Saturday, January 27, 2007
Consulting my friend on his finances
I received a text message from a lifelong friend on Tuesday. He said he was considering a debt settlement company and wanted my input. I preferred to call him to let him know that I thought it was a bad idea.
He recently got married and the attempts to get finances under control with his wife are going for naught. The story I got was that they had both used the same checking account and basically they weren't communicating when each other was spending money. She would write checks unknown to him and they would be low on funds. He felt at the end of the ropes and wanted to use a debt settlement company to get rid of his debt. They told him he could pay about $450 a month for about three and a half years. The total paid was going to be around $15k. And in the process his credit would be trashed. Good thing he just bought a house and a car(not sure if its new or not).
He's a salesman for his current occupation and plans on earning about $50k this year. Not sure on his wife's job but it's probably good to bet she makes at least $15k a year. $65k a year for the area they live in is great money.
I tried my hardest to talk him out of it. I told him repeatedly that he'd only be curing the problem and not the symptoms of what got him into debt. Should this ever happen again, he'd look to do it again as an easy way out.
I've offered to drive up to his house to sit down for a couple of hours to go over his and her finances to get their financial life in order. I've even thrown out there that he should come to Dave Ramsey's Total Money Makeover in Dallas at the end of February.
Does anyone else have any advice I could offer up to him to keep him from making a big mistake??
He recently got married and the attempts to get finances under control with his wife are going for naught. The story I got was that they had both used the same checking account and basically they weren't communicating when each other was spending money. She would write checks unknown to him and they would be low on funds. He felt at the end of the ropes and wanted to use a debt settlement company to get rid of his debt. They told him he could pay about $450 a month for about three and a half years. The total paid was going to be around $15k. And in the process his credit would be trashed. Good thing he just bought a house and a car(not sure if its new or not).
He's a salesman for his current occupation and plans on earning about $50k this year. Not sure on his wife's job but it's probably good to bet she makes at least $15k a year. $65k a year for the area they live in is great money.
I tried my hardest to talk him out of it. I told him repeatedly that he'd only be curing the problem and not the symptoms of what got him into debt. Should this ever happen again, he'd look to do it again as an easy way out.
I've offered to drive up to his house to sit down for a couple of hours to go over his and her finances to get their financial life in order. I've even thrown out there that he should come to Dave Ramsey's Total Money Makeover in Dallas at the end of February.
Does anyone else have any advice I could offer up to him to keep him from making a big mistake??
Labels: dave ramsey, debt, friends
Comments:
Links to this post:
<< Home
You did as much as you could. Giving him a copy of Dave Ramsey will help him alot but unfortunately in the beginning, everyone wants the quick fix.
He did ask your advice though, so feel proud of yourself for having the knowledge to convey.
He did ask your advice though, so feel proud of yourself for having the knowledge to convey.
Ryan: You are absolutely right in dissuading your friend from debt settlement. Debt "counseling" is also unacceptable because the "counselors" are merely agents for the creditors. Not everyone has the discipline, time and commitment to a do-it-yourself debt reduction program that analyzes how best to apply income and asset returns to eliminate debt -- including Dave Ramsey's program. But increasingly people like your friend are turning to professionals who now offer a Personal Financial Liability Portfolio Management service. Unlike debt restructuring or settlement with creditors, this technique has no negative impact on credit rating and is actually designed to eliminate all liabilities -- credit cards, student loans, even mortgages -- in less than ten years. With a combined annual income of $65k, your friends might be perfect candidates. Direct them to www.iono1.com use the Quick Nav to check out the FAQ section and view the Flash presentation.
I think you should try to explain to your friend what the true meaning of debt settlement is. If he is in debt and he thinks debt settlement is a good idea, I think that goes straight to the core issue of why he is in debt. He doesn't understand how to manage his money along with his wife.
You need to explain to him that debt settlement will not HELP his credit but will 99% of the time hurt his credit. Now, if he wants to consolidate his debt into a lower interest rate and try to combine it into 1 payment, then yes do that, but there is no need for him/her to have a debt settlement consultation.
I'm sure you know how to consolidate debts, but your friend does not. I think you should pound it out hard and inform him that debt settlement is one step away bankruptcy as far as how it affects your credit scores.
Maybe that will help him to understand a reason why there is so much advertising for debt settlement. Does he know it will cost him MONEY to pay a company for this and his credit score will probably go down? It seems your friend is someone who doesn't read the fine print on things and is too trusting of things he hears.
I really hope you can knock some sense into your friend. I'm sure he will thank you for it years from now.
Good Luck
You need to explain to him that debt settlement will not HELP his credit but will 99% of the time hurt his credit. Now, if he wants to consolidate his debt into a lower interest rate and try to combine it into 1 payment, then yes do that, but there is no need for him/her to have a debt settlement consultation.
I'm sure you know how to consolidate debts, but your friend does not. I think you should pound it out hard and inform him that debt settlement is one step away bankruptcy as far as how it affects your credit scores.
Maybe that will help him to understand a reason why there is so much advertising for debt settlement. Does he know it will cost him MONEY to pay a company for this and his credit score will probably go down? It seems your friend is someone who doesn't read the fine print on things and is too trusting of things he hears.
I really hope you can knock some sense into your friend. I'm sure he will thank you for it years from now.
Good Luck
Ramsey's program is quite simply unrealistic for most people who aren't prepared to go without seeing their family for a year. Get a second job for 6 months so you can make double payments? Sure, if you're single, no medical problems, and you have no kids (or you don't really like to see your family). It's the easiest thing in the world to tell somebody else to pull themselves up by their bootstraps, but most people in debt trouble have already heard that from any number of self-appointed mavens of frugality like yourselves. Benjamin Franklin, you ain't.
Bankruptcy, debt settlement, and credit counseling are not pleasant or "easy" ways out for anyone, as anybody who's actually had to go through it can tell you. Christ tells us to forgive our debtors, but Ramsey says "pay up". Spoken like a true businessman. He's not exactly giving out his books for free, is he?
Your friend needs some new friends.
Post a Comment
Bankruptcy, debt settlement, and credit counseling are not pleasant or "easy" ways out for anyone, as anybody who's actually had to go through it can tell you. Christ tells us to forgive our debtors, but Ramsey says "pay up". Spoken like a true businessman. He's not exactly giving out his books for free, is he?
Your friend needs some new friends.
# posted by 
:
8/27/2007 4:28 PM
:
8/27/2007 4:28 PM Links to this post:
<< Home
Subscribe to Posts [Atom]
