Most points are covered here.
I agree never lend to friends or family money you ever expect to get back. Also, never lend money to someone you'd feel out of place asking for it back.
Personally I like the straight up
question: "Was that $500 money you ever planned on paying back?" Followed up by "When?"
Ill be honest, i never would have remembered it. And its not the money, its the principal. But, like i told my wife...the whole concept is flawed. Did she really think that by loaning(giving) this girl this money, that she would then become fiscally responsible and all of a sudden make smart financial decisions? Duuh...theres a reason she is in that spot in the 1st place, and it wasnt because of a one time screw up or special need.
Ive never borrowed more than a few dollars from a friend, but i make it a priority to pay them back asap...of course, for just a few dollars, most friends dont care, cause it all comes around.