[mr1303]

A friend of mine seems to be struggling a lot financially. She's only recently (last 3 months or so) turned 18, and earns a lot less than me (and I don't earn a lot either). She still lives at home with her parents and doesn't have a large loan, but she drinks and smokes something chronic. She takes taxis to and from work (at £20 a pop), and I've discovered that she has missed a payment on her credit card. She's now planning on taking out a loan to learn to drive and buy a car.

I've tried persuading her of the errors of her ways, but she won't listen, and says that young people are "the credit card generation". She also says that I'm a hypocrite having just taken out a mortgage to buy a house (at the same price than I previously paid in rent).

I'm now quite concerned about her. Should I just leave her to make her own mistakes, or should I try further to do something about it. If so, what?

[Gerben42]

How did she get the credit card in the first place at age 18? To get my first credit card I was asked if I earned more than some specific amount (€24000 / year before taxes).

Anyway, I can imagine that being in debt and broke is not a lot of fun. I plan to never find out.

Maybe it's her parent's card? I think when she lives at home her parents will be held responsible for her debts... Maybe talk to them. This maybe will not make you popular for the moment but if she's any kind of friend she will be grateful a few months from now.

[Winstonm]

Live and let live.

Friend has her own life; friend gets to make her own decisions.

[luke warm]

i tell a particularly hard-headed son of mine that when he turns 50ish he's gonna say "i wish i knew when i was 25 what i know now" ... then i tell him that he can know what i know at 50ish now, at 25ish... but that's somehow not the same for him... they have to learn experientially, it seems - just as we did

[blackshoe]

It's not enough to learn something. You have to, as a friend of mine puts it, "own it" - and you can only do that through experience.

Buy your friend a good book on credit management, and just give it to her - no speeches. After that, it's up to her. Whatever you do, don't loan her any money.

[Al_U_Card]

Yuk! As hard as it is to get, every mill needs its grist. These are the people that make this cockamamie system run (faster and faster with every day.....just trying to keep ahead of the foreclosure).

The ideal of being industrious and saving for stuff is, not only démodé, it is downright anathema to the majority. Living for today is nothing like being in the moment. Ignorance is not bliss, it is debt and difficulty.

Whenever you see this "friend" try to go in the opposite direction. You can never change anyone but yourself.

[kenberg]

It seems to me that the problem is this: It used to be that if you handled money badly you came to regret it very soon. This had a corrective effect. These days there are numerous ways to juggle things so that you can go on for quite a while racking up more and more debt. From what I have seen, there simply is no way to convince someone that this is a bad idea unless they can somehow come to see it for themselves. As with smoking, when the time comes that you see you have made a mistake, it's often too late to correct it.

I wish you well in your efforts, but I am pessimistic.

[keylime]

Support her as her friend, but to offer counsel will drive her away.

I was that person you alluded to, and after having to file bankruptcy in 1998 for my youthful indiscretions to the tune of A LOT of money (you'd be shocked how much debt I had at age 22 - over $150,000 in debt), I realized then and only then that it was going to be hard to get myself out of this. I within the last year finally have recovered enough to have unsecured credit cards.

[kenberg]

keylime, on Jan 20 2008, 05:15 PM, said:

Support her as her friend, but to offer counsel will drive her away.

I was that person you alluded to, and after having to file bankruptcy in 1998 for my youthful indiscretions to the tune of A LOT of money (you'd be shocked how much debt I had at age 22 - over $150,000 in debt), I realized then and only then that it was going to be hard to get myself out of this. I within the last year finally have recovered enough to have unsecured credit cards.

Holy S--- but that's a lot of cash. Congratulations on getting out from under. A long haul! Maybe MR1303 could show his friend your note. I agree completely that no one can ram advice down another person's throat but if she is at all open to discussion this might impress her. Whew.

[keylime]

In my situation, I had in essence the perfect storm happen. Firstly, my marriage dissolved, in California, which is a community property state. Secondly, practically everything I had was tied to the ex. Thirdly, I had left the service under medical conditions, and, well, I had some issues.

Let me tell ya, when the magistrate granted my petition, I walked out of the courthouse and I sat down on a bench enjoying the warmth of sunshine. After it posted to my credit tho, I was practically at the bottom of bottom in terms of scale. It was LOW.

The secret to my recovery was threefold:

1. The most important: You filed bankruptcy. Learn from it. Attend classes. Take control of finances. The simple fact that I had to do everything with cash (rent-to-own places became my lifeline at times) taught me firsthand the value of money.

2. Look at your wants, and then ask yourself if you really need to have them.

3. Once things have improved and you get the chance to open credit, look at the credit percentages, and throw most of them away. Open credit slowly, with reason. I started with retail credit (Best Buy and IKEA are my favorites). After nearly a year of that, then started to get into Mastercards. A slow progression of paying more than the minimum, boosted my credit score 85 points in one year.

If I can do it, anyone can.

[JoAnneM]

Whatever happened to the idea of parents setting good examples? We certainly tried to and our two sons have made it into their 40's relatively unscathed money wise. Maybe they have just been lucky, but I have also watched them be smart.

Anyway there is only one way to own a credit card, and that is to pay the balance each month. Credit cards are just a substitute for carrying cash or a checkbook, they are not a loan desk sitting in your pocket. Credit limits are how much you have available for a trip or in an emergency, not how much you can spend on clothes and dining out. At least that should be the attitude of most people, with exceptions of course.

I would not give advice to the young person unless asked. I don't even advise my own children unless asked. But certainly be there for her if she needs you, if you are really her friend.

[Gerben42]

Quote

actually I do not like this statement (no offence intended) But credit cards are for things you cant afford, or delaying payment for a few months and bank assumed interest (for profit, if you use the maximum payment delay period) But explain this to me, how much interest do you save on a meal for four?

Debit cards are an alternative to cash, NOT credit cards

Savings are what you use for an emergencies, not credit cards if you want a trip save for it and you will enjoy it most, if you cant afford the trip, dont take it, as for travelling a long distance on credit, I used to hitch hike (free and a fun way to travel)

DEBT SUCKS and will be what brings the happy house of cards down

Exactly! Credit cards give you loans, whereas debit cards are a way of carrying cash you already have. The secret of really messing up is to have several credit cards, each of which you acquired with the limit corresponding to your income.

[luke warm]

i agree with joanne on this... while it's true you can make purchases with credit cards and pay the minimum, to think of them in this way shows (imo) why there are so many people in financial trouble.. you can get loans at much better rates than the cards charge, don't use them for that

unless i'm faced with an emergency, i pay my cards off every month... no interest charged or paid

[Al_U_Card]

My favorite is, since I already pay the retailer's surcharge for credit card use, I changed my bank card from a fixed rate ( $12/mo. unlimited transactions) to a minimum usage plus transaction fees. I use my credit card for everything, pay the month end balance and pocket the $6 to $8 per month bank fee savings. Every little bit counts.

[mr1303]

Anyway, take my advice she has not done. She has just bought a car for £1200, with a car insurance quote to match (it has been heavily modified, and has tinted windows etc. I suggested a much smaller car for around £300, but she said she wouldn't be seen dead in a car that size.

Given that she is in severe danger of losing her job at the moment, I fear for her finances.

[rbforster]

mr1303, on Jan 22 2008, 03:41 PM, said:

I fear for her finances.

Before you can help your friend, she has to decide that her finances are a problem. You can't do this for her. All you can do is be there for her if and when she decides to seek your advice. In the meanwhile, just don't lend her any money or otherwise subsidize her unsustainable lifestyle.

[Rain]

I don't think you can help her right now. But when her finances start crashing you can be there for her. She's young and can probably survive a bankruptcy easily. (I don't know much about UK bankruptcies, but it's certainly not the end of the world in the US system.)

So if you were thinking of lending her any money, save it for later when she'd appreciate it more.

Sceptic..hitch hike? :=o

I actually believe in using credit more liberally. I like those 0% balance transfer offers, charging on credit cards that give rewards and miles. I like the idea of mortgages where I can use debt to acquire a few times more than what I can currently afford.

I thought credit ratings/scores and whatever other laws you have in each countries regarding who can actually obtain what kinds of credit should have prevented your friend from severely overextending herself. Yep, blame big governman

[Elianna]

You should listen to Rob, he is THE EXPERT on finances.

[mike777]

"...otherwise subsidize her unsustainable lifestyle...."


Why not, this would seem to be a very useful skill for her to learn to be able to pull off. I certainly do not begrudge someone who is able to master this skill.

It seems very biased to assume everyone must be able to afford a rich lifestyle on their own. Different strokes for different folks.