Because money isn't something frequently discussed in everyday conversation, it can be hard to determine whether a friend or family member is in a bad place financially. But Gail has found there are two primary indicators that suggest a person might be in debt. Someone experiencing financial difficulties might constantly seem preoccupied with how to make ends meet. She might mention bills being due and seem stressed out where money is concerned. On the other side of the spectrum are people who are accruing debt while trying to give the impression they have plenty of money. They might offer to pick up the tab or fund expensive shopping sprees that are out of proportion to the income they have coming in. This suggests they're using credit to spend more money than they have and are racking up debt.
Unfortunately, knowing a friend is having financial difficulties is just the beginning. Though your concern might cause you to want to jump in and lend a hand, you can't help someone who doesn't want help, explains Gail. Until they're ready to talk about it and accept your advice, you can't force them to change.
Once your friend is ready to seek advice and get help, begin with a spending analysis. Gail advises sorting through the paperwork with your friend to determine where their money is going. The important thing here is to not let them get away with guesses or estimates. Print out all their bank statements, credit card balances, store card balances and any "buy now, pay later" documentation so you can get a clear idea of what they've been spending and where. Also discuss whether they're involved with any pay advance stores like Money Mart, whether they've accumulated any loans and whether any overdraft fees are in the picture. You need all the facts to make true progress. Until they know exactly how much they've been spending, they can't change their habits.
Your friend might know she isn't doing well financially, but she likely doesn't realize how bad the situation is. Seeing the extent of her debt laid out in front of her will be shocking if not overwhelming. Remain supportive, and work with her to determine the exact amount she needs to pay each month so as to not continue accumulating interest and to make progress in paying off her debts. Gail suggests that could mean she'll need to get a second, part-time job to bridge the gap, but your objective point of view will be a big asset in helping her put together a strict budget.
When you see a loved one in pain, it's natural to want to bail them out. But Gail explains that under no circumstances should you lend them money. If you can afford to give them money and are willing to do so, that's fine. But when you lend money that you expect to have returned to you, it's "the beginning of the end of your friendship," she advises. You'll be more help to her in the long run as a supportive friend than a frustrated lender, so don't opt for a "quick fix" loan.
To get more of Gail's helpful advice, check out her website, Debt-free Forever.
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