• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Wealth Pilgrim

No Money Worries. No Matter What.

Neal Frankle featured in
  • Home
  • Life Insurance
  • Investing
    • Build Strong Investment Building Blocks To Avoid Going Broke In Retirement
    • Systematic Mutual Fund and ETF Investing
    • Stock Market Investing Guide
    • Choosing the Right Investment Brokerage Guide
    • How Bonds Work Guide
    • How Banks Really Work Guide
    • Annuities – What You Need To Know Before You Invest
    • A Beginners Guide To Buying Individual Stocks
    • Create A Pool Of Great Mutual Funds and ETFs To Pick From To Secure Your Retirement
    • ETF and Index Fund Investment Guide
  • Earn More
  • Banking
  • Retirement Planning
    • Retirement Guide
  • Reviews
    • Upgrade Personal Loans Review
    • Lending Club Review
    • Prosper Review
    • Ally Invest TradeKing Review
    • CIT Bank Review
    • LegalZoom Review
    • Lexington Law Review
    • Airbnb Host Review
    • Should You Drive For Uber?
  • Tax
  • Courses
    • Raise Your Credit Score So You Can Buy a House – Free Video Course

Borrowing Money Inexpensively

by Neal Frankle, CFP ®, The article represents the author's opinion. This post may contain affiliate links. Please read our disclosure for more info.

If you can avoid borrowing money you should do so. But sometimes it can’t be helped. The good news is that if you must borrow money you can do so quickly and inexpensively. Don’t lean on your plastic for extra cash. There are a number of great credit card alternatives. Also, the banks can be a royal pain to work with these days. And don’t tap your IRAs for funding either. It’s far too dangerous. I believe you can get cheaper and faster money by thinking outside the box.

Believe it or not, your best source is friends and family. I know you might balk at this, but before you move on to the next idea, stop and consider. Even though you may not want to ask people you know to invest in you, understand that it’s not a new idea. Friends financed friends before there were banks, credit cards or loan sharks.


Your friends and family may want to loan you money because they respect you, want to encourage you and want to make a good return on their money. But before you speak with them, understand what their real concerns are.

I recently read that 42% of the money that people use to start a small business comes from close family members. And another 40% comes from friends and neighbors. The message is clear: if you have a good opportunity, your family and friends want a piece of it. If you’re not in business, start thinking of yourself as being in the business of YOU, Inc.

How do you get your friends and family to start writing those checks?

1. Play Favorites

Make a list of all your friends and family. Make notes next to each person’s name. Does she trust you? Does she make investments like these? Does she have the resources to make this investment? Would she be comfortable with this kind of risk?

The longer the list, the better the prospects are to fund your business. Think outside the box. Remember, you’re not asking for a favor. You’re presenting an opportunity.

2. Become a Boy Scout

By this I mean to be prepared. Have a written plan showing exactly what the expected cash flows are going to be and (most important) how you’re going to pay back the lenders.

Make sure that the return you offer is competitive. Right now, that’s not very hard to do. The banks are paying close to nothing and everyone on your investor list knows it. They’re dying to hear about a solid opportunity to earn 5% or more. If you can show that you are solid, you should have no problem getting people interested in earning 5% to 8%. Anything above that level will make people think you are desperate.

Remember one thing: Don’t approach anyone until you have your debt payment plan worked out and are familiar with market interest rates. If that plan includes you taking weekend jobs until you repay the debt, put it down on your proposal. If you have an attractive credit score, show your investors to prove you mean business. (You can get a free credit report with no credit card and without signing up for “free trials.”)

Neal’s Notes:  Are you sure that it’s better to borrow than to pay cash?  Sometimes the answer isn’t so clear-cut.

3. The Approach

Be direct but have no expectations. Call your friends. Do not send an e-mail.

Let your friends and family know what you are up to. Tell them why you are borrowing money and what you need. Tell them why you think it’s a great investment for them. Don’t present it as if it’s a favor and don’t expect any favors. If the loan isn’t a good solid deal for your investors, rework your plan until it is.

I suggest you practice a few times with your spouse. Actually pick up the phone and call him. Ask him to pretend he’s your Aunt Melanie. Go through the conversation a few times and get your husband to provide honest and brutal feedback.

  • What did he like about what you said?
  • What turned him off?
  • What motivated him to want to write you a check?

After you’ve perfected the call on your spouse, try it one more time with a close friend who has no money. Go through the same exercise and get more feedback. After she tells you that she loves the presentation, ask her who she knows who might be interested in the opportunity.

Have your friends and family ever invested in you? How did you approach them? What worked best?

 

Tweet
Pin
Share

Reader Interactions

User Generated Content (UGC) Disclosure: Please note that the opinions of the commenters are not necessarily the opinions of this site.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Are You Human? * Time limit is exhausted. Please reload CAPTCHA.

Primary Sidebar

Who is Neal Frankle

Neal Frankle

I'm a CERTIFIED FINANCIAL PLANNER™ Professional with more than 25 years of experience. I feel very blessed and hope to share my personal financial experience and professional wisdom with readers of WealthPilgrim.
Read More »

Stay Connected

Facebook Twitter YouTube RSS
We are on YouTube
Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement.  We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement. We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

YouTube Video UCoU0buhwVplzXrsyf342nOg

Retirement Crusaders

June 10, 2022 1:19 PM

Subscribe
This error message is only visible to WordPress admins

Error 403: Requests from referer are blocked..

Domain code: global
Reason code: forbidden

More Categories

Career Development
College Funding
Credit Cards
Credit Score Fixes
Money and Marriage
Debt Relief
Estate Protection
Property Investment Loans
Small Business Strategies
Spend Less Money
Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement.  We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement. We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

YouTube Video UCoU0buhwVplzXrsyf342nOg

Retirement Crusaders

June 10, 2022 1:19 PM

Subscribe
This error message is only visible to WordPress admins

Error 403: Requests from referer are blocked..

Domain code: global
Reason code: forbidden

Disclaimer

Wealth Pilgrim is not responsible for and does not endorse any advertising, products or resource available from advertisements on this website. Wealth Pilgrim receives compensation from Google for advertising space on this website, but does not control the advertising selection or content. Please do the appropriate research before participating in any third party offers. The information contained in WealthPilgrim.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation. Wealth Pilgrim does not provide investment advisory services and is not a registered investment adviser. Neal may provide advisory services through Wealth Resources Group, a registered investment adviser. Wealth Pilgrim and Wealth Resources Group are affiliated companies. In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving payments,access to free products and services for product and service reviews and giveaways. Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.


About · Contact · Disclaimer & Privacy policy

Copyright © Wealth Pilgrim 2023 All Rights Reserved