I have a more personal question. Is there any good way to discuss/teach finances with a friend?
My husband's best friend is bad with money. His family is bad with money. He was never taught, and I worry he is going to struggle his entire life.
In the past we talked a little about money with him. His credit was bad because of him putting his name on a phone bill with a friend when he was about 16 and his friend stopped paying. Doh. We talked to him about credit cards, and helped him open his first one so he could have some "good credit" history. Telling him how interest works and how he should only use it for regular bills and pay it in full each month. Things seemed to be going well.
To sum things up as best as I can. He makes about $30,000 a year, and also goes to school full time. He purchased a $12,000 car a little more than a year ago. 1st mistake. In order to save money he moved back in with his parents. That was a major mistake. His parents are super bad with money, can't hold down real jobs, etc. He has online classes and they couldn't pay their bills, so he has to keep paying their electric and internet bills to do his school. Shortly after him moving in with them, they somehow convinced him to let them put close to $5,000 on his credit card. :O With the promise they would pay it back.
He purchased a new laptop last year, financed. Now he just purchased a desktop. He also financed his school. This parents of course could not pay the credit cards, and he couldn’t make the huge payments, so he just took out a personal loan of $8,000 to condense everything. He is $20,000 in debt with not much to show for it. :/
Even scarier is that he recently talked about buying a house. He went to the bank and they approved him for $150,000!!! He literately almost bought a house for that much. (His parents encouraging him of course.) When we asked him about it he couldn’t even tell us the term or the interest rate. Thankfully he changed his mind last minute.
I’m seriously scared for his well being. It’s going to take him years to dig himself out of this debt. He can’t say no to anyone, and I bet his parents are going to continue to have him pay their bills and tack on more debt. He has no idea that this is bad debt, doesn’t understand interest, etc. He just follows whatever the banks and his parents tell him. He is already struggling paying his bills, and I don’t see how he will ever be able to move out of his parents house, get married, etc.
Husband and I joke that we need to sit down with a powerpoint and teach him finances. But seriously. How can we help him? I try to stay out of people's business, but he’s a good guy, and honestly just doesn’t know.
Friends and Finances
July 26th, 2016 at 04:41 pm
July 26th, 2016 at 04:57 pm 1469548628
The one friend I really helped in depth, at least no longer pays nonsufficient fund penalties anymore, but unfortunately I don't see her credit card debt going down. At least it's not going up significantly; she was about $12K in the hole when I started 2 years ago (including student loans) and she's still about $11K in the hole. She's got a tiny bit more CC debt and her student loan has gone down. She opened a Vanguard Roth and puts a bit into it every month. She could have made so much more progress but it's better than nothing. I guess I helped her a little bit. At least she's not as able to stay ignorant when she does make a mistake. Once you open someone's eyes they have to admit when they're screwing up.
I guess long story short is you can lead a horse to water but you can't make them drink. But they *might* drink a little bit; all you can do is lead them to water and hope for the best.
July 26th, 2016 at 05:21 pm 1469550087
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July 26th, 2016 at 06:19 pm 1469553552
July 26th, 2016 at 08:02 pm 1469559737
I think this blog is great for beginners because it introduces the idea of a whole new mindset about money, and does it in a very positive and entertaining way.
July 26th, 2016 at 11:47 pm 1469573257
July 27th, 2016 at 03:33 am 1469586799
July 29th, 2016 at 03:21 am 1469758899