Friend in financial trouble

[mmouse1239]

It's easy to judge, but we were/are in a similar situation. It was caused by irresponsible spending and job issues with my husband. His well paying job ended due to a business closing, and he cut his income in half. We based our spending habits on what was earned before and never changed them. We found ourselves in a lot of debt. However, we decided to use an organization called consolidated credit. All cards were closed, new interest rates were negotiated, and we are on our way to being debt free. Throughout this whole ordeal, we have learned to live with less. We shop at resale shops, grocery outlets, and yard sales. We rarely eat out. We pack lunches, coffee and tea. It will take a couple of years for all of this to be behind us, but I can now sleep at night, and I have learned that it's possible to live on less and enjoy life just as much. I wish your friends good luck. It can be done. I only wish I hadn't waited so long to do something about it.

 

[halfpintpeggy]

It's easy to judge, but we were/are in a similar situation. It was caused by irresponsible spending and job issues with my husband. His well paying job ended due to a business closing, and he cut his income in half. We based our spending habits on what was earned before and never changed them. We found ourselves in a lot of debt. However, we decided to use an organization called consolidated credit. All cards were closed, new interest rates were negotiated, and we are on our way to being debt free. Throughout this whole ordeal, we have learned to live with less. We shop at resale shops, grocery outlets, and yard sales. We rarely eat out. We pack lunches, coffee and tea. It will take a couple of years for all of this to be behind us, but I can now sleep at night, and I have learned that it's possible to live on less and enjoy life just as much. I wish your friends good luck. It can be done. I only wish I hadn't waited so long to do something about it.

Your story is inspirational & it was brave of you to share, thank you!

 

[tinkerone]

http://www.gailvazoxlade.com/resources/own_up_to_debt_worksheet.html

here's a starter page to give them something. they need to figure out where they stand and what it all looks like. Gail Vazoxlade is a really good financial planner so looking into her free information online will get the ball rolling.
I wish them luck.

 

[LuvOrlando]

Warning- boring economics nerdfest lol: For what it's worth, I think our generation was totally exploited. Some people are frugal, they learned it from family lifestyle & such while others are not. Truly it's a deeply rooted personality thing defined by the 'propensity to consume' theory and everyone has a spot on the range. Credit cards like we have now did not always exist. They sprung up in the 70's/80's as a market response to that recession. It used to be that high interest was outlawed by usury laws prohibiting loansharking after the Great Depression (they would be helpful now). After the Great Depression the system was set up so that the Fed had tight control over the economy via Federal Reserve via Money Supply via the Fed Fund Rate & Fed Reserve requirements on "loans" - this doesn't work anymore & here is why... Because the majority of our money no longer comes from what they call "loans". Of course, when the 70's recession hit people were desperate for money & the market discovered a way round that with credit cards & fool/uneducated politicians looked the other way towards our country spending our way out of the recession- which is why we had 'Stagflation'. Lots and lots of people made lots and lots of money with a very high cost & we are paying the bill now but back then either nobody understood or cared about was coming because, as always, people refused to get educated and learn from history (yes it's hard but it's necessary). Result is credit card debt is no longer called a loan but it still behaves the same way. So it's all in the name & apparently that's everything. This mess morphed into the monster loansharking going on now by banks and no one has the guts to stand up to it and enforce laws that already exist to protect us. Ever wonder why foreign money back's US debt? It's because our laws are unenforceable in the international arena & unless someone somewhere closes that ethereal abstract business border the best we can hope for is that our kids generation avoids the snares.

So in the end, I don't really think people should be shamed for what happened to virtually all of generation x; I just hope the next generation, our kids, can learn from it & change things. As for me, I'm teaching my kids everything I know... Time will tell

 

[havaneselover]

Warning- boring economics nerdfest lol: For what it's worth, I think our generation was totally exploited. Some people are frugal, they learned it from family lifestyle & such while others are not. Truly it's a deeply rooted personality thing defined by the 'propensity to consume' theory and everyone has a spot on the range. Credit cards like we have now did not always exist. They sprung up in the 70's/80's as a market response to that recession. It used to be that high interest was outlawed by usury laws prohibiting loansharking after the Great Depression (they would be helpful now). After the Great Depression the system was set up so that the Fed had tight control over the economy via Federal Reserve via Money Supply via the Fed Fund Rate & Fed Reserve requirements on "loans" - this doesn't work anymore & here is why... Because the majority of our money no longer comes from what they call "loans". Of course, when the 70's recession hit people were desperate for money & the market discovered a way round that with credit cards & fool/uneducated politicians looked the other way towards our country spending our way out of the recession- which is why we had 'Stagflation'. Lots and lots of people made lots and lots of money with a very high cost & we are paying the bill now but back then either nobody understood or cared about was coming because, as always, people refused to get educated and learn from history (yes it's hard but it's necessary). Result is credit card debt is no longer called a loan but it still behaves the same way. So it's all in the name & apparently that's everything. This mess morphed into the monster loansharking going on now by banks and no one has the guts to stand up to it and enforce laws that already exist to protect us. Ever wonder why foreign money back's US debt? It's because our laws are unenforceable in the international arena & unless someone somewhere closes that ethereal abstract business border the best we can hope for is that our kids generation avoids the snares.

So in the end, I don't really think people should be shamed for what happened to virtually all of generation x; I just hope the next generation, our kids, can learn from it & change things. As for me, I'm teaching my kids everything I know... Time will tell

Oh, gosh. It didn't happen to them. They made bad choices. These people are making a couple of hundred thousand dollars a year and can't understand that having six figures of credit card debt is a bad idea???

 

[crisi]

I know the "we make a lot of money, we can spend a lot of money" trap well. I had to break my husband of that fairly early.

There are a few things to try.

For him, an allowance was helpful. You get this much for lunch and coffee and your toys. The household gets this much, and the rest is family play money - for the family to vacation. That didn't last TOO long, he was able to establish a spending pattern that has - more or less held.

Another thing to try is a marriage counselor. I suspect their marriage issues are being played out in money - he may feel like he wasn't ready to give up his selfish life for marriage and kids. He may feel that his high paying job is really stressful and he's not appreciated. She may "spend back" - if he's going to Starbucks every day, I can get my nails done. If he can go out with his buddies, we can certainly afford to go out as a family.

 

[morgan98]

Warning- boring economics nerdfest lol: For what it's worth, I think our generation was totally exploited. Some people are frugal, they learned it from family lifestyle & such while others are not. Truly it's a deeply rooted personality thing defined by the 'propensity to consume' theory and everyone has a spot on the range. Credit cards like we have now did not always exist. They sprung up in the 70's/80's as a market response to that recession. It used to be that high interest was outlawed by usury laws prohibiting loansharking after the Great Depression (they would be helpful now). After the Great Depression the system was set up so that the Fed had tight control over the economy via Federal Reserve via Money Supply via the Fed Fund Rate & Fed Reserve requirements on "loans" - this doesn't work anymore & here is why... Because the majority of our money no longer comes from what they call "loans". Of course, when the 70's recession hit people were desperate for money & the market discovered a way round that with credit cards & fool/uneducated politicians looked the other way towards our country spending our way out of the recession- which is why we had 'Stagflation'. Lots and lots of people made lots and lots of money with a very high cost & we are paying the bill now but back then either nobody understood or cared about was coming because, as always, people refused to get educated and learn from history (yes it's hard but it's necessary). Result is credit card debt is no longer called a loan but it still behaves the same way. So it's all in the name & apparently that's everything. This mess morphed into the monster loansharking going on now by banks and no one has the guts to stand up to it and enforce laws that already exist to protect us. Ever wonder why foreign money back's US debt? It's because our laws are unenforceable in the international arena & unless someone somewhere closes that ethereal abstract business border the best we can hope for is that our kids generation avoids the snares.

So in the end, I don't really think people should be shamed for what happened to virtually all of generation x; I just hope the next generation, our kids, can learn from it & change things. As for me, I'm teaching my kids everything I know... Time will tell

This did not happen to "virtually all of generation x." I think explanations like the one above take responsibility away from individuals and make everyone sound like sheep who cannot think for themselves and victims of something beyond their control.

There are no doubt people who fall on hard times and get into debt. However, there are also people who have never been educated in budgeting, money, etc. and having problems managing a household budget. This has always been the case, credit cards just may make it easier. No one is forced to get a credit card.

 

[kamik86]

I know the "we make a lot of money, we can spend a lot of money" trap well. I had to break my husband of that fairly early.

There are a few things to try.

For him, an allowance was helpful. You get this much for lunch and coffee and your toys. The household gets this much, and the rest is family play money - for the family to vacation. That didn't last TOO long, he was able to establish a spending pattern that has - more or less held.

Another thing to try is a marriage counselor. I suspect their marriage issues are being played out in money - he may feel like he wasn't ready to give up his selfish life for marriage and kids. He may feel that his high paying job is really stressful and he's not appreciated. She may "spend back" - if he's going to Starbucks every day, I can get my nails done. If he can go out with his buddies, we can certainly afford to go out as a family.

This is something I am finding I have to do with my husband as well. I hate having to watch the money closely but I find that if I don't his spending will creep up more and more. Especially if he starts going into monthly subscription type things as he doesn't think of those as spending his money.

My husband equates spending money with being happy. If he is depressed he wants to go buy something. Anything. I have trouble saying no to him because I know it makes him feel worse when I do. Heck sometimes he ends up spending my fun money on me when he is like that (which is fine by me... I am one of those people that most of the time don't really know what I want. Things will make me happy if I get them and I'll use them but I won't think to go buy them for myself, even though I have money.

 

[VillainFavs]

Warning- boring economics nerdfest lol: For what it's worth, I think our generation was totally exploited. Some people are frugal, they learned it from family lifestyle & such while others are not. Truly it's a deeply rooted personality thing defined by the 'propensity to consume' theory and everyone has a spot on the range. Credit cards like we have now did not always exist. They sprung up in the 70's/80's as a market response to that recession. It used to be that high interest was outlawed by usury laws prohibiting loansharking after the Great Depression (they would be helpful now). After the Great Depression the system was set up so that the Fed had tight control over the economy via Federal Reserve via Money Supply via the Fed Fund Rate & Fed Reserve requirements on "loans" - this doesn't work anymore & here is why... Because the majority of our money no longer comes from what they call "loans". Of course, when the 70's recession hit people were desperate for money & the market discovered a way round that with credit cards & fool/uneducated politicians looked the other way towards our country spending our way out of the recession- which is why we had 'Stagflation'. Lots and lots of people made lots and lots of money with a very high cost & we are paying the bill now but back then either nobody understood or cared about was coming because, as always, people refused to get educated and learn from history (yes it's hard but it's necessary). Result is credit card debt is no longer called a loan but it still behaves the same way. So it's all in the name & apparently that's everything. This mess morphed into the monster loansharking going on now by banks and no one has the guts to stand up to it and enforce laws that already exist to protect us. Ever wonder why foreign money back's US debt? It's because our laws are unenforceable in the international arena & unless someone somewhere closes that ethereal abstract business border the best we can hope for is that our kids generation avoids the snares.

So in the end, I don't really think people should be shamed for what happened to virtually all of generation x; I just hope the next generation, our kids, can learn from it & change things. As for me, I'm teaching my kids everything I know... Time will tell

Sorry--this wasn't the big bad banks forcing people to live beyond their means. Bad things happen to good people--medical bills, natural disasters, unemployment, etc. Okay.

But having to have the giant house and the latest and greatest toys is your own fault. Plain and simple. No one racks up $100,000 in credit card debt overnight. And it's not because the bank forced it on them.

I have sympathy for those who deserve it. Not so much for those who live beyond their means and do nothing about it.

 

[Disneybuckeye]

I don't believe my kids are Generation X as they are early to mid-twenties, but I can you that they all make decent money, but are very frugal. They all pack their lunches, most of their clothes are gifts from me, and they don't eat out much. I know people my age (early fifties) that have plenty of money and some who live pay check to pay check. Yes, illness can play into some people's problems, but there still are many that do not make smart financial decisions. There are choices that people have to make to be fiscally responsible. I don't think the husband in this family is there yet.

I have a 26 year old that has close to $100k saved as he lives at home, drives and old Lexus that was given to him, and is very judicious with his money. He is looking at the big picture and loves to watch his money grow.

I hope your friend can convince her husband they need to sit down and set up a budget and stick to it so they get out of this mess.

 

[LuvOrlando]

It's OK for people to disagree but if your disagreement is simply because it deprives you of the right to shame people - that I can't really get on board with. If you don't like it, just say it for what it is but in order for it to be a discussion tell me where the facts are wrong, tell me where the lineage is wrong and that's fine but that's not what I see. I don't really know what to do with people who just want to make other people feel bad, that to me is not helpful.

If you go back to see what caused the Great Depression there are many similarities and I don't think everybody that makes bad choices does so because they are willfully self-destructive

 

[havaneselover]

It's OK for people to disagree but if your disagreement is simply because it deprives you of the right to shame people - that I can't really get on board with. If you don't like it, just say it for what it is but in order for it to be a discussion tell me where the facts are wrong, tell me where the lineage is wrong and that's fine but that's not what I see. I don't really know what to do with people who just want to make other people feel bad, that to me is not helpful.

If you go back to see what caused the Great Depression there are many similarities and I don't think everybody that makes bad choices does so because they are willfully self-destructive

My disagreement with you is that you are not holding people accountable for their poor choices. Until people take responsibility for the stupid stuff they do, no one learns a lesson and we all pay for it.

 

[tinkerone]

If you go back to see what caused the Great Depression there are many similarities and I don't think everybody that makes bad choices does so because they are willfully self-destructive

You may not call it wilful self-destructive but that is exactly what it is. Anyone who says they got a credit card but didn't know they would have to pay funds back is not telling a truth. If you know you have to pay it back and pay no attention to what you purchase that is wilful and destructive behaviour. plain and simple.

I'm not berating anyone, I have seen this LOTS. To many people have the 'it will fix it self, I want this now' attitude. If you know going in that your busting the bank so to speak then your going to have issues and its hard to have compassion. Lots of people have credit cards and can handle them, aka, are responsible. We can't blanket credit cards to big bad banks or the problems people have today.
JMO

 

[Happyinwonerland]

I don't believe my kids are Generation X as they are early to mid-twenties, but I can you that they all make decent money, but are very frugal. They all pack their lunches, most of their clothes are gifts from me, and they don't eat out much. I know people my age (early fifties) that have plenty of money and some who live pay check to pay check. Yes, illness can play into some people's problems, but there still are many that do not make smart financial decisions. There are choices that people have to make to be fiscally responsible. I don't think the husband in this family is there yet.

I have a 26 year old that has close to $100k saved as he lives at home, drives and old Lexus that was given to him, and is very judicious with his money. He is looking at the big picture and loves to watch his money grow.

I hope your friend can convince her husband they need to sit down and set up a budget and stick to it so they get out of this mess.

While I am all for frugality and smart financial decisions, I would not view a 26 year old living with their parents as a goal to have. Saving money is not everything, and there isa lot to be gained from living on your own, paying your own bills, the freedom of independence.

 

[morgan98]

It's OK for people to disagree but if your disagreement is simply because it deprives you of the right to shame people - that I can't really get on board with. If you don't like it, just say it for what it is but in order for it to be a discussion tell me where the facts are wrong, tell me where the lineage is wrong and that's fine but that's not what I see. I don't really know what to do with people who just want to make other people feel bad, that to me is not helpful.

If you go back to see what caused the Great Depression there are many similarities and I don't think everybody that makes bad choices does so because they are willfully self-destructive

This really has nothing to do with shaming people. But getting into credit card debt on as high of an income as the OP is talking about does not sound like these people had a sudden illness, unemployment, etc. Getting into credit card debt is not some random event like being diagnosed with cancer.

 

[Happyinwonerland]

I don't like the idea of blaming the banks- how did they force anyone to take on debt?

 

[tinkerone]

While I am all for frugality and smart financial decisions, I would not view a 26 year old living with their parents as a goal to have. Saving money is not everything, and there isa lot to be gained from living on your own, paying your own bills, the freedom of independence.

I agree with this and I don't agree with this. How's that for double talk??
I don't know the history of the poster however our situation sounds similar. We encouraged both our sons to live at home and save. They were both here until about age 25. As you stated, this alone would not teach them the fact that there are bills that need to be paid. What we did was have them pay us a set amount for rent. They paid this when they completed their schooling and had jobs that gave them an income. By doing this, they were able to leave our house and move into a house of their own. They had very health down payments and as an extra surprise, they were each given back all the monies they had paid in rent.
Its not always a bad thing to have children stay home for a bit longer if you can teach them value and how to handle money properly.

 

[DnA2010]

While I am all for frugality and smart financial decisions, I would not view a 26 year old living with their parents as a goal to have. Saving money is not everything, and there isa lot to be gained from living on your own, paying your own bills, the freedom of independence.

Really? I think it's awesome! I bet in coming times he will be able to outright buy his house while the rest of us are stuck with mortgages!

 

[Happyinwonerland]

Really? I think it's awesome! I bet in coming times he will be able to outright buy his house while the rest of us are stuck with mortgages!

I would not trade the experience of living on my own in my twenties for any amount of money. This delay of adulthood is a disturbing trend. Sometimes saving money isn't everything. Life experience trumps saving moeny in my book.

 

[DnA2010]

I would not trade the experience of living on my own in my twenties for any amount of money. This delay of adulthood is a disturbing trend. Sometimes saving money isn't everything. Life experience trumps saving moeny in my book.

Interesting- through my 20s I was finishing a university year in England, living at home to finish my degree, then moved out with a bf, then back home for a bit to do a masters, travelling, (paid for by my living at home savings ) then bought my first house- it really didn't matter where I was living- even when I was living at home I was still out living life- didn't matter where I layed down at night. I still did all the same things, not matter where I was.