Is it even worth trying to give financial advice? UPDATE #28, #42

[Slartibartfast]

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.

[nuit93]

It might be worth suggesting she contact a financial professional, especially with regards to all that debt.

[cicero]

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

[bopper]

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.

[MindsEye]

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.

[Morticia]

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.

[It's good to be Queen]

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. 

[TurtleDove]

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.

[Two Ravens]

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!

[Judah]

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.

[artk2002]

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.

[bloo]

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.

[JenJay]

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!" 

[VltGrantham]

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.

[JenJay]

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.