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Friends and Finances

July 26th, 2016 at 03:41 pm

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.

9 Responses to “Friends and Finances”

  1. ceejay74 Says:

    I'm not sure. I've been very open with my friends about my focus on personal finance and am considered if not a guru, someone they can talk to about it. I've tried some very detailed counseling with one friend and given others advice on request.

    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.

  2. klarose Says:

    Is there a good way to approach the topic though? We've always tried to give good advice whenever the topic of money was brought up. But I don't think it's enough. He really needs a sit down, heart to heart talk.

  3. My English Castle Says:

    While I disagree with Dave Ramsey on many things, I do think Total Money Makeover is a GREAT idea for someone with so much debt. It offers such nice concrete steps to making over your money life. It might be worth taking it out of the library or offering to do the steps with him.

  4. Turtle Lover Says:

    you could always tell him you are seriously concerned and offer your help ... but it is my experience that if a person isn't ready ... they aren't ready. And to have his parents making things worse I'm sure isn't helping ... sigh ...

  5. ceejay74 Says:

    If you think he'd be open to a frank sit-down, try it. Mine happened organically through first starting a discussion group with friends about finances, and having a public blog (not my one on here) that I shared with my friends and talked to them about, and then just letting it be known that I was up for helping at whatever level of involvement my friends wanted. Eventually my friend hinted that she wanted full-on help, so we set up a series of meetings where I created budget and debt tracking spreadsheets that she still uses.

  6. greenleaf Says:

    I agree with Ceejay- simply telling him you're concerned about him as a friend might work best. If he is receptive at all, this article might be helpful as a wake-up call that he can read and digest on his own without feeling personally judged:

    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.

  7. Turtle Lover Says:

    greenleaf : that article is FUNNY ... so true ... but funny

  8. LivingAlmostLarge Says:

    Depends on how well the friend would take it. If they asked for help or money. Depends on how they are doing. I would if they seemed receptive or asked.

  9. rob62521 Says:

    Like LivingAlmostLarge, it depends on whether the person wants help. I had a friend who said she wanted help. We agreed to meet at my house with her bills. She decided she didn't want to do it. She doesn't want any help. She would rather just complain. Sad. We were raised about the same way. She just chooses not to help herself and says she will never be able to retire.

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