2008
http://www.mcall.com/business/local/all-d2_kristoff-a.6263107feb08,0,2981342.column
When it comes to dealing with freeloading friends and deadbeat
relatives, Jeanne Fleming and Leonard Schwarz suggest that you be what
they call the three P's: prompt, polite and pointed.
All too often, people get taken advantage of for no better reason than
that cheapskates think they can get away with it, according to the
husband-and-wife writers, who pen a money and ethics column for Money
magazine.
''There's no indication that these are people who are down to their
last dollar,'' Schwarz said. ''Every indication is that they are
people who feel no moral obligation to pay.''
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The authors, whose book ''Isn't It Their Turn to Pick Up the Check?''
was published last month, have categorized the people their readers
consistently complain about into several character types, along with
suggestions for dealing with each of them.
The deadbeat
An Internet survey conducted by Schwarz and Fleming indicates that 95
percent of adult Americans have lent money to a friend or family
member, and 36 percent have made a loan of $1,000 or more. When asked
about the largest such loan they had made, 43 percent said they hadn't
been paid in full -- and 27 percent hadn't been paid at all.
Women are more likely to be stiffed than men, and poorer lenders are
less likely to get their money back than those earning $100,000 or
more, the survey found. That suggests skipping out on a debt isn't so
much about what the borrower can afford but rather how vulnerable the
creditor is perceived to be.
''The decision not to pay,'' Schwarz said, ''is often the result of a
cynical analysis of the person that they owe money to, rather than a
sense of desperation.''
Fleming added: ''It's more about borrowers' calibrating whether they
can get away with it.''
How can you avoid getting skipped out on? Three tips:
First off, of course, be careful -- about whom you lend to and whether
you can afford to make the loan.
''While it's great to be generous and do good deeds, you need to be
analytic about whether the person is likely to repay you and whether
you can live without the money if they don't,'' Schwarz said.
Second, if you expect to be repaid, put the loan in writing. You might
not need a long contract, but you definitely need a few lines
documenting who lent whom what amount, and when and how that loan is
expected to be repaid. (If nothing else, the Internal Revenue Service
requires such documentation if you later want to write off a bad debt
on your income taxes.)
Finally, if a payment isn't made as stipulated, say something right
away.
''If one month goes by and they don't pay you, you had better ask
why,'' Schwarz said. ''It doesn't mean that you have to send somebody
to break their thumbs, but you need to put them on notice that they
need to pay you or explain. Otherwise they get comfortable not paying
you back.''
The cheapskate
You and your three siblings decide to give an expensive present to
your parents to celebrate their 50th anniversary. The problem:
Everybody knows that one sibling won't pay his fair share -- because
he never does. He either pays a small portion and forgets the rest or
never ponies up the cash at all.
Instead of splitting the bill by three and signing the card for four,
Fleming suggests that you either ask for the money in advance and
include the cheapskate only if he pays his share, or sign the card
from the three of you.
''The kids who pay can just tell their parents that it's a gift from
them,'' she said. ''They don't have to say anything bad about the
brother.''
In other words, let the cheapskate fend for himself.
The moocher
You go out to dinner with a group of friends, including one couple who
consistently pay less than their share. What do you do?
A. Let them get away with it, as they always do.
B. Stop scheduling these dinners because they leave you feeling used.
C. Tell the waitress you want separate checks.
D. Speak up and note politely but firmly that the cheapskate owes
more.
Plenty of people opt for one of the first two choices, but either of
the last two responses would be smarter, Schwarz and Fleming say.
The important thing, they say, is to speak your mind.
''Some people believe that they will be considered small if they stand
up for themselves and ask for what's theirs,'' Schwarz said. ''But we
have to quit letting the thieves of kindness make us feel bad for
counting. They are the bad guys, not you. ''You don't have to be
angry. You just need to say, 'Gee, John. I think you forgot about the
tip. I need you to kick in another $10.'''