One day several years ago, one of my employees came to me with a not-unusual request — he needed to borrow some money. I was always willing to do that if the amount was reasonable, the reason for the loan was also reasonable, and there was some plan for repayment. In this case, the amount was $350 (although getting close to my mental threshold) and the repayment plan of $50 per week was also reasonable. But when I asked the reason for the loan, I began to have some doubts.
His reason for the loan? To pay his rent.
Now you need to know a little bit more about the situation. The employee was one of the highest paid and his wife was also working — although not for me. The employee also had a “moonlight” job so I could not fault him for being lazy or for not trying. However, he did have two late-model vehicles and one of his daughters was driving an almost-new car that he was paying for. And there were several other areas of his personal finances where he was way over his head and had bought stuff he really couldn’t afford. (He couldn’t pay his rent but he did have a a monster hi-def LCD television set.)
So how did I respond to his loan request? As I usually do; I told him I’d think about it and get back to him the next day. Sure enough, he was promptly back in my office the next morning. By then I had my lecture ready.
I said, “Vincent, I will give you the loan but I expect you to pay it back exactly as promised and that it will be the last loan you should ever expect from me.” Then I continued, “You cannot borrow your way out of debt, which is exactly what you are trying to do. You are borrowing from me to pay someone else and if you continue buying stuff you can’t afford, you will end up borrowing from someone else to pay me.”
The sequel to the story? After three weeks of keeping to his payback commitment, he “forgot” to pay me the $50 on the fourth week. After that, it was an almost weekly game for me to get my payment although he did eventually pay me back in full. Probably because he borrowed the money from someone else.
Somehow this reminds me of the Detroit automobile industry. You, too?
(A few months after finally paying me back, Vincent quit to go work for another local company for a few dollars more per week. So much for loyalty.)
— Paul Burri is an entrepreneur, inventor, columnist, engineer and iconoclast. He is not in the advertising business but he is a small business counselor with the Santa Barbara chapter of Counselors to America’s Small Business-SCORE. He can be reached at firstname.lastname@example.org.