Juan Pinon, an electrical engineer in McAllen, Texas, struggled with credit card debt for years. It wasn’t until he confided in his sister that he began to turn things around.
“It just so happened that one day I opened up to my sister and she admitted to me that she had debt problems and got out through professional help,” says Pinon.
A verified referral to a nonprofit credit counseling agency and encouragement from someone he trusted convinced him to take action. Pinon signed up for the agency’s debt management program and paid off about $50,000 in less than three years.
It’s difficult to see people we care about struggle with debt. Debt can affect their financial and personal lives, as well as the lives of those around them. As a close friend or family member, your influence can be powerful enough to inspire change. As the expensive holiday season approaches, how can you help others stay out of debt? Here’s what you can do to help a loved one cope with debt.
PROCEED WITH CAUTION
Unlike Pinon, people in debt will not always address the issue themselves. Addressing someone else’s personal financial matters can feel like crossing borders. If you think it’s important to intervene, use strategy to strike the right note.
The first step should be to ask them if they’re open to the conversation, says Kathryn Ellywicz, a marketing and communications specialist and former consultant at GreenPath, a nonprofit credit counseling agency. Giving them choice can prevent them from feeling ambushed.
When they are ready to discuss their debt situation, speak politely and hold back judgment. “Often our family members are ashamed of financial debt. So it’s a conversation that needs to be conducted very carefully,” says Brandy Baxter, a Dallas-based chartered financial advisor. “It has to have a lot of grace and it has to be in an environment that makes the person feel relaxed.”
If you have been in a similar situation, consider telling your loved one. Drawing on your own experiences of debt and acknowledging the emotions involved can help you address it from an empathetic place.
“We can use ourselves as an example to say, ‘Hey, I was there, I see. I’m not trying to embarrass you. I went through this embarrassment myself. Please let me help you,'” says Pinon.
RESPECT YOUR REFUSAL FOR HELP
Your friend or family member may end the call. That’s okay.
“Debt can be addictive, just like any other addiction. The person who is in the cycle may not see anything wrong and therefore may not be ready for help,” says Baxter.
Ultimately, you have to accept that it’s her life and her choice. Let your friend or relative know that you respect their decision and are ready to help if they change their mind.
Baxter says you can also use this as an opportunity to push boundaries. If you have supported them financially and you no longer feel comfortable doing so, explain the circumstances and ask them to respect your decision in return.
SHARING KNOWLEDGE AND RESOURCES
When your loved one is ready to get out of debt, help them take the next step. You can talk to them about the emotions that might be affecting their spending, explore different methods of paying off debt, or review their spending.
“Maybe you’ll get together and say, ‘OK, this is how I do my budget. Let’s work on how to manage your budget. Or here’s how I set up my spending plan. Let’s work on setting your spending plan,’” says Baxter.
But not everyone feels comfortable letting their friends and family dive into the smallest details of their financial life. Also, not all of us have the expertise to take a do-it-yourself approach.
“Of course, the experts are always available,” says Ellywicz. “Sometimes just giving a recommendation is a big help for a family member.”
Prepare yourself with a list of trusted resources like online tools, nonprofits, and financial advisors. (Nonprofit organizations, such as credit counseling agencies, typically offer lower-cost or free services and meet certification requirements for quality and ethical standards.) Then share your recommendations.
Here’s a start: The Association for Financial Counseling & Planning Education offers free virtual financial counseling and coaching sessions. If your loved one is having trouble paying bills or affording basic necessities, they can call 211 or visit 211.org to find local help.
SET HOLIDAY EXPECTATIONS
As the holiday season approaches, your loved one may feel an increased pressure to treat themselves. Do your part to avoid adding to their existing debt and discuss ways to keep your plans simple.
Baxter suggests looking for alternatives to gift giving that “reduce the financial burden,” such as
Keep up the momentum and check them out all year round. Paying off debt is a journey, and the journey can be a little easier with you by their side.
This column was provided to The Associated Press by personal finance website NerdWallet. Lauren Schwahn is a writer at NerdWallet. Email: email@example.com. Twitter: @lauren_schwang.
NerdWallet: What is Debt and How to Handle It https://bit.ly/nerdwallet-what-is-debt-and-how-to-handle-it
Association for Financial Counseling & Planning Education: Find an Accredited Financial Counselor https://findanafc.org/home/pro-bono/general/
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