Money fix: How to lend to family, friends

In this tough economy, it's only a matter of time before someone you love comes to you for cash. Do you say yes? No? Nothing ruins a relationship like money.

Lending money to family and friends is an emotional proposition, but "treat it like a business transaction no matter what," warns Mark Meinberg, managing partner with MayerMeinberg in Syosset.

"First determine if you're giving a drunk a drink," says Dave Ramsey, author of "The Total Money Makeover." Why are they in this situation? Is it poor decisions or an emergency? Don't be an enabler.

The IRS frowns on loans that charge little or no interest and may require you to pay a gift tax, says Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling. Evaluate the effect the loan will have on other family members; you're setting a precedent.

Helping can make a big difference in someone's life, but you can lose money -- and a loved one.