Friend in financial trouble

[ruadisneyfan2]

This is very true. It seems like everyone I know is selling something these days. I have started saying no I don't have the money for that, no matter who it is selling it. Except things like Girl Scout Cookies.

Not even just selling but invites from friends or coworkers to go out to dinner and things like that.

 

[manning]

give a copy of 'Total Money Makeover'

http://www.daveramsey.com/specials/welcome?ectid=bing.dr4

He also has a radio show. Find station finder on his site, enter your ZIP code and will give you the time and station.

As far as her husband, someone should hit him on his head with a 2x4.. If anything they may hear his head ring. Empty heads tend to do that.

 

[QueenIsabella]

I wish her luck. They both need to be moving together for any change to happen. He'll need to change his thinking--maybe she can get him to, "I deserve to be debt-free"?

 

[VillainFavs]

Maybe she's being vague with you because she's a bit embarrassed.

If she's being vague because she really doesn't know exactly what position they're in, that's different. And if he's not on board AND being vague with her about their financial situation, there's more to the story....

 

[PlutoPony]

It does not sound like they have done a budget or really know where their money is going.

Her dh is NOT fully on board with making the necessary cuts (lots of coffee, lunches out, latest tech etc -feels entitled due to good salary) either so I think data will help with that.

These two sentences highlight how they've gotten to this place in a nutshell - it's pretty simple.
And the bolded shows why getting out of the hole will be so difficult without a substantial mind change - the ENTITLED mentality is deadly in $$ problems (and possibly marriage problems as well).

The wife is going to have to carry the full weight of getting substantial data together to convince her husband this is a huge problem. And figure out how to present it in a way that it gets his attention. Good luck to her.

I hope neither of them needs to maintain a good credit score in order to keep their jobs. A lot of positions with security clearances look at this on a regular basis.

 

[Jake&IzzyLand]

I can't imagine having a 200k plus income and having nothing to my name but debt. However, I know that no matter what a person makes they can find a way to spend all of it plus more.

I find it sad, at that level you should have freedom, not enslavement.

The husband should be embarrassed enough to be motivated to make changes and find security for his family. There are people making half and even less than half that are living better than they are!

It's possible for your friends to make a turn around. It's going to be very difficult and they both have to be 100% committed. I would suggest they meet with a professional. They do not sound like they can read a book or use a website and find the answers they need at this point.

As her friend, I would lend a sympathetic ear and maybe some helpful advice or examples of how you manage budgeting. I know from prior experiences that when you are trying to help someone with their finances and they make zero changes that it can be incredibly frustrating.

Good luck!

 

[nkereina]

Pl

Please don't suggest chapter 13 bankruptcy. My husband went that route shortly after we married because he was sued and had a very large judgment against him. It was a nightmare and took forever to recover from it.

Chapter 13 is a viable option for someone who wants to retain assets and feels they can pay off their debts with a more manageable payment plan. I'm sorry it didn't go well for you, but it doesn't make it any less of an option for someone in the OP's friend's situation.

 

[HM]

After budgeting, Need versus Want needs to become part of their daily life. Do I need this? Or do I just want this?

 

[hsmamato2]

I would say nothing unless they ask you for some advice. And then tread carefully, what do they want to do to help themselves? Are they interested in actually changing their habits,paying off their bills,and not repeating? or do they just want an 'easy' fix so they can continue their lifestyle? There's no point in trying to 'help' people who aren't ready to hear it.... I say this not to be unkind, but so you don't waste your time and get frustrated with your friends. If they do want actual advice, more credit isn't the answer, financial counseling and a spending halt is though.

 

[Vernie822]

Dave Ramsey or YNAB. Heck even a good spreadsheet would help them out somewhat. I know we are all in different circumstances but if I even see a balance of more than $1,000 on my CC it makes me crazy!

 

[Vijoge]

I can't imagine having a 200k plus income and having nothing to my name but debt.

I fantasize about having a 200k plus income lol We made 68k last year, have no debt except the house, and we're paying cash for two vacations in the next 10 months because we bank every single cent we don't absolutely need to spend on essentials. So all things considered, we're ok. However, lest anyone think I was born with this mindset, I should add that at one time DH and I were waaaay over our heads in credit card debt and spent 5 whole years working every minute of OT we could get (way too many 16 hour shifts to count) in order to pay it off. Thankfuly we learned our lesson. We spent 15 years accumulating massive debt, 5 long years suffering the consequences, and we definitely learned the hard way.

 

[barkley]

I would say nothing unless they ask you for some advice. And then tread carefully

I agree with this-the friend may simply be using the o/p as a means to vent.

the best advice I could offer a friend in this situation is to avail themselves of the FREE consumer credit counseling agencies located in every state. this is a means to have an independent review of the overall financial situation-and they are forthcoming about all viable options. they won't sugar coat it-if there's a means to repay debt they will spell it out, if there's not and bankruptcy is the only viable alternative they will spell out the consequences.

the truth is-unless both partners in this situation are on board it can be nearly impossible to deal with it. if the friend's husband isn't willing to go to an appointment then the friend should to at least become educated as what her individual situation is b/c it's not uncommon at all for financial pressures to rip apart a marriage.

 

[Anthony1971]

Not to be rude but they simple overspend and are irresponsible with their money. I can tell you as a fact with that income and a house that costs around 400K in the NE they could easily not only pay their entire Mortgage off in 5-8 years or less, drive an expensive car, Vacation at least twice a year, have a nice size savings account and live debit free should they have been responsible from day 1. There is a whole lot more to this story if they can not live off of 150,000 in cash a year (give or take depending on true income but about right if they are making 220 a year) Do the math...that is SPENDING over 2,800 a week.
Fix... go to a local 1.00 store buy a pad and pen for each person and log EVERY time they spend money input into excel if necessary... writing every transaction is usually enough to make a person realize how much money they are actually spending... But as other have said it does not see one of them wants to change. If they ever have to declare bankruptcy they will be in for a world of hurt after living the way they are.

 

[LuvOrlando]

Can they sell the house, move into an apartment for a while, restructure & reorganize themselves then buy another home?

I say it because this suggestion has always been my -back of my mind- plan b in case of extreme circumstances. Houses are way more $$$ than just the mortgage payment. There's taxes & upkeep plus utilities- it can strangle a family

Sometimes there are no easy answers just choosing the least damaging option. For me having this backup plan in mind is a huge comfort, I've known too many people who lost everything due to holding on too long to a dream... Including my own family when I was a little kid in the 70's- live & learn

 

[tinkarooni]

Just FYI, I just received a CC bill of $31,000. We redid our kitchen and put the whole thing on CC to earn the rewards. I paid it off, but I did take notice of the minimum payment, $475.

So we can do the math. I also agree with others, I feel for people who have a medical issue or a job loss that forces them to ring up CCs, but if it's just living too high it burns me up when they file bankruptcy.

 

[Gumbo4x4]

The upside is with that level of income, if they can just suck it up for a couple of years, they will be in SOOOOO much better shape to blow money on all the frivolous crap they're buying today.

First step - admit you have a problem. She has, he needs to.

 

[tvguy]

Just FYI, I just received a CC bill of $31,000. We redid our kitchen and put the whole thing on CC to earn the rewards. I paid it off, but I did take notice of the minimum payment, $475.

So we can do the math. I also agree with others, I feel for people who have a medical issue or a job loss that forces them to ring up CCs, but if it's just living too high it burns me up when they file bankruptcy.

My contractor actually offered a 5% discount for cash (check in reality), so that offset any rewards I would have gotten. I have run into a few merchants.....and are they are the one's actually paying you the rewards....looking to reduce their cost associated with that. The restaurant where my son's wedding rehearsal dinner is going to be said they figure that credit card sales cost them 10% over cash sales and they are considering offering a cash discount on catering and banquets.

 

[Nayan]

I agree with those who said to say nothing. While it's painful to hear and watch, unless they truly ask for help it's best to not be drawn into the situation.

 

[Stacy's a freak]

I feel for the OP's friend. The stress of debt like that must be awful. And it sounds like OP's friend might be the one who actually sees these balances when paying the bill. Maybe the husband is just blissfully unaware. If so, it's time for a "come to jesus" meeting between the two.

As for minimum payments on credit cards, I think it also has to do with the interest rate of your card. If your interest rate is very high like 22% (maybe they missed a payment or were late or had a less than great credit rating when approved for the card), the minimum payment will also be on the high side. I think the minimum payment is calculated to start with the interest that has accrued that month and adds a small percentage onto that for a payment on the principal. So if they have $100,000 in credit card debt with a 22% interest rate, the interest alone for one month would be $1833. That is staggering to me.

They might want to be their own advocate and work directly with their creditors to see if they will reduce the interest rates. I'm sure this is the same thing that the debt counseling services do. I imagine that the debtors would have to convince the CC companies that they are in a bind to get good results. This might mean missing a payment or two to prove that point. I would be loathe to do this (miss payments) and would talk to a FREE debt counseling service to get some options.

Another good site for budget/credit message boards is myfico.com if they want to talk with others who have gone through this or currently going through this.

 

[NKHarris329]

For help creating a budget I've used a site called mint.com. You link all your accounts and it automatically pulls your transactions and helps you categorize them. This helped us see where our money was going and where we could cut back.

Also, YOU can call your cable company, phone company, etc. and negotiate rates. For many of the services we use it takes a 20 minute phone call every 6-12 months. Occasionally they take a bit longer, but it is worth my time and energy.