What's the best way to loan money to friends?

HI HELAINE: A decade ago, a close friend needed money fast. She was a single mom with two kids, her husband had left her and she needed $4,000 for her housing costs. I gave her $2,000 thinking I'd consider it a gift.

I said it was a loan, but I didn't want it to get in the way of our friendship, so she should know if it took a long time to pay back or if she never paid it, that was an amount I could live without. I didn't want to be one of those friends who loans money and then watches the person's every move, wondering why they can afford this or that.

It wasn't too long after that her life started to improve. She would take vacations and I would think, "Why is it your first priority to take a vacation?" I guess you never forget you've loaned money to a friend.

Two years ago, she said to me, "I really should pay you back that $1,500." I said it was $2,000. She said, "It was?" After that she sent a few checks, maybe $750 in total. Then she announced she was moving to Atlanta. Now she's flying back and forth across the country -- and not paying me back. Am I at fault? — GENEROUS FRIEND

DEAR GENEROUS FRIEND: There's no agreement among financial experts on how to loan money to a friend — or even whether you should do it at all. Some say don't go there; it always leads to busted relationships. Others suggest you get your friend to sign a contract, outlining how you will be paid back.

A third school of thought suggests you make all loans to friends a gift. This way, you aren't wondering when you will be repaid. I will admit this is my preferred strategy — when I can afford to do so. Few of us can afford to make fourfigure gifts.

So did you make a mistake? Yes. I'm guessing you weren't too clear with your, uh, friend. This is understandable. Who wants to have formal contract negotiations with a friend over money? Friendship is more than that. But that doesn't mean you were at fault. Even the experts can't agree on what's the best way to handle this, so what are the chances poor little you will get it correct?

The thing about friendship is that we learn to accept each other, flaws and all. But acceptance does not mean you need to be used. This person — I refuse to use the word "friend" here -- failed that test. This "friendship" appears to be fading out. Help it along that path by muting her on social media, so you don't need to view all the ways she is spending the money she never returned to you.

Helaine Olen is an expert on money and society and a regular contributor to The Washington Post’s “Post Partisan” blog. To ask Helaine a question, email her at askhelaine@ gmail.com.