Lending money to your friends can be tricky business. While cash is easily valued, friendship is not, and that instantly puts a wedge in the equation. There are also a number of concerns to consider. First, are you supposed to lend them more money because they're your friends? Second, how are you supposed to ask for the money back? Third, can utang na loob be monetized? Below are some answers that might help:

1. Dump the utang na loob mentality.

Just because your friends helped you out with a project once doesn't mean you're obliged to lend them anything. If you don't want to lend money in the first place, stick to your guns. Any friend who resorts to emotional blackmailing is probably not worth keeping anyway.

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2. Never lend money at your expense.

If your own finances are unstable, don't force yourself to lend your friends money. Yes, you want to help them, but you need the cash, too! At the same time, never lend an amount that you're not comfortable with. If P 1,000 is all you feel safe lending, don't let your friends pressure you into giving more.

3. Find out the reason for the loan.

Asking your friends why they need to borrow money will help you decide whether or not to lend them cash in the first place. If it's to buy a new gadget, then just politely decline.You don't want to dole out a few thousand bucks because a family member is supposedly ill only to see your friend flaunting a new mobile phone the next day.

4. Keep all evidence of correspondence.

Since lending money to your friends is not a formal transaction, you'll most likely have a harder time collecting their dues. One sensible advice people keep giving is to draw up a written agreement to be signed and notarized. If you feel like the amount is not big enough for such a fuss but it's still considerable enough that you want to be paid back, save all your conversations with your friends. If they ask to borrow money via Facebook, don't erase anything. At the very least, they won't be able to deny asking to borrow money from you.

5. Be clear about payment terms.

Telling your friends to pay you back whenever they can sounds pretty noble, but it will most likely backfire on you. By waiving a deadline, you're telling your friends that you're in no hurry to get the money back and that it doesn't matter if they pay you or not. Of course, not all friends would take advantage, but then again, some would unconsciously or consciously do.

(Photo by jean-- via Flickr Creative Commons)

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