Etiquette Hell

General Etiquette => Family and Children => Topic started by: Slartibartfast on December 17, 2012, 02:03:11 AM

Title: Is it even worth trying to give financial advice? UPDATE #28, #42
Post by: Slartibartfast on December 17, 2012, 02:03:11 AM
Long and awkward situation here, but I'm really looking for advice about whether I should tell my friend what I think and if so, what I should say.

[bg]A friend of mine recently lost her father and is coming into a $50K inheritance.  We're pretty open about finances with each other - not that it's a huge deal usually, but we trade anecdotes about our money ups and downs without it really ever having been awkward before.  I knew she and her husband aren't good at keeping track of where their money is or how much debt they have, but I did know they carried credit card debt and that my friend's DH refuses to pay any attention whatsoever to a budget.  It's not how I'd choose to live my financial life - it sounds like one good emergency would take their whole house of cards down - but she's never asked for my advice before so I've always kept my mouth shut.

Complicating issue: we have a shared financial venture.  For the sake of this thread I'll say we own a boat together.  The boat itself is already paid for, but we share the expenses for upkeep/storage/gas/upgrades/etc.  We sometimes use it together and sometimes on our own and have no problem with sharing in that aspect, but if she and her DH were to suddenly stop paying for their half of the expenses, DH and I would be forced to either give up the boat altogether (at a huge loss) or to pay for their share.  (It's not a boat, but assume for the sake of argument it's something else with no particular legal encumbrances or protection.)

So my friend is inheriting $50K, which is awesome, and was asking me for some advice about how they could use that to help her and her DH get themselves back on track.  And then she mentioned how much credit card debt they have ($50K wouldn't cover half of it) and the idea of bouncing that kind of debt around from card to card and bank account to bank account scares the heck out of me.  My friend thinks if she paid of her DH's credit card he'd just charge it back up to the max in a matter of months anyway so why bother?  One day she's all for bettering their financial situation and the next day she's planning a huge vacation and a new car.

She's never directly asked for my advice before, so I've always decided not to comment on their financial activities and just focused on other relevant parts of the conversation.  I'm torn now, though.  On the one hand, I don't want to get involved because it's none of my business and her husband wouldn't be willing to suddenly be financially responsible anyway.  On the other hand, I'd be a horrible friend if I were able to help my friend and her DH figure out their way out of this financial pit and I refused to tell them how.  We've also got our boat to consider - DH and I could *probably* afford to pay for the whole thing for a while if she and her DH decided to suddenly stop, but it's definitely not pocket change and would put a big damper on our own financial situation.

So the big question: assuming she asks me directly again, what do I say?  I'm no financial guru, but I am pretty organized about money and that's one thing my friend could really stand to work on.
Title: Re: Is it even worth trying to give financial advice?
Post by: nuit93 on December 17, 2012, 02:32:09 AM
It might be worth suggesting she contact a financial professional, especially with regards to all that debt.
Title: Re: Is it even worth trying to give financial advice?
Post by: cicero on December 17, 2012, 02:34:22 AM
I think that if she *asks*, you could say something like "well, DH and I learned a lot using a financial adviser. [*even if your financial adviser was your mother or info you gleaned off the internet] You can try X, i hear he is very good". Or, "I know this is old advice, but DH and I saved X last year by doing A [writing down every expense] and B [using cash only]."

but really - i doubt it will help. i know a couple who ate their way through a 50k$ inheritence - they could have really used that money for a down payment on a home, but instead used that instead of actually working and getting salaries and now 4 kids and many years later still live in a rented apartment. they are never going to *get it*. and if there is a way you could un-hinge yourselves to them financially, i would do that
Title: Re: Is it even worth trying to give financial advice?
Post by: bopper on December 17, 2012, 08:29:00 AM
You could give her advice without seeming to....Ask her what her financial goals are.  To have credit cards paid off? To own a home? Send kids to college?  keep access to "the boat"?  Then ask if she would like some advice on things she and her Dh could do with her money to accomplish those goals.
Title: Re: Is it even worth trying to give financial advice?
Post by: MindsEye on December 17, 2012, 08:32:55 AM
My 2 cents...

You have a shared financial obligation with these people.  In my opinion (YMMV!) you have every right to dole out financial advice and even demand financial safeguards as it pertains to protecting your shared investment.  If they drop the ball on that investment, they will not be the only ones who get hurt... you and your DH will be financially injured as well.

Some additional pocket change...

I know this is not what you asked about... but if I were you and your DH I would find a way to get out of this shared financial obligation sometime before yesterday.  Or, failing that, make sure that you have any necessary paperwork legally drawn up to protect yourselves should your friends fail to meet their financial obligations to your shared resource.  These people do not sound reliable or like good financial partners, and I honestly think that it is just a matter of time before they let this obligation drop.
Title: Re: Is it even worth trying to give financial advice?
Post by: Morticia on December 17, 2012, 08:34:31 AM
My 2 cents...

You have a shared financial obligation with these people.  In my opinion (YMMV!) you have every right to dole out financial advice and even demand financial safeguards as it pertains to protecting your shared investment.  If they drop the ball on that investment, they will not be the only ones who get hurt... you and your DH will be financially injured as well.

Some additional pocket change...

I know this is not what you asked about... but if I were you and your DH I would find a way to get out of this shared financial obligation sometime before yesterday.  Or, failing that, make sure that you have any necessary paperwork legally drawn up to protect yourselves should your friends fail to meet their financial obligations to your shared resource.  These people do not sound reliable or like good financial partners, and I honestly think that it is just a matter of time before they let this obligation drop.


This is exactly what I was thinking.
Title: Re: Is it even worth trying to give financial advice?
Post by: It's good to be Queen on December 17, 2012, 08:38:48 AM
You might suggest that good financial plannig starts with establishing an emergency fund that can cover about 3 months living expenses.  It sounds like it would do no good to pay down credit cards if the husband would just charge them up to the max again, but at least if they had a three month emergency fund (and it it important for them to set up the conditions under which they can access the fund - unemployment, a major home repair, etc.  A big screen TV is not an emergency.) it would give them a cushion. 
Title: Re: Is it even worth trying to give financial advice?
Post by: TurtleDove on December 17, 2012, 08:40:49 AM
I would focus on your own financial situation and do what you can to get out of the joint venture. I don't get the sense any financial advice to your friend will be productive.
Title: Re: Is it even worth trying to give financial advice?
Post by: Two Ravens on December 17, 2012, 09:39:15 AM
So my friend is inheriting $50K, which is awesome, and was asking me for some advice about how they could use that to help her and her DH get themselves back on track.  And then she mentioned how much credit card debt they have ($50K wouldn't cover half of it) and the idea of bouncing that kind of debt around from card to card and bank account to bank account scares the heck out of me. My friend thinks if she paid of her DH's credit card he'd just charge it back up to the max in a matter of months anyway so why bother?  One day she's all for bettering their financial situation and the next day she's planning a huge vacation and a new car.

Um, yikes. She has over $100K in credit card debt and her husband will run up more, and she thinks why bother? I think your friend is beyond your help, to be honest. Is she asks, I would bypass the financial advisor and reccomend going straight to credit counseling. That is a bad situation, and you are right - one hospital bill or car accident and its all going to come crumbling down.

I also would second the others in reccommending that you get out of this joint venture asap!
Title: Re: Is it even worth trying to give financial advice?
Post by: Judah on December 17, 2012, 09:41:59 AM
I would focus on your own financial situation and do what you can to get out of the joint venture. I don't get the sense any financial advice to your friend will be productive.

I agree. With $100, 000 in credit card debt $50,000 really isn't going to help them even if they put it straight to paying off the debt. These are not the kind of people I'd want any financial entanglements with.
Title: Re: Is it even worth trying to give financial advice?
Post by: artk2002 on December 17, 2012, 09:45:34 AM
I agree with PP that these people are a financial disaster in progress and you need to get yourself disentagled from them. Someone who's $100K in debt and thinks that her husband will just run the debt up again, and seems mostly ok with that, is not someone you want to have any financial relationship with.

As for giving advice: Other than "talk to a financial advisor" and "get marriage counseling," I wouldn't say a word.
Title: Re: Is it even worth trying to give financial advice?
Post by: bloo on December 17, 2012, 09:56:46 AM
I agree with PP that these people are a financial disaster in progress and you need to get yourself disentagled from them. Someone who's $100K in debt and thinks that her husband will just run the debt up again, and seems mostly ok with that, is not someone you want to have any financial relationship with.

As for giving advice: Other than "talk to a financial advisor" and "get marriage counseling," I wouldn't say a word.

This is my take on the situation as well.

My 2 cents...

You have a shared financial obligation with these people.  In my opinion (YMMV!) you have every right to dole out financial advice and even demand financial safeguards as it pertains to protecting your shared investment.  If they drop the ball on that investment, they will not be the only ones who get hurt... you and your DH will be financially injured as well.

Some additional pocket change...

I know this is not what you asked about... but if I were you and your DH I would find a way to get out of this shared financial obligation sometime before yesterday.  Or, failing that, make sure that you have any necessary paperwork legally drawn up to protect yourselves should your friends fail to meet their financial obligations to your shared resource.  These people do not sound reliable or like good financial partners, and I honestly think that it is just a matter of time before they let this obligation drop.


See, I actually disagree with the first paragraph. I do agree with MindsEye's second paragraph.

OP, did you know about their financial instability BEFORE you entered into the joint venture? Cause, honestly, the best thing is not to give financial advice. I agree with artk2002 - these people are beyond any help you can give them - direct them to a professional. Marriage counseling is a good idea, because if her husband is as financially destructive as you say...I'd personally be considering separate finances and possibly legally separating. Someone has to model good fiscal responsibility. And I, personally, wouldn't want to get into that with my friend - which is why artk2002's advice is probably best.

The best thing is to go back in time and NOT go into the venture but since I haven't figured out how to do that, my $0.02 is to disentangle yourselves as quickly as possible.
Title: Re: Is it even worth trying to give financial advice?
Post by: JenJay on December 17, 2012, 10:01:43 AM
I would focus on your own financial situation and do what you can to get out of the joint venture. I don't get the sense any financial advice to your friend will be productive.

I agree. Anybody who won't even consider putting that kind of money toward their debt, because they know they'll just run it up again, is beyond your help. Honestly the only thing I was thinking as I read your post, SB, was "This ship is sinking fast, save yourself!"  :-\
Title: Re: Is it even worth trying to give financial advice?
Post by: VltGrantham on December 17, 2012, 10:04:10 AM
Quote
I agree with PP that these people are a financial disaster in progress and you need to get yourself disentagled from them. Someone who's $100K in debt and thinks that her husband will just run the debt up again, and seems mostly ok with that, is not someone you want to have any financial relationship with.

As for giving advice: Other than "talk to a financial advisor" and "get marriage counseling," I wouldn't say a word.

People that actually want advice and are interested in change, will do something about it--whether it's related to their marriage, relationships, finances, child-rearing, etc.

Your friend is probably using you as a sounding board, but if she really wanted to make a change, she'd have done it long ago or be exhibiting behavior in keeping with really wanting help.

I'd definitely get out of my shared venture with them--no matter what it took.  And if I had to, I'd be honest about why.  I've sorta taken the "stand in your truth" stance that Suze Orman advocates.
Title: Re: Is it even worth trying to give financial advice?
Post by: JenJay on December 17, 2012, 10:39:36 AM
Quote
I agree with PP that these people are a financial disaster in progress and you need to get yourself disentagled from them. Someone who's $100K in debt and thinks that her husband will just run the debt up again, and seems mostly ok with that, is not someone you want to have any financial relationship with.

As for giving advice: Other than "talk to a financial advisor" and "get marriage counseling," I wouldn't say a word.

People that actually want advice and are interested in change, will do something about it--whether it's related to their marriage, relationships, finances, child-rearing, etc.

Your friend is probably using you as a sounding board, but if she really wanted to make a change, she'd have done it long ago or be exhibiting behavior in keeping with really wanting help.

I'd definitely get out of my shared venture with them--no matter what it took.  And if I had to, I'd be honest about why.  I've sorta taken the "stand in your truth" stance that Suze Orman advocates.

That's a very good point. The friend has to know that her plan to go on vacation & buy a new car is crazy, and that she ought to pay down her debt. I bet she's complaining to OP that it'd be pointless because she wants to hear someone say "Oh you're so right, you might as well do something fun with the money!" and make her feel better about it.  ::)
Title: Re: Is it even worth trying to give financial advice?
Post by: Lynn2000 on December 17, 2012, 10:41:08 AM
"On the other hand, I'd be a horrible friend if I were able to help my friend and her DH figure out their way out of this financial pit and I refused to tell them how." I don't think this is true at all. Recovering financial stability from the kind of hole they're in is a complex process that takes a lot of time, effort, and personal discipline. It's not like her cake keeps coming out badly and you're hiding the fact that her baking soda is stale--there's no one magic thing you can tell her that would solve her problems. There is a ton of financial advice out there already and it doesn't sound like she's really interested in following any of it, so it's hard for me to imagine she would suddenly change her mind just because you offered to help.

That said, if you really want to get involved, I think it would be most polite to separate your financial motivation from your friendship motivation. Tell her frankly that her financial situation makes you worry about the safety of your joint investment. She needs to put $X in some kind of untouchable account that will ensure her half of the investment is paid for Y amount of time (or whatever); and after that is done, if she wants, you will happily give her financial advice and/or take her to a financial planner, as a friend. If she's not interested in securing her half of the joint investment, you've already looked into it and will be pulling out using ABC steps on D timeline.

If she chooses the first option, you will rest easy knowing that your investment is secure, and you will be able to give her financial advice truly as a concerned friend. If you just give her financial advice, allegedly as "just" a friend but always with the idea in the back of your mind that your own money could be at stake, I think that's a bit shady, even if you mean well. Take your own stake out of it first. If you're really going to try and help her with her finances you will need to have many frank, perhaps uncomfortable conversations with her, so best to start here.

Though personally, being non-confrontational and not savvy about financial matters, I would just be looking for a way to disentangle myself from her, and not get involved in giving advice.
Title: Re: Is it even worth trying to give financial advice?
Post by: rashea on December 17, 2012, 11:01:32 AM
Does she have EAP at work? I would suggest she go there for financial counseling. Then it's not coming from a friend, but she'll get told in no uncertain terms that she needs to straighten things out.
Title: Re: Is it even worth trying to give financial advice?
Post by: EMuir on December 17, 2012, 11:12:38 AM
I would recommend to her that it would be a great time to buy out your half of the boat.  Then take the money and rejoice that you're no longer tangled up with them.
Title: Re: Is it even worth trying to give financial advice?
Post by: DavidH on December 17, 2012, 11:25:18 AM
If she wants genuine advice, then paying down her debt, starting with the debt with the highest interest rate is the way to go.  It seems so obvious to me, that I assume most people can figure that part out, particularly since with a few minutes on line, you can get advice if it's really needed.  I think what she wants is validation around spending it frivolously, which I wouldn't be willing to give her. 

The logic of I won't pay down debt since my husband might just rack up more debt so I'll spend it frivolously now just doesn't make any sense to me. 

If she asks for advice, I'd ask her are you really sure you want my advice, and then if she confirmed that she wanted it, I'd give her genuine advice.  Otherwise, I'd just stay out of it.  Owning a joint asset together doesn't give you the right to offer unsolicited financial advice, particularly if they have paid their obligations just far.  On the other other hand, when asked, you don't have to just say what they want to hear.

Title: Re: Is it even worth trying to give financial advice?
Post by: Slartibartfast on December 17, 2012, 11:37:33 AM
OP here.

There is a natural end date to our join financial entanglement - 12-18 months down the road - but I like the idea of seeing if we can hurry that along.  As much as DH and I love the "boat," I hate the idea that my friend is stuck paying the same "not pocket change" we are for it whether she wants to or not.  I didn't know the extent of their debt before our conversation yesterday - and I'd hate to think she's sticking with the boat because she feels obligated to me to continue, even though it's clearly spending money they don't have.  (Yes, I realize it's their choice what to spend their money on, but I still don't like thinking it's indirectly spent on me.  I'd rather she spend it on something else completely frivolous if she wants to, but something she has 100% control over.)

My friend and her DH also do have a weird system with money in their house.  They both have their own accounts, plus a joint account, and they do both work so they each have income - but they're constantly trying to find ways to sneak charges past the other one.  I long ago told my friend point-blank that I wasn't going to lie to her DH about going to lunch with her.  (We'd trade off who pays each time, and sometimes she'd put it on their joint card and say "Don't tell DH, teeheehee!")  Her DH is already making plans for how he's going to spend a chunk of her $50K - on an interest of his that she has no interest in or control over - but I'm definitely not touching that one with a ten-foot pole!

I'm going to look into more information about credit counseling and financial advisors around here and see what I can come up with.  I really do appreciate the advice and the perspective!

ETA: Okay, I've just had a few minutes to look, but it seems like what's traditionally marketed as "consumer credit counseling" is basically those debt-packaging services which can help but trash your credit.  I don't think that's what my friend and her DH needs - they are making payments on everything, they're just in over their heads.  Is there a service out there which is basically financial advice focused on debt instead of investments, and if so, what's it called?  Not surprisingly, the Googles are full of financial companies trying to spam every possible money-based keyword so it's hard to sort out the actual help  :-\
Title: Re: Is it even worth trying to give financial advice?
Post by: Peregrine on December 17, 2012, 12:00:53 PM
I use Edward Jones for my financial planning.  While my family doesn't have a hug chunk of investments we have small retirement accounts going.  Our consultant is certainly interested in our long term financial health moreso than just what I can invest for the year.  You might check out something like that.
Title: Re: Is it even worth trying to give financial advice?
Post by: PastryGoddess on December 17, 2012, 12:10:41 PM
I would recommend The National Foundation for Credit Counseling www.nfcc.org AKA The Consumer Credit Counseling Service (CCCS)
Title: Re: Is it even worth trying to give financial advice?
Post by: Amara on December 17, 2012, 12:47:15 PM
Ah, PastryGoddess just provided the link I was going to. That is the correct organization. They provide excellent service, though from your posts I would guess it unlikely it will work in your friend's case because they require that all credit cards be turned over to them for destruction and the credit lines shut down. But they do work with the creditors and the people's budgets to get them out of debt. They also require you attend classes. It takes a commitment, not a particularly pleasant one, but it works. If they are willing they can be helped.

Another organization that no one has addressed and that seems particularly appropriate here is Debtors Anonymous, the Twelve-Step organization that is to debtors what AA is to alcoholics ( http://www.debtorsanonymous.org/ ). Again, it requires commitment but it helps those who want it.

I also second the suggestions that you get out of this joint venture as soon as you can.

ETA: First, this $50,000 is going to be to a compulsive debtor, which it sounds like they both are, what the keys to a liquor store would be to an alcoholic. Second, while I may be wrong wouldn't taxes be due on the money, meaning they will owe estimated taxes. If this is the case and they don't make their estimated payment, they will be "spending" money they don't have the right to. If that happens, they will make their situation dangerously worse by messing with the IRS.
Title: Re: Is it even worth trying to give financial advice?
Post by: Winterlight on December 17, 2012, 01:20:05 PM
I would focus on your own financial situation and do what you can to get out of the joint venture. I don't get the sense any financial advice to your friend will be productive.

This. It sounds like they're both messing up the finances here, not just him.
Title: Re: Is it even worth trying to give financial advice?
Post by: Kiara on December 17, 2012, 02:50:42 PM
Seconding Amara and PastryGoddess.  I went through CCCS and got myself out of $40,000 worth of debt.  Took me 5 years.  They worked with the credit cards to stop all the calls and helped me get a budget set up.  I have no idea if they helped my credit or not - mine was pretty much trashed when I started, and I was able to buy a house ten years later, so it must have helped somehow.   :)

Michelle Singletary is also a good financial author, although be forewarned that she can be pretty religious.  I don't think it's to the point of being overbearing, but some people do.
Title: Re: Is it even worth trying to give financial advice?
Post by: PastryGoddess on December 17, 2012, 04:54:50 PM
For those of you watching the thread, beware of other organizations that have a "CCS" in their name/acronym.  A lot of them are piggy backing off of the CCCS name and because they look similar, people are often taken in by unscrupulous organizations.
Title: Re: Is it even worth trying to give financial advice?
Post by: sweetonsno on December 17, 2012, 05:00:42 PM
I second the financial advisor advice. If you think she'd be open to it, I would also suggest taking some of it to spend on "fun" and putting the majority into a retirement fund or some other sort of investment account that she can't touch for X number of years.
Title: Re: Is it even worth trying to give financial advice?
Post by: Kaypeep on December 17, 2012, 05:54:28 PM
I'd advise her friend to contact one or two credit cards about paying off the debt with a lump sum.  Most of what they owe is probably interest.  Some banks are willing to write off almost half of what you owe if you pay off an agreed upon balance.  For example, if  friend owes $30K on a card, the bank may be willing to accept $15K in a lump sum, and they will write off the other $15.  Then you can close the card.

My boyfriend did this and it helped him a lot.  It did not have a significant impact on his credit report, either.  The only caveat was that he had to pay tax on the amount written off, because the IRS considered it as income.  So friend would need another small sum to pay the tax bill on the write off amount.

Title: Re: Is it even worth trying to give financial advice? UPDATE
Post by: Slartibartfast on December 17, 2012, 06:23:51 PM
SURPRISINGLY FAST UPDATE

(Although I just now realized I put this in the "Children" folder - could a mod please move it to a more appropriate location?)

So I actually had lunch with my friend today.  Based on the advice of all you wonderful eHellions, I did a little lookup first and came across a local nonprofit that does financial counseling - budgeting, financial management, debt, etc.  It looks like they do debt consolidation also, which they charge for, but their classes and advisors are free.  I took down some information and gave her their number/website/info.  I told her I knew it was none of my business what she did with her money but it scared the heck out of me that she could inherit $50K and still not have enough to get out of debt.  (I didn't mention anything about the boat - that's for another time.)  She said she was going to look into it and had been thinking about figuring out a budget for a while now.  I didn't say this, but I'm hoping they can give her some advice about her DH's habits as well - she can't be the only person in town legally tied to a partner who doesn't care to bother being financially logical.  I figure people must go through this with divorces all the time.

Anyway, it's in her court now, and if she chooses to waste her money then at least I tried to point her in a better direction.  I really do like her (and her DH) as friends, so I am hoping that if they can shore up their finances they'm shore up other areas of their life as well.
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: bloo on December 17, 2012, 08:57:31 PM
You are a very caring friend. I hope it works out for them! Thanks for the update.
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: AlansGirl on December 17, 2012, 09:17:50 PM
I have an anecdote to share.  A few years ago, my bestest friend and her long-term live-in boyfriend split up.  Suddenly faced with one income instead of two, she was having a hard time making ends meet, falling behind, borrowing from her parents.  She asked me for advice because it's kinda what I do for a living - not a personal financial planner but I handle finances for 2 of my boss's companies and do the planning, savings vs. spending, decisions about cash purchase vs. loans, stuff like that.  I was happy to do it and hopeful of being some help.  She gave me access to everything - copies of all her bills, password to her online bank account, everything - and I spent a great deal of time looking at every last bit of it, trying to think of solutions and offer helpful suggestions.  Not writing that like I'm bragging on myself, just that I really truly tried - I didn't just look over her check register and say, "You should downgrade to basic cable."

I put together this huge document - 5 or so pages - of a list of things to change and suggestions to try, everything from starting an Etsy shop (she is very artistic and gifted with jewelry making, but only does it to give as gifts to friends/family, not as a money maker), buying a fuel-efficient car (she commutes over 100 miles/day in a huge, gas-guzzling SUV) to simply staying more aware of her bank balances.  In one month alone, she'd racked up enough NSF charges to pay any one of several of the bills she was behind on.  Seriously, like $245 in just one month.

My husband and I refer to that document as "The Great Budget Manifesto".  And out of all those things (some easy, some more difficult) that I suggested, in the 3 - 4 years since, the only - the ONLY - suggestion from The Great Budget Manifesto that she implemented?  She switched to an unlimited text plan on Verizon b/c I pointed out that she'd racked up far, far more in text overage than upgrading to unlimited would cost.  I don't mean to imply that she should have followed my instructions to the letter, or that my way was 'right' - rather that she asked for advice, I took it way seriously and tried to do a good job, and...well, not nothing, but not much. 

My point is, sure, offer some suggestions or point her in the right direction, that's what friends do - but don't be surprised if nothing happens, they don't change, and the $50K is gone as soon as a $1000 bonus is, and them with as little idea as to where it went as when you check your wallet for exact change and don't have any.  I think people can change - habits, behaviors, beliefs - but until it really matters to them to do so, they won't.
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: Virg on December 18, 2012, 06:04:59 AM
Kaypeep wrote:

"I'd advise her friend to contact one or two credit cards about paying off the debt with a lump sum.  Most of what they owe is probably interest.  Some banks are willing to write off almost half of what you owe if you pay off an agreed upon balance.  For example, if  friend owes $30K on a card, the bank may be willing to accept $15K in a lump sum, and they will write off the other $15.  Then you can close the card."

For most consumer credit cards, this isn't accurate.  Consumer credit cards very rarely allow buildup of interest as part of the debt (notice that the minimum payment is larger than the assessed interest on your statement if you carry a balance) so the debt load is virtually always principal.  Most creditors will discuss payoffs if you're likely to declare bankruptcy and will write off part of the balance because it's easier on them to accept partial payment rather than try to fight it out with your other creditors, but that's an extreme case so I wouldn't consider it reliable as a way to reduce debt unless you're on the ragged edge and missing payments.  Getting financial advice is certainly a wise idea, but I wanted to point out that credit card companies aren't the first debt that's likely to get written off.

Virg
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: Tea Drinker on December 18, 2012, 11:06:05 AM
The rules on consumer cards have changed, so it's hard to rack up as much interest, but a lot depends on the interest rate, how long they've been letting debt build up (so what rules it was under), and whether it includes things like cash advances, for which there's usually a fee of x% in addition to interest.

Just for reference, I have grabbed my last credit card bill. Note that I pay in full every month, so there is no previous balance.

The actual amount I spent for that month was $510.04.

The box under "minimum payment warning" says that if I pay only the minimum each month, it will cost me an estimated total of $594. That's $84 I didn't spend on travel, groceries, clothing, or anything else specific. Or, from another angle, 1/6 of the total would be interest. That's for an interest rate of 15.4%, which isn't low, but is probably less than the person being discussed is paying, given her described spending habits.

(I'm using this card because it gets me points toward travel; I have another with a lower interest rate that I use if I might have to carry a balance.)
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: oogyda on December 18, 2012, 12:38:00 PM
I have learned through personal, painful experience with our most long term, very dear friends that you can give all the advice you want, but it will most likely go unheeded.

It may also be unwelcome and come off as being judgemental. 

Our friends are wonderful people, but they have no financial sense or responsibility.  They have been through bankruptcy 4 times.  The most recent being almost 2 years ago.  And right now are facing foreclosure. 

The most recent issues are complicated by recent job loss due to an increase in bi-polar symptoms that resulted in a job loss.  However, if there had been reasonable steps taken along the way, they would still have enough money to get by on.  With only her working and his navy pension, they earn about what we do. 

I will help all I can with physical labor, providing a meal now and then, transportation when needed and whatever emotional support I can give.  I will not loan or give them money.  It won't help, and they wouldn't use it for what it should be used for.  Our Christmas present to them will be the part that is neede fix their washing machine and Oogydad will install it.  Someone else has apparently already given them the money for the part...I think it went for gifts for their grandchildren. 

If THEY want to fix it, they will. 

Be very wary of the joint venture you have with them if they do file bankruptcy, they may be required to sell...which could force you to sell or buy out their share. 

Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: Virg on December 18, 2012, 12:50:06 PM
Tea Drinker wrote:

"The box under "minimum payment warning" says that if I pay only the minimum each month, it will cost me an estimated total of $594. That's $84 I didn't spend on travel, groceries, clothing, or anything else specific. Or, from another angle, 1/6 of the total would be interest."

The point is that the current balance owed does not include that interest, and so if someone owes $50,000 on credit cards the balance doesn't include any interest so saying "most of what they owe is probably interest" is inaccurate and trying to convince the bank to take a short payment because of that concept is a non-starter.  To turn that back to your example, you owe $510.04, and if you pay only minimums then at the end of umpty months you will have paid $594.  If you called the bank and said, "How about I pay less than $510.04 because part of it is interest?" they'll tell you that the balance on the card is what you charged and doesn't yet include interest, so you owe it all, and the only way to add interest to that balance without charging more is to skip a payment since every minimum payment must be more than the assessed interest by law.  Said a simpler way, every minimum payment includes all of the interest charged for the last cycle plus a portion of the principal debt, so assuming you always pay at least the minimum there's never any accrued interest in the balance.  In your own words, skipping payments is the only way to "rack up interest" on a credit card, and it's been that way for nearly twenty years.

Virg
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: Amara on December 18, 2012, 02:06:13 PM
I don't want to harp on this but in re-reading your original post I can so clearly see they are both compulsive debtors and not just people in debt. That is, they can't work with any financial plan or advice unless and until they realize their spending is out of control. Not everyone in debt, even in severe debt, is a compulsive debtor just as not every heavy drinker is an alcoholic. But having been there and having seen this in many I believe this to be accurate in this case. I think, OP, that you should consider that however kind and helpful your suggestions that they are unlikely to implement them. And they'll always have an excuse.

The only thing you can really do is to untangle your financial investment in the "boat" from them--quickly. Because once your friend comes into that money it is going to not just disappear in weeks or, at most, a few months, they are going to end up far worse. And when that happens you really need to have your own finances safely protected.
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: sparksals on December 18, 2012, 03:11:02 PM
The best piece of advice you can give is to keep that money in her name so her husband doesn't get his paws on it.   It is an inheritence and thus, her money.   He has zero say in it and she should pay off bills or put it in an account her name only for savings. 
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: JeanFromBNA on December 18, 2012, 03:42:03 PM
I recommend http://www.daveramsey.com/category/get-started/

Re: Debt consolidation.  She shouldn't pay for that.  She can do it herself.
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: Precarious Armada on December 19, 2012, 03:08:44 AM
The best piece of advice you can give is to keep that money in her name so her husband doesn't get his paws on it.   It is an inheritence and thus, her money.   He has zero say in it and she should pay off bills or put it in an account her name only for savings.

That.
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: Virg on December 19, 2012, 09:03:13 AM
sparksals wrote:

"The best piece of advice you can give is to keep that money in her name so her husband doesn't get his paws on it."

This isn't going to help.  They have massive credit card debt, and if she pays that bill down she's already said that he'll just charge it back up.  If she's not willing to fix that problem at the source then there's nothing she's going to be able to do to hide the money from him in the long run.  I'll agree with the other posters who said that the OP should unhitch her financial wagon from this couple ASAP and let them deal with their own finances.

Virg
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: sparksals on December 19, 2012, 01:13:40 PM
Quote
sparksals wrote:

"The best piece of advice you can give is to keep that money in her name so her husband doesn't get his paws on it."

This isn't going to help.  They have massive credit card debt, and if she pays that bill down she's already said that he'll just charge it back up.  If she's not willing to fix that problem at the source then there's nothing she's going to be able to do to hide the money from him in the long run.  I'll agree with the other posters who said that the OP should unhitch her financial wagon from this couple ASAP and let them deal with their own finances.

Virg

The problem is he wants to spend some of that money rather than put it towards debt.  I agree, it is probably a lost cause, but once paying off any debt, the best thing for her to do is close the accounts that are paid off.  Then he won't have anything to rack up.

I also agree the OP should dissolve any joint financial venture with them. 
Title: Re: Is it even worth trying to give financial advice?
Post by: Fleur on December 19, 2012, 01:18:16 PM
I agree with PP that these people are a financial disaster in progress and you need to get yourself disentagled from them. Someone who's $100K in debt and thinks that her husband will just run the debt up again, and seems mostly ok with that, is not someone you want to have any financial relationship with.

As for giving advice: Other than "talk to a financial advisor" and "get marriage counseling," I wouldn't say a word.

I agree. As far as the 'boat' goes, I say run for the hills. Though of course, that is easier said than done. But you shouldn't let your friendly feeling towards this woman obscure the fact that you need to make good on this asset as well. People like her make me mad, she needs a financial counsellor, stat.
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: Slartibartfast on December 19, 2012, 01:27:53 PM
I talked to her briefly today - I didn't ask, but from what she mentioned about this and that it sounds like she's planning to pay off her car (which is in her name and she's making payments for out of her own money) and is going to spend some and save some of the rest.  Paying off her car sounds like a good way to get rid of some debt her DH can't then just rack up again, so I'm glad she's at least thinking in that direction!
Title: Re: Is it even worth trying to give financial advice? UPDATE #28, #42
Post by: Winterlight on December 19, 2012, 03:53:19 PM
At least it's something!
Title: Re: Is it even worth trying to give financial advice? UPDATE #28, #42
Post by: BatCity on December 20, 2012, 05:13:12 PM
I agree with with Jean.  Dave Ramsey has a good technique for breaking out of the bad debt pattern.  Maybe for the holidays you can give her a copy of "The Total Money Makeover" if she's a reader (if not, maybe point her to his radio show). 
Title: Re: Is it even worth trying to give financial advice? UPDATE #28
Post by: Precarious Armada on December 20, 2012, 05:53:47 PM
I talked to her briefly today - I didn't ask, but from what she mentioned about this and that it sounds like she's planning to pay off her car (which is in her name and she's making payments for out of her own money) and is going to spend some and save some of the rest.  Paying off her car sounds like a good way to get rid of some debt her DH can't then just rack up again, so I'm glad she's at least thinking in that direction!

Wow! that's a better update than I expected! She really needs to keep the money she's saving out of her partner's reach, though, or those savings are just "spentings".