Never loan your siblings money.
Never co-sign a loan.
But, since not everyone listens to their elders ... ... If you absolutely must do either of these things, get a contract or simply don't expect to ever get the money back. Just give it away and forget about it.
"I did loan to one sister – and we signed a contract – and it turned out to be a good experience," says one senior. The others gathered around declare to her this is R.A.R.E. "I loaned another sister $5000 and to date have only gotten back $800," she concedes.
It makes things difficult, the group explains. You start to judge what you see this person doing. Are they spending your money on something other than what they claimed they needed it for? Do they appear to be in a position to repay you, but seem to be spending money on frivolities? The relationship becomes strained. You've got to be able to distance yourself from the money and its truly difficult to do – unless, as we've said – you considered it a gift to begin with.
PS: This applies to friends, too.