Friends and Family Struggling with Debt – Here’s How to Help
Today, millions of people are in debt. The chances are someone you love is struggling with debt, how to manage it, or keep their heads above water. They may have been laid off or had their work hours reduced. Whether it is credit card debt, a mortgage, auto loans or a combination of issues; as a loved one, you can play an important role if you are not in that type of difficult financial situation.
One of the most difficult things a person can do is admit they’re in debt and they need help. There is a stigma attached to being in debt. People feel ashamed, out of control, and judged. However, with the economy in dire straits and jobs hard to come by it is no longer the exception to be out of a job or struggling to make ends meet.
Just yesterday, it was announced on the news, that some 200,000 State workers in California were being hit with a huge salary cutback to minimum wages. That’s because of a budget crisis and the politicians in California cannot get it together to approve a budget. So the ordinary person that works for the state is being punished by the legislature’s incompetence. You just never know when you will be affected by circumstances beyond your control.
When you learn that someone you love – a friend or a family member – is struggling in debt, be a shoulder they can lean on. Skip judgment or recrimination. That is not what they need. Listen, offer emotional support, and help them to stay positive and gain control of their finances.
Ask what you can do. Sometimes all that’s required is a person to talk to. Other times, people are looking for advice. And yes, sometimes you’ll get the friend or family member that’s looking for financial help too.
The best advice is not to lend money to friends or family. This only offers a short-term solution to the problem. Instead, direct them to credit counseling. Help them sell their car. Help them find a part-time job. And help them create a budget, a plan to pay off their debt.
If you do lend money, make it official. Lending money to friends and family is very tricky at best. There are emotions tied to the loan for both the lender and the borrower. Write an agreement about how much money is being loaned, when it’s to be paid off and how it’s to be paid off.
Additionally, if there are any other conditions, like you want them to seek credit counseling, and then put those in the agreement as well.
Again loaning money to relatives or friends is a touchy situation. Many friendships have been lost because of loaning money to people close to you. Avoid it if possible.
Be considerate to their plight. Make sure you’re a help and not a hindrance. When you have get-togethers with your loved ones, make sure they’re free or very inexpensive. The last thing you want to do is add to their financial worries. That doesn’t mean you offer to pay for every outing. However, you can suggest inexpensive outings and do things that are free to do.
It’s difficult to know what the right thing to do is when a friend or family member is in debt. Be supportive, but above all take care of yourself. Definitely do not put yourself in debt to help them out.
Give them the tools they need to help themselves. Getting in debt is easy; getting out is a struggle. However, once they’re out and they’ve managed to take care of the problem, they’ll have learned a tough lesson.
The lesson will teach them about themselves; they’ll be able to hold their head high. And they’ll likely stay out of debt. If you’ve helped them in any way it will feel good to you and the person you helped as well.