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Loaning is like gambling. Never put up money you can't afford to lose.
And don't break up the relationship over it. A lot of people say "oh if he doesn't pay you back he's not really your friend." Nah, not really. In general people just aren't good with finances, thats why they need a loan. Just write it off as an expensive lesson learned, and don't be a prick about it either.
Next time if you really feel inclined to loan some money, take collateral. If they refuse to put up collateral, they don't want the money bad enough.
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