Doing Buisness with Family

Money.  Family.  Business.  Do they merge?  I received a phone call last night from a family member wanting to borrow money from me.  First, I don't have money to loan.  Second, would I ever see it back?  Third, isn't that the worst thing to do? 

Here is the scoop: I love my family to death.  I would do anything for them.  But where do you draw the line?  I would happily loan money to certain members of my family if I had the means to do so.  However, what do you do when you don't approve of the way someone else in your family spends their money and then turns around asking to borrow money from you?  The above referenced family member claims that they are broke all the time, but when Christmas rolls around, Santa sure had the means to provide an abundant holiday for their family!  Someone can easily point out that their Santa could have put it all on credit and such. 

This family member refuses to clothe their children in hand-me-downs, thrift store finds, used anything.  I have happily tried passing on my kids' clothes to them with no acceptance.  I am extremely frugal and watch every penny.  This family member claims that they are always broke and struggling, yet their are two incomes in their house, live in an apartment with limited utilities, and just somehow seem to have all this money to spend.  They purchase every movie new when it comes out, the day it comes out  from what I understand.  They have every game imagined for their video game consoles/systems. 

Yes, I know everyone has different priorities.  I know no one is alike.  I was listening to Dave Ramsey on the radio one night and he specifically said how family and business clearly don't mix.  He said that you shouldn't loan money to family and that so much drama can be caused due to this.  A few callers called in telling stories about how family members owed them all this money and they never saw it back.  Dave just said you should chalk it up to experience and let it go.

It got me to thinking.  If someone you held dear to you asked to borrow money and you had the means to loan it to them, would you?  If so, would it bother you if you knew they happily spent money stupidly?  If you wouldn't loan them money, why?  Just curious as to everyone else's opinions.