Defusing Loan Stressors in Palau

By Jackson M. Henry —-

Life on Palau, in the eyes of our foreign visitors impervious to Palauan cultural duties, is probably the closest they see an ideal society similar to what British author, Sir Thomas More wrote in his famous book, Utopia. Life on a paradise island appears free of the stresses that come with big city living.

But for some of us locals who are duty bound by our ancient culture of sharing, one of the most pernicious stressors is dealing with friends and relatives who constantly badger you for loans.

It is common these days that a Palauan finds himself at a crossroad deciding whether to engender bad blood or ensure good karma when a friend or relative come unannounced for “an emergency loan”. Many of us know well those uncomfortable feelings they bring.

Loan to friends and families is an emotionally sensitive matter because they could be a recipe for resentments and puts relationships to rigorous tests. They can also be divisive instruments that drive wedges between you and your friends and families, regardless of which side of the fence you stand on. If your borrowers do not repay then most likely, you loose them as friends or cut them off as just another “dead beat” family member. However, if you refuse to lend money then you become branded as a Mechuuit. As my Rubak friend says, its one of those “damn if you do and damn if you don’t” Palauan syndromes.

I inquired about the genesis of this mind set from several elderly folks and they opine that it is traceable to ancient times when Palauans lived in communal villages where true “security blanket” comes from sharing just about everything you own. Therefore, it is only a matter of time before they come to claim it or “borrow” it during times of need.

However, this traditional mindset runs contrary to Palau’s modern ways of life that rewards individualism, self money management and economics dictated by the almighty Dollar. Nonetheless, there is still a pocket of locals who use our ancient cultures to define what constitutes a loan and a gift. The clash of modernity and ancient cultures places lending and borrowing in an enigmatic gray territory.

Thanks to money management professionals, there are ways to assist a friend or family in a reasonable and a financially sound way, provided that certain measures are followed between lender and borrower. First step is to distinguish between a loan and a gift. Many Palauans use the word “loan” when in actuality they are asking for a freebee because they have no intentions of repaying the loan back. The important point is “get if out upfront”. Second, if it is a serious loan, then make sure you have the date of repayment clearly understood. Third, if it is a loan, then put it in writing. Proper documentation may save your relationship if the loan turns sour. Fourth, if the borrower is not in a desperate situation, then only lend them half of the money they want to borrow. Sixth, if the borrower offers you a loan collateral then take it but perfect its documentation. Finally, only lend out an amount that you are prepared to loose. When emotions flare, bring in a third party to help defuse the tensions.

IF you have nerves of steel and ready to face any future aggravations, then just say NO. Sooner or later, your friends and relatives will either learn to live within their means or work smarter to improve their financial health.

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