How to Help Loved Ones Deal with Debt Problems
If you have a friend or family member who is dealing with debt issues, it can be very tough to watch. When your loved one is having trouble, you likely want to help. However, money and debt can be sensitive subjects for many people.
Here are some ways that you can help your loved ones deal with debt without straining your relationship or getting yourself into financial issues.
Recognize the Signs of Debt Trouble
Before you assume that one of your loved ones is having difficulty with debt, it’s a good idea to look at for some signs to try to confirm your thinking. There are a few signs of debt troubles that may help you recognize if your loved one is having an issue.
Signs that someone may have a debt problem include:
- A person mentioning to you that they have no savings
- A pattern of declined credit cards
- Using payday loans or other similar services to pay bills
- Dealing with calls from creditors or avoiding phone calls
- If a person is stressed, anxious, or irritable, they may be having financial problems. The same is true if they seem especially tired (they could be having trouble sleeping due to debt, for instance)
- Being unable to enjoy things they once found enjoyable
- Being secretive or withdrawn
- “Living above their means” and buying expensive items despite not having the income to afford these expenses
If a loved one is displaying one or two of these signs, it may not necessarily mean that they are struggling with debt, but it money problems could be an issue. At this point, it’s important to have a conversation.
Talking About Debt with Loved One
When you have a financial conversation with someone, it’s important to avoid being judgmental. Even very close friends or family members could be offended if they feel like you are judging their financial choices.
A good way to start is by talking about your own financial situation. Mentioning that you are working on a new budget or that you heard a new tip that is helping you save more money can be positive ways to bring up the subject.
Some people may be unaware that their debts or their financial issues are a problem. Hearing you talk about your own finances and how you handle possible issues can help them better understand their own situation. These talks can also show them that everyone has to think about money at one time or another and that it is possible to resolve money problems.
Be Careful when Lending Money or Co-Signing a Loan
You may decide that you want to help your family member financially. If you decide to take this step, it is important to be careful. Money can come between people and seriously harm a relationship.
Before you lend or give money, it’s important to be clear about the terms. Is this a loan that you expect to have paid back? If so, when do you want it back? Is it a gift? If so, are there any strings attached? For instance, if you give them money, are you expecting them to put all of it towards paying their debts or can they use it in any way they see fit?
If you clearly state the terms up front, this decreases the risk of the situation going differently than you expected and that means there is less likely to be an argument or hurt feelings.
If you decide to co-sign a loan, know that this means you will be financially responsible for paying the loan if your loved one is unable to keep up with the payments. Can you handle this financially? If you can’t, and you don’t believe they will be able to make the payments, you may not want to co-sign.
It’s important to know that there are ways to help that don’t involve financial contributions.
One of the best things you can do to help a loved one who is struggling financially is to be there for them and to provide support. Help them prepare a budget (if they ask), show them how you manage money, work with them to set financial goals, and be there for them in other ways. You can provide motivation or to give them someone to turn to when dealing with issues as well. This can be a big help as dealing with debt can be very stressful and upsetting for many people.
You can also plan free or inexpensive things that the two of you can do together. This will allow them to spend time with you without worry about money and it can also show them that there are ways to live a happy and fun life without overspending.