An answer to that question may be very difficult during these times when life is very tough. A lot of people are having difficulties paying for their home loans, their cars, and credit cards. Bank standards are stricter due to the economic situation. A lot of people are seeking aid from their relatives and friends.

If you will lend money, how much can you afford to lend? Here are some responses you can give to usual distress calls from friends:

Desperate Plea

It is very tough to respond when a friend approaches you telling you that his wife is in the hospital and they can't produce the money needed to pay a hospital collection agency after an unpaid surgery bill. As much as you want to help, it is not very easy to write those checks.

Listen to someone who needs your help. Ask for reasons why they are in that scenario.

If you find out that it is money mismanagement which is behind the problem. Maybe the best advice is to ask them to seek professional help to address the problem long term. There are credit counseling sessions that can help people who are neck deep in debt. Homeowners who face difficulties with their mortgage payments can go to house counseling experts.

You may opt to do single time cash out for situations like temporary lay off so your friend can pull him out of the debt quick sand. It is wise to lend him the money rather than giving it as a gift. Payments maybe delayed but there is that great feeling of able to help someone you love. Third party go betweens may help a greater possibility of pay back.

Genuine one time Need

There will be times when friends can seek your help due to shortage of cash for something that must really be done. It can be down payment for a home, or for a much needed family car, or any need that you think you are all willing to help.

If you have spare money that you can give then you might as well extend a helping hand rather than spending it on your vacation or new gadget.

Spare funds must be present in case you or your family might need it for emergency situations. Determine if you really can afford to extend help.

For this kind of picture a gift is okay. Be clear if you want it as a loan or a gift to help your needy loved one or friend.

Lifestyle Change

Your college daughter might ask you that she wants to transfer to an apartment closer to her university. She tells you that she just needs some help to cover the cost but she'll be spending her money for most of the food and utilities.

She and other young adults may not be fully aware of how to budget for a real household since they still lack the experience. Electric bills and weekly cost of groceries might go spiral, surely you will be getting a note asking for help.

It might be wise to help her set up a budget. Together you can determine the limits on how much you can help her and how much she needs to help herself. You can track the expenses and make adjustments as necessary.

If you want you can help long term by being co-signer for a loan so she can have a kick off on her life.