You have to be careful, there's generosity and there's also being taken advantage of.
It's not really a problem I've run into recently, but we do have a set of friends- a married couple- that are just deadbeats. They aren't close friends and we don't hang out with them one on one, but there was a time when they would join us and about 4 or 5 other friends for sushi on occasion. The ritual was everyone would pass up the cash and we would wind up paying the tab.
As this went on the gap between what I was getting at the end of the meal and what we were paying started to get larger and larger. Eventually it just got rediculous. Long story short they don't go out to eat anymore w/ us. Sucks, but if someone tries to freeload they aren't really friends.
If someone can't pay their way, if they're upfront about it I don't have a problem picking it up for them, it's when someone assumes or tries to skate by when I get offended. Everyone has ups and downs, we all take turns supporting eachother, but I try to not get in the habbit of throwing money around too much, I don't want to feel like I'm buying my friends.
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