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It is better to owe than to be owed

September 27th, 2013 at 01:11 pm

"It is always better to owe someone than to be owed." This was the newest mantra that my ex-business partner spouted off one day when he showed up to do some work.

He was never good with money. But he is smart and likes to learn/emulate from people he admires.

The night before he had been hanging out with an acquaintance whom he really admired. The acquaintance had a big successful business and my ex partner thought he had nailed down a good business formula. (Which ended up being one of the problems with our business, the formula was not right for us and what we could handle, when it was modeled after the acquaintance's business).

Anyways, that particular morning, ex partner came in to make himself some food and said "It is better to owe than to be owed." I immediately looked at husband with a "Do not buy this crap" look and waited for the elaboration.

"Because when you owe people, you have all the money. Your plan might go bust and you cant pay it back as promised, but you have the power because you have the money. If you are owed, then you have no money and you are at the mercy of people with money". That was his logic.

I wasn't in the mood to really refute him or think it was going to be a turning point of information so I halfheartedly talked about how I would rather live debt free so I don't have people breathing down my back. I mused that it was the creditors that were always wealthy while the debtors were seen as broke and vulnerable. I think husband and ex partner continued to talk money theory and then moved onto video games. I moved on to do the laundry.

Anyways, that motto stuck in my head and gnawed at me for a while. Probably because ex partner started LIVING it. Our 50/50 expenses split became wildly unbalanced as he was crying broke and expecting us to carry the load. We kept expecting him to catch up and he never did.

One day I realized why that motto was stupid. Because a debt owed can be collected at any time. Whether you are ready for it or not.

I remembered a snippet of history where the Donner Party (the pioneers trying to cross the Rocky mountains to get to California but got stuck in the mountains over winter and most starved, froze and ate each other.) would sell supplies to one another on their journey. The wealthier families would sell off cows and supplies to others in the caravan because they had more supplies to begin with. They sold on credit, with the buyers promising to pay back in California.

Well when everyone was trapped in the mountains and dying, the wealthy family came to collect from the poorer family. Stating they wanted their cow back. "but the cow is gone. We don't have it anymore." So the wealthy family said "then we are taking stuff that is the equivalent of that cow's worth." Even though they knew they were signing a death warrant to the other family, the wealthy guys took blankets, food and clothing to pay themselves back for the cow that had been sold. They came to collect on their debt and the debtors were not prepared to pay it back.

I relayed that story to husband and told him that's what was wrong with the "It is better to owe than to be owed" line of thinking.

Well weeks later when we had the falling out with ex partner it was because we felt we were carrying way too much of the expenses and ex partner shouldn't be entitled to half the profit. We knew ex partner NEEDED half the profit because he had borrowed to actually put into the business. So he owed us and them and husband was determined that we were getting paid back first. The argument escalated to threats, and changing of locks, and partnership/friendship ending.

I was crying and asked husband afterward why he did that. He said "I am collecting on the debt he owes us, you yourself said we can collect at any time."

I appreciate that husband did a real life Donner Party re-enactment (that he really respected and listened to me), his timing wasn't great, because running the business by ourselves was way too much work and we quickly realized we couldn't do this on our own. So we sold everything as soon as we could to halt the misery and money hemorrhaging. We didn't get our money lent into the business on ex partners behalf back, we worked out a payment plan with the new owner to recoup it. So basically we lent it to someone else hoping they were more responsible to pay us back.

Since that all went down, that motto has still stayed with me. Perhaps because we have a person out there that owes us money. We have not really been able to collect on it, he is definitely the one with all the money. Mostly because we are now across the country and husbands original tactic of changing locks and keeping inventory are not applicable. Instead we are going with the mr. nice guy approach and also appealing to empathy to get our money.

Although our ex partner apparently worked out a side deal where he would get paid in full right away (rather than a payment plan we agreed to), and he has been paid in full the amount he invested into the business. But he is still in Cali so maybe its a proximity thing.

Anyways- Do YOU think its better to owe than be owed? What is your take on this perspective?

10 Responses to “It is better to owe than to be owed”

  1. creditcardfree Says:

    My husband went into business with two partners, using credit cards for cash flow. This was 20 years ago. We were never paid back in full from the one partner. We did get a little, but my attitude after it all went down was to look at any pay back as a bonus. I honestly didn't expect we would ever get it back and for the most part that has been true. I won't ever go into business or loan friends or family ANY money.

  2. TashaC. Says:

    Thank you for letting me know I'm not the only one who did this. How long does it take to "get over it?" I still think about it everyday.

  3. creditcardfree Says:

    I'm sure it will take a little while to come to terms with the events, but the more you focus on doing what you have control of and do the right things with your money the better you will be. The truth is you can't MAKE the other person pay. Is there a contract? Can this be taken to court? We never thought it worth the effort. Our case was about $6K of money owed, which was a lot of money to us at the time.

  4. My English Castle Says:

    How about "Neither a borrower nor a lender be"? It's taken me far too long to get over the loan to a friend and our subsequently damaged friendship. It's easier when money is easier for you--like with the good news about your rental!

  5. laura Says:


    My grandpa: "If you can't give it as a gift, you shouldn't give it as a loan."

  6. ceejay74 Says:

    Laura nailed it. I've loaned money twice: Once I paid for part of AS's education when we were first dating and her parents assured me they considered it a loan and would pay it back. Another time I loaned money to a soon-to-be-ex-boyfriend. I never got paid back either time. It took YEARS for the bitterness to subside.

    The next time AS's mom came asking for money, saying it was a loan, we decided as a family what we could afford to GIFT her. She insisted it was a loan, but we pretended it was a gift. Lucky we did, because of course not a penny has been paid back. But this time I'm not mad because I considered it a gift.

  7. MonkeyMama Says:

    I like "Neither a borrower nor a lender be". Neither sounds particularly nice.

  8. Buendia Says:

    I agree with English Castle... I don't like to owe OR be owed. I didn't lend a friend money, rather he paid me money for rent each month on an office we shared. He stopped paying, and I had to make him leave the office. I'll never see the money that he still owes me (like CreditCardFree if I do, it's a "bonus"). The friendship is preserved, but not like it was before. I should have known, though, that this might happen. There were personality clues.

    I rent out that space to someone else now (because we share an office we've become friends) and he always pays on time, never misses a rent payment. He has a very different personality, though!

  9. FrugalTexan75 Says:

    The idea of "neither a borrower or a lender be" is a big part of the reason why I never accepted my family's offer to help me with a purchase of a new car. I just did not want to introduce that element into my relationship with any of that particular side.

    Anytime a friend asks me for money, I always look at it as a gift. If I get it back, great. If not, well it was a gift, so no hard feelings - though I probably won't do it a second time.

  10. baselle Says:

    Oh man. He's why we have contracts. Run!

    I'm reminded of an old saying: owe $5,000 to the bank and the bank owns you; owe $5 billion to the bank and you own the bank. It's a matter of proportion.

    Look on the bright side. The owe/owed is a great question that you can ask potential business partners now that you know what the answer isn't (and what your proportion is).

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