How Do I Talk to Someone I Want to Help Get Out of Debt?

If you know someone who is having a hard time with their finances, you might feel helpless watching them struggle. But there are ways to help. Talking about someone else’s financial difficulties is delicate and it’s important to approach the topic with empathy. Here are some considerations and tips to keep in mind when you approach a friend or loved one whom you want to help get out of debt.

Be sure there’s a problem

Money is about more than the dollars in a bank account—it’s about emotions. Think about how an unexpected medical bill or a car repair might make someone feel panicked, embarrassed, or depressed. If you’re worried about someone, it’s important to show that you care. But before you approach the subject, try to understand if there’s a problem.

Here are signs that someone you care about might be struggling with debt:

• Previous issues with debt: Have they confided in you about debt problems in the past?

• Expensive “must have” things: Do they always have the latest tech gadget, but recently mentioned being worried about filling up the gas tank?

• Never talks finances: If money comes up in conversation, do they quickly change the topic? They may avoid financial discussions out of embarrassment.

• Altered spending habits: Are they suddenly saying “no” to going to their favorite restaurant? Or do they now overspend on luxury items using a credit card?

• Exhaustion or insomnia: Have they talked about being exhausted or not sleeping well? Difficulty sleeping can be brought on by financial stress.

• Major life changes: Have they lost a job? Did they have a baby? Has their spouse died? All of these can tighten finances.

• Emotional changes: Are they reducing their social activities? Do they seem withdrawn, anxious, or depressed?

• Mentions money concerns: Did they say they’re living paycheck-to-paycheck, behind on bills, or running up debt?

If someone you care about is exhibiting many of the above signs of distress, then it may be time to have a frank conversation where you provide sound guidance about debt. Here are seven tips if you’re going to talk to someone you want to help get out of debt:

1. Help, don’t judge

When you bring up the topic of debt, be aware of the tone in your voice. You want to come across as caring, not as a know-it-all. So, avoid the tone of “I know everything, and you should do it this way,” as that probably won’t be productive.

2. Reach out and ask

If someone has mentioned money worries, it may be a request for help. Directly ask if they’re concerned about money. Or tell them how something you’ve observed them doing causes you to worry—like shopping all the time or traveling every weekend. Let them know you’re concerned and ask if there’s anything you can do to help. But be mindful that if they say “no” or seem to ignore your inquiry, it might be best to drop the topic for now.

3. Mention your own debt history

Sharing how you’ve been in a similar debt situation and found it overwhelming and stressful can help someone know that you fully understand. And explaining how you got out of debt can offer a ray of hope as well as practical steps for obtaining a healthy approach to finances.

4. Don’t be part of the problem

Whether it’s going to dinner, a movie, or even a cup of coffee, these are expenses that someone with debt might not be able to afford. And they may feel upset about saying “no thank you” all the time. But people in debt still need a social life. Offer ways to hang out that don’t require spending money, like going for a walk, a bike ride at the park, or watching a movie at home.

5. Offer accountability

Whether it’s an exercise program or a financial diet, many people are likely to find success when they’re accountable to someone else. For example, you could encourage them to create a budget to help get out of debt faster. Offer to help them by setting goals, having check-ins, keeping them motivated, and celebrating their successes.

6. Avoid the quick fix handout

Even if you have the financial ability to help your friend, that may not help them with debt in the long run. First, while generous, a financial handout can make them feel indebted to you. Second, taking ownership of their debt and deciding on the best course of action to tackle it can help ensure they learn to manage money more effectively in the long run.

7. Recommend a debt relief program

Suggest they look into a debt relief program. Such programs can help them reduce the amount they owe and put the debt behind them faster than they could on their own. Even just making that first phone call for a debt evaluation could help reduce feelings of stress and overwhelm.

8. Establish an Emergency Fund

There's no getting around the fact that having an emergency fund in place can simplify your finances. Here's why that matters. 

Why an Emergency Fund Matters

Think of an emergency fund as an airbag for your finances. If something goes wrong, it's there to minimize the damage. An emergency fund makes it possible to cover unexpected events without taking out a loan or pulling out a credit card. In short, it prevents you from going into more debt than you're comfortable with. 

How much to save

Financial experts suggest you build an emergency fund with enough money in it to cover three to six months' worth of bills. That way, if something unexpected happens, like a layoff or sudden illness, you would have enough money to pay your bills for several months.

If the thought of saving that much money is daunting, that's okay! Take it one step at a time. 

Getting Started

1. Don't be intimidated: If the most you can come up with is an extra $5 a week, begin by tucking it away in your emergency fund. There is no shame in starting out small. 

2. Set a goal: Having a goal helps you measure your progress and keeps you motivated. Set a realistic goal and keep track of your progress. Your goal may be something like "$500 by New Year's Eve." Once you reach that goal, set a new one.

3. Create a budget: If you don't already have a household budget in place, track your income and spending for one month. Then, go through the previous month to see where simple expenses can be trimmed. For example, if you typically eat out four times a week, consider cutting it back to two. If you're spending more than you're comfortable spending on everyday items, download a price comparison app that will let you know where you can find the cheapest prices in your area on the products you need. 

4. Automate Savings: Contact your bank or credit union to set up auto-transfers into savings. For example, your goal may be to save at least $100 a month, so you decide to automatically transfer $50 from checking to savings each payday. No matter how much you automatically transfer, it's much easier to avoid spending money you never had in your hands. 

Finally, celebrate the small wins along the way! Saving can be a tough habit to get into, but once you do, you'll never want to go back.

9. More tips on avoiding new debt

Taking on new debt as you build an emergency fund will slow the pace of your savings and likely lead to frustration. Here are some practical tips for avoiding unwanted debt. 

Why Avoiding New Debt is Important

Avoiding new debt is important for these two reasons:

1. New debt will likely make you feel like you're on a treadmill, unable to reach your financial goals. You deserve far more than that. 

2. The less debt you carry, the more financial options you have. And yes, options include plumping your emergency fund. 

Practical Tips to Avoid New Debt

1. Put your cards away: Get out of the habit of carrying credit cards with you when you shop. Leaving them at home in a small safe or tucked away in the back of your freezer makes it less likely that you'll make an impulsive buy.

2. Become your own financial counselor: Before you make a purchase, ask yourself if it's a "need" or a "want." If it's a want, ask yourself if you have plenty of money to pay for it or if you'll go into debt to buy it.  

3. Use Cash or Debit: Using cash or debit to make purchases hurts a little more than paying with a credit card. After all, you're immediately faced with the fact that you no longer have the money to spend. Using cash or debit on a daily basis makes new debt less likely. 

4. Set Spending Limits: Based on your household budget, decide how much you can afford to spend each week, and then track your spending to ensure you don't go over. Once you begin to track, you can quickly identify when spending goes off the rails. 

5. Avoid ‘Buy Now, Pay Later’ (BNPL): Even if you're offered an interest-free period on a BNPL purchase, you could still incur late fees and charges exceeding typical credit card interest rates. If you aren't in a position to pay for something outright, you'd be better off saving for it. 

When you were a toddler, you practiced walking until you got it right. If you played an instrument, learned a foreign language, or mastered a sport, it's because you practiced. The same is true of financial matters. The more you practice avoiding debt and saving money, the more natural it feels. Be patient with yourself. You'll get there.