I think it is a simple matter of asking no less than you give. I do not abuse, and i will not accept abuse. I don't play game, and I will not be played. I don't risk my family and home by dealing from the house or doing other crimes based on the home, and I would expect others under my roof to do the same. If we live together, we have to respect each other and think beyond ourselves, or there's no way it can work. If things get violent or hurtfull in otherways, sometimes there is no choice, as Byz says, than to ask the one causing the trouble to leave.
I don't believe in cutting off. My hubby's family does this "you are dead to me " crap and I don't cotton to it. But sometimes you have to say," You need to straighten this out, and I'll help you, but you can't move in or borrow from us until you show some results, and they'd better be enough that we can trust you again."

Sometimes it's easier to set game rules from a bit of a distance. You know you are taking the kid for lunch, not being suckered into giving a full free meal ticket. You know you are giving underwear for Christmas, not being suckered into buying all his/ her clothes. If you give, you know you are giving, if you loan, you make a plan. When the person is living with you, it is hard to draw the lines so clearly. This can be triggering for oneself, not just bad for the person who needs to be limited. we are so interconnected.