There aren’t any easy or obvious answers.
Quite often we don’t understand why we do certain things with money.
Spend. Save. Earn. Waste. Loan. Borrow. Invest. Donate. Hide. Hoard. Give. Take. Splurge. Keep.
There’s a complicated hodge-podge of emotions behind every financial decision we make.
Marcy’s loan story.
I never met Marcy. But someone who knows each of us quite well told me her story.
She can’t fully explain why she loaned a boatload of cash to someone she didn’t know too well.
Marcy is an attractive woman in her late 40s, with a successful career as an optometrist. She got divorced about 10 years ago and kept the family home in New Jersey.
Her ex-husband always took care of the chores that we tend to stereotypically put on the man’s side of the Honey Do list. Like house maintenance and fixing stuff.
Marcy wasn’t incompetent. She could do more than just change the light bulbs. But she didn’t want to spend what little free time she had, perched on a ladder or wielding a paintbrush.
Enter the handyman
She knew Jim vaguely. He was a wealthy businessman from the West Coast who did odd jobs for her elderly next-door neighbor when he visited. Marcy approached him a bit sheepishly. Her gutters were getting clogged with leaves. Could he take care of it?
Jim was happy to help. He charged her a reasonable price. Marcy was relieved she didn’t have to peruse Craigslist to find a good handyman.
Marcy hired Jim, who was in town often, to take care of chores like mowing the lawn. Fixing the washing machine. He even installed hardwood flooring in her home office.
For once, Marcy appreciated (a little bit) how much work her ex-husband did to keep their place in good shape, whether he did it himself or hired a professional.
Not just a handyman
Handymanning wasn’t Jim’s sole source of income. He told Marcy he bought and sold expensive real estate. Did a lot of property flipping, which was a natural for him because of his fixer-upper skills. She was aware that he was quite successful.
Jim liked Marcy and didn’t mind doing the odd jobs. And she was grateful just To Get Things Done by writing him a check instead of banging a hammer. She gave him a spare set of keys to her house.
Marcy and Jim’s relationship over the years went beyond casual acquaintances and floated somewhere in the vicinity of friends. However, there was never the slightest hint of romance or even attraction between them.
How the loans started
One day, Jim asked Marcy if she could lend him $5,000.
He could make a killing on this property nearby if he came up with a bit more cash to finish remodeling the master bathroom, he said. Nice fixtures weren’t cheap! Marcy loaned him the money. The only checks she wrote these days were payable to Jim. Like most of us, she paid her bills electronically.
Jim was appreciative and later told Marcy that the bathroom came out great. He would pay her back after the sale of the house closed next month.
But the sale fell through.
And Jim didn’t pay her back.
A few months later, he told Marcy about an opportunity he had to buy a block of condos in a brand new development in Orlando. Jim was a bit short on funds and needed $9,000 to finance the deal. Could she help him out? Sure. They both laughed when Jim offered to paint her garage for free
Somehow, Marcy forgot that she had already loaned Jim $5,000 and he hadn’t repaid her.
This became a pattern that went on for years.
Almost a decade.
Jim does chores. Marcy pays Jim for chores. Jim has a fantastic investment opportunity. Marcy loans Jim money. Property sale falls through. Jim doesn’t repay Marcy. Jim gets an even better deal that will surely enable him to pay Marcy back all the money he borrowed. Rinse and repeat.
The disappearing handyman
One day, Jim didn’t show up to mow the lawn. Marcy didn’t worry. She knew he was always busy with his real estate business. Perhaps he was still out of town. He traveled a lot to visit his properties. Her grass wasn’t going to grow much in a few days.
But still no Jim by the end of the week. She texted him “Grass tall!” No response. Marcy called him a few times; she had him on speed dial. He didn’t return her calls or texts.
Marcy checked with her neighbor, but she hadn’t seen him in a while either.
Jim never came to mow the yard. Didn’t text or call Marcy back. Total ghost.
Eventually she had to face the truth. Jim was gone.
And so was the big pile of money she lent him.
Marcy told no one. Finally, she confided in her older sister and admitted how much she lost.
One hundred thousand dollars. Yes, six figures. $100,000.
Her sister was both horrified and angry. Marcy was no dummy; how could she let this happen?
Marcy was so ashamed. She didn’t have a good explanation.
Jim was always there when she needed him. She wanted to return the favor. Marcy trusted him; Jim spent a lot of time alone in her house and she never gave it a second thought. Nothing ever disappeared. Somehow she forgot that she paid him for all his work in addition to the loans.
Marcy figured that she and Jim were close enough friends that they didn’t need anything formal like written IOUs.
And he kept promising that he just needed that one big sale to pay her back.
It sounded reasonable, right? The real estate market was starting to recover. He was always telling her about all the other expensive properties he bought and sold.
What was the truth?
Marcy doesn’t know whether Handyman Jim ever invested in real estate.
She still can’t explain to herself or her sister why she handed over all that cash. All she knows is she will regret it for a long time.
It’s her dirty little secret.
We tend to beat ourselves up when we make a dumb financial move. I know I did, for a long time. Probably too long. But that’s a story for another day.
Have you ever made a bad decision about money and didn’t want to tell anyone? Is it still your secret?
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