My colleague Alexis Jeffries and I had fun reporting a recent story called "Five Ways To Pump Up Your Income," which ran in the December 2009 issue of MONEY.  Who couldn’t use some ideas right now on how to make more dough?

As Alexis recently blogged, many of the ideas we came up with didn’t make it into the final piece. But there’s an idea that did make it into the article — lending money to friends, families and strangers through so-called peer-to-peer networks — that had a surprising aspect that we didn’t cover in the piece. More

Question: Is there anything wrong with asking a good friend to secure the loan I'm giving him with the title to his car? Tom really needs the money, but he can be pretty irresponsible, and I don't want my $2,500 to become a gift.

Answer: In a word, No. And in two words, Absolutely Not.

Lending a flakey friend that kind of dough is a very generous thing to do, and insisting on some security in no way dilutes your generosity. After all, nowhere is it written that, in lending people money, you are required to make it as easy as possible for them not to repay you. And neither is it written that at the Bank of Friends and Family, the borrower gets to set the terms. If Tom is unhappy with the arrangement you propose, he can always try to find a friend or relative —- or, of course, a real bank —- who’ll offer him a better deal.

That said, we suggest you not secure the loan with his car. Why? Because if Tom’s as irresponsible as you say, there’s a good chance you’ll end up having to choose between two equally unattractive alternatives: taking possession of your buddy’s car (and there goes your friendship) or ending up with nothing.

Instead, consider asking Tom to give you some collateral to hold until he repays you: a fine watch, say, or his prized Stratocaster -— something of sufficient value to give him a real incentive to pay off the loan. Because you’re right: You don’t want to bet $2,500 on the good intentions of an irresponsible friend.

Questions? Email Money Magazine’s ethicists – authors of “Isn’t It Their Turn to Pick Up the Check?” (Free Press) – at FlemingandSchwarz@right-thing.net.

by JEANNE FLEMING, PH.D. and LEONARD SCHWARZ

Question: When I needed money to get my restaurant started, my good friend Dave lent me $12,000 with the proviso that I hire his son, who hopes to be a chef someday.  The kid’s been working in the kitchen for three months now, and he’s all thumbs.  Is there anything wrong with firing Ryan, or am I stuck with him until I pay off the loan, which won’t be for another year?

Our answer: A deal is a deal.  So whether you’re stuck with Ryan hinges on exactly what the deal was you struck with his father.  If, in return for the twelve grand, you promised to give Dave’s son a try-out in your kitchen, then you’re free to tell the Platebreak Kid to turn in his toque. 

But if you effectively promised to give Ryan the opportunity to learn his craft - and it sure sounds as if that’s why Dave lent you the money – then the fact that the kid’s a disaster doesn’t get you off the hook. 

Were Ryan stealing from you, of course you could fire him.  Were he lazy and disrespectful, you’d be within bounds to insist that he shape up or leave.  But being a klutz isn’t sufficient grounds for letting Ryan go - not if Dave believed the loan guaranteed an apprenticeship for his son.

And what if you and Dave never discussed the exact terms of Ryan’s employment?  In that case, try to err on the side of keeping the kid.  After all, your friend did you a big favor.  You should try to do him one in return.

Questions? Email Money Magazine’s ethicists – authors of the upcoming book “Isn’t It Their Turn to Pick Up the Check?” (Free Press) – at FlemingandSchwarz@right-thing.net.