A deep-in-debt friend asks your help to get another credit card

13 years ago

If you had a good friend who'd gotten him/herself deep into debt and was facing a need for more cash coming up soon, and came asking for your help to sign up for yet another credit card, what would be your response?

Woud you suggest selling off some possessions, possibly a second car, in order to avoid going deeper into debt?

If the person is having a hard time paying off the loans now, how will s/he accomplish it when the debt gets even larger?

How about getting another job, to produce some more income?

Or send the boomerang kid that recently returned home out to get some income to help keep the family afloat?

Folks in a neighbouring country, whom we hold in high regard, are having troubles, these days worrying about how they can expand their debt.

Some are suggesting that it would be a good idea to work on developing some more income (especially from well-off folks) ... but others say that's not a good idea, and their statements include everyone, with some emphasis on the working folks being included.

Good wishes as you work on getting these major financial issues worked out in the most effective way.

Many seem to have forgotten that one of the major reasons for the deep debts, with substantial recent additions, was the bail-out of some financial agencies who'd offered mortgages to folks who they knew would not be able to pay, and when the pigeions came home to roost, they almost went broke.

Too big to fail.

Right now, our largest city, Toronto, has large debt and, running a major deficit, are considering how to cut it.

They had a free-for-all discussion, including the public, yesterday, beginning at 9 a.m. ... and it ran to just over 22 hours, till just after 7 this morning.

Many were saying that they did not want a cut in services ... but how is it to be paid for??

The majority of the tax load has been carried by the middle class, as the poor have low income and the wealthy have arrqnged myriad ways to avoid taxes.

And the middle class is being eroded, I've heard some say, "hollowed out", in recent years, not only in your country, but in ours, as well.

We've been living too high on the hog, in recent years, with few increases in wages, but substantial increases in prices. With more to come, so we're told, on fairly good authority, I think.

ole joyful

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Comments (26)

samkaren
13 years ago
I would say...sorry i can't. I know you are having difficulties but I don't want to be responsible for paying off someone else's credit card if you can't.

Selling possessions is a good response. Tell them to have a giant garage sale.

My parents would never co-sign anything for us. They said "if you want it bad enough-work for it".

SamKaren
your resident DJ
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workoutlady
13 years ago
I agree with Samkaren. I wouldn't encourage anyone to get a credit card if they have bad credit and can't afford to pay the card. Also, my parents never co-signed for me. I have also never co-signed anything for my daughter and hope I never have to.
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Well, like everyone else, I agree with much of what has been said but of course, as humans, we can't leave it at that and have to put our own 2 cents in :) You need to figure out a few things about your debt. Is it a matter of you currently have 35k debt that you need to pay off and you aren't adding anything to that debt? If so, then that is great! Work on ways to save every penny you can from your monthly budget to put towards debt. If you are still adding to the debt, you need to figure out why. Have you been paying for your kid's education or any of their bills? Like someone said earlier, if this is the case, they need to pay those things themselves. If they can't get a student loan, then they can cut back on their school hours, find a job full time, and pay their way through. They can also learn to take own their own insurance and phone bills if they don't already. And, if you still can't get your head above water, tell them that they will need to start pitching in on the food budget, or even pay you rent if they wish to live at home. Some may say that is harsh, but what is the best way to prepare a child to grow up and be apart of the real world? The parent pay for everything and bail them out of every problem, then suddenly graduate college and realize they don't know how to budget their own money and end up getting stuck with debt problems or unable to save for anything they want? Or having them pay for the things they want and need while under the protection and guidance of their parents so that when they graduate and/or get married and start their own family, they know how to budget and save money. So this could be a major thing to look at. You obviously don't want to just kick your kids away and make them think you don't love them, but if they aren't responsible for their own things, you need to start holding them responsible for them. Also look at other things you could save on. If you have Cable or Dish, perhaps drop them. Most shows can now be watched online, even if it means going to youtube and seeing if anyone put it up. Perhaps revise the food budget? That's one thing my husband and I have really been working on. I have cut ours in half! I am unsure of your living conditions or what type of disease you have, but if you are able to, perhaps there are things you could do for a little extra money. Clean the homes of family and friends? Host a garage sale and have all the profit go towards your debt? Are there crafts you can sell (they usually don't bring much money in, but every little bit can help). Perhaps you have a skill or talent you can train people in? If you can find something you can do that will create extra income, do it and discipline yourself that all of that extra income will go towards your debt and can't be spent elsewhere. If you haven't already, check out various sites about cutting the budget and frugal living and as you apply those tips, use the money saved toward debt. I have 2 things left to say. The first is a tip I read about paying off debt. Write down all the various debts you owe. (To whom, who much the debt for each is, and their minimum payment). Next, order them from smallest debt to the largest. Each month, pay the minimum towards each debt, but for the smallest debt, the one listed on the top of your list, pay more. I'll give an example on a small scale. We'll say you owe $ to 3 creditors. Vista debt: 300 Min: 20 American Express debt: 1000 Min: 50 Master Card debt: 2500 Min: 100 So, you pay the 50 and the 100 to AE and MC, but for Vista, we'll say you managed to get enough extra income to pay 100 a month on it. So, for the next 3 months you get it paid off (Note, I am not calculating interest, it is not needed to get the basic concept of this). Once you paid off that Vista, that gives you $100 extra each month that you can then apply to the AE card. So, rather than paying the min 50, you are able to put 150 towards it. Once the AE is paid off, you now have 150 extra in the budget so you add that to the minimum payment you were paying on the MC which means you'll be paying 250 on it each month. With this method, you can quickly pay off debt and reduce the number of creditors you are paying because rather than spending forever trying to pay off the largest amount, or slowly paying off all at the same time, little by little, you free up money as you finish paying off creditors so you can apply more to other debt. I hope that tip helps. The last thing I have to say is short. If you already have bad credit, do not fret about it. You don't want to do anything stupid, obviously, but do not fret about past mistakes. After 7 years, bad records are taken off your credit record. I could be wrong on the 7, it may be slightly more or less, but I believe it is 7 years. I know for bankruptcies, it is 10 years before it is taken off. (But please don't go bankrupt if avoidable because we, the tax payers, as well as yourself assuming you work and pay taxes, end up paying for it through our taxes). I hope the advise I gave was helpful.
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But to keep shopping for cards - I hate to have so many opening and closing credit cards on my credit. When they cross me, I just inform them that I won't be using their card anymore...that it will be stored safely at the back of the file (or whatever) and never carried or used....just to let them know it is unlikely I will ever be using them. I rather think that the average joe customer service really does not care much. Maybe it would get their attention if one was to drop the 'approved amount from 5, 10, 20, or 50 K down to say $500...and then stick it in drawer. It seems they really want to give us some money (debt) yet aren't willing to give folks even with super credit rating, super rates. I just checked and my Discover (the only one I regularly use and always pay off each month) has a rate of 17.49% for purchases, and 22.99% for cash advances. Sheesh...Let's revolt! I think I'll call now and ask that they remove that cash advance option....suggesting for security reasons. That rate is outrageous. When I checked a score (it wasn't FICO but some other name and scale) a year or so ago, it said my score was 98.5...only 1.5 away from being 100 percent perfect. Shouldn't that warrant a pretty decent rate? Sue
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My brother and I moved swiftly and surely to isolate our mother's assets when it became clear her failing health would preclude her independent life style. That was 2 1/2 years ago. She has a revocable trust now. Assets are protected, we have powers of attorney, and the chaos that follows any death will be minimized. She has "gifted" every year since her health "crashed and burned". Her home has been emptied of its contents and her assets have been directed to its maintenance. I can only tell you, that having an elderly, frail, mentally failing parent in your home and in your care is no day at the beach. To be perfectly honest, I hate the encroachment on my personal freedom. But she is my mother, she needs my help, and who better than I to see she is well cared for, indulged, given mental stimulation on a daily basis? "Baby boomers" need to pay attention to this issue... , laws governing "look back" and estate planning change every month/year; you need to pay attention to politics! "Look back" for Mum had we tried to put our names on the deed to her home in 2003 was 3 years. With the trust it was reduced to 7 mos.. Get thee to a lawyer specializing in ELDER LAW and estate planning, ASAP. Loop holes on inheritance and the transfer of potentially valuable real estate are being closed routinely, even as we're being told that we should reduce our expectation of social security and Medicare. Smarten up! move now and isolate the assets. You'll be glad you did.
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Lucy 2222, I'm glad that your credit card debts aren't at the usual high rates that they charge - usually 15 - 18%. That makes it much more difficult to get the amount still owing reduced, as so much of the regular payments must go to pay interest. If it's any consolation - store-issued cards are usually much more difficult to clear, as they usually charge 25 - 28%. I'm glad that you don't have any of them to cope with. If you can have the persistence to keep plugging away at the payments without getting the feeling of satisfaction that comes with getting one paid off fairly soon, I prefer paying the extra amount monthly, or at least most of it, on the HELOC, as it carries the highest interest rate. And if interest rates go up, it could be raised even higher. On a larger amount still owing. As credit card debt is unsecured, in case of serious problem, the credit card co. can hound you, but not take your house. As the people that carry the HELOC have secured debt, the loan being secured by a lien against your house, they could cause your house to be sold, if things go really bad with that one. That seems to me another reason to get rid of that one as soon as possible. Are the interest rates on the Visa debts fixed throughout the full term that the amount is owing? Sometimes they offer low rates, but that rate is for a limited period, e.g. a year or so, or even only a few months. After that, the interest rate becomes much higher. And usually if one doesn't make the full minimum payment, or the payment is a day late, etc., the rate goes to the usual higher rate immediately. I hope that you won't run yourself down into the dirt for getting into this problem. Lots of people have sort of wandered into a similar kind of a bind. It's really easy to get bogged down in debt - really easy: as you've found out. But while I ask that you not hate yourself for this mistake, I also ask that you be honest with yourself, and face the real issues and choices that you have made that are hurting you now. You have made a really good start, in recognizing the problem, and making a reasonable plan to get the problem fixed. A plan that is, according to your evaluation, do-able. As someone has suggested, I agree that it would be a good idea for you to get some information from the library to help you along the line of learning how debt works and how to manage it. It's really a situation where you gave yourself a pay cut - for, as you bought the goods that were more than you could afford on your current earnings, you set up a situation where you had to pay for it out of future income. Not only that, you had to pay rent on the money that you borrowed to buy goods before you had saved enough to buy them with your own money. That rent on the borrowed money is an expense to be paid in future , that you would not have had to pay had you been less impatient, could have waited until you could pay for the items out of your income at the time. After you get the loans paid off, please follow the suggestion offered above, of saving most of the $900. monthly to build an emergency fund to be available in case some unexpected but necessary expense crops up. When one has a such a cushion, it eases one's mind greatly. And can I offer a further suggestion? But that you go even one better ... get some materials that will help you learn how to manage your investments so that they produce better results for you than many obtain, plus reducing or deferring income tax, etc. In over 20 years as a personal financial advisor, I've told a number of people that learning how money works is an interesting hobby ... ... and it's a hobby **that pays well**!! Maybe you could retire early. Or retire a millionaire. Dream some great dreams ... but not of the castles in the air kind, but of ones that can be brought to pass, with increasing skill, effort, some self-control, and persistence. You can do it - and when you need some advice, or support, or to cry on someone's shoulder - come any time. We want to see you succeed in this noble enterprise that you've chosen. Good wishes for getting these debts whittled down. ole joyful
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carol_in_california
13 years ago
I would politely decline and only offer advise if I was asked.
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socks
13 years ago
Nice analogy, Joyful. I'm pretty sure we are going to get the extra credit card. I'm watching the proceedings on TV. It's like watching a dog chase its tail.
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Chi
13 years ago
If your friend had 20 dependent children who were relying on food in the next week or face going without, it makes things a little more complicated. Sure, your friend can sell things off, get a second job, but these things take time. Meanwhile, the dependent children, through no fault of their own, are going to go hungry until she figures out her finances. Why should they go hungry because she's irresponsible? She needs to find a way to feed them first, and then figure out the debt.
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minnie_tx
13 years ago
I think more people and government agencies should start watching Suze Orman on TV She'd say "Denied"
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Chi
13 years ago
It just baffles me that people don't seem to understand the implications of defaulting and not being able to pay the bills. Not only the support of millions and millions of people, but our military, our economic status, our currency, our interest rates, the loss of our credit rating. These are huge with massive effects that will be felt for a very long time. Yes, increasing the debt isn't ideal but it's much better than defaulting.
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User
13 years ago
I would say nada, nope, ABSOLUTELY NOT! I would not suggest any help, because he has probably heard it all before. My dad use say this..."Never give advice...wise men do not need it, and fools will not heed it." Best "advice" I ever heard.
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socks
13 years ago
I agree, Chi83. Raise ceiling, cut spending. Not so sure about the balanced budget amendment.
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Georgysmom
13 years ago
I agree with you 100 percent OJ. We were discussing this with friends at dinner the other night and I used a very similar analogy.
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lazypup
13 years ago
I had that very situation happen to me about a month ago. One of my kin folk came to me and asked me to co-sign for a credit card.

I politely told her that I am already extended to my limits and I could not take on any more risk at this time.
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susie53_gw
13 years ago
I would "never" co-sign for a credit card, cell phone or anything else for anyone.. If children were involved I would help with food but I would not hand over money.. If they can't handle their own money how do you think they are going to handle mine??
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Chi
13 years ago
The "kids" in my analogy are the millions of people who paid into the system and who are entitled to their social security and risk going without or having late payments cause of the government. I'm curious how you would give them food but not money? Food stamps?
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OklaMoni
13 years ago
Things were getting tight, and the divorce wasn't scheduled yet... and I was getting very worried.

I went out, and got a job. I changed jobs since then, to one that pays a bit better.

No, I really would prefer not going to work every day at this time of my life, but to get to where I want to be... I have to work.

No unpaid bills for me.

I wish, the government could figure out how to cut back. Everyone can do with less most of the time.

Moni
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sjerin
13 years ago
Yes, chi83. It's a mean game of chicken that a certain faction started, using the debt ceiling for use in blackmail. Raising the debt ceiling has nothing to do with spending/cutting/taxing. It does boggle the mind how few people don't know anything about anything going on right now. Check out Hot Topics if you're interested.
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heather_on
13 years ago
No, I would not give help to buy another credit card, because you know that very quickly it would be up to its limit too. Tough Love is in order here. Your friend would have to learn to prioritize his spending and stop spending money on luxuries that are not important. Downsizing would be a good step. The gimme gimme, you owe me that mentality would have to go. One doesn't need the biggest house or the fancy expensive car, fancy vacations. Instead I would guide my friend in better work ethics, perhaps an extra part time job where the money is set aside and used to pay down the debts already incurred. If my friend refused a job because he/she thought they were worth more money than the job offered.....well too bad, take the job. Some money is better than no money and free handouts. Oh and by the way, if the friend has family, perhaps the whole family should work together united in paying off the debt. Tell the family the truth about what is owing and why they got into the financial mess in the first place and work together to get out of debt. Even small steps in economy will add to a better future.
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rosemaryt
13 years ago
Chi83 is right. The implications from defaulting on the national debt are staggering.
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cynic
13 years ago
This starts off as a question about a person then turns into politics. OK. AFAIC, there's a gigantic difference between personal finances, corporate finances and nations' finances. They don't get handled the same way IMO.

My opinion, companies and nations responsibly handling debt can and will be successful. People can, but these days few are responsibly handling debt. A business and a country (or a state) needs short term cover loans until the accounts receivable come in. Individuals usually work on a cash accounting rather than accrual accounting method, though these days, people keep trying to convert.
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joyfulguy
Original Author
13 years ago
But when one is deep in the hole ... isn't it wise to stop digging?

And maybe look for a way to start filling up the hole?

When one is going deeper in debt, year by year ... where is it to end up?

And let's not forget that there are a number of Boomers about to retire, feeling entitled to pension/income ... and they have never been used to doing without ... and have got used to getting their way.

Medical services will be overtaxed when they become the big wave of seniors, also.

Seems to me that there are large increases in rather necessary spending, coming down the pipe.

With any increases in income? Many seem to pooh-pooh that.

And the numbers in the middle class, traditionally the main contributors to goverrnment income, is shrinking.

Seems to me that the days of strong political partisanship, if they continue, may well drag the country into third world status.

Time for statesmanship to trump political posturings, no?

ole joyfuelled
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sjerin
13 years ago
OJ, I thought you were using a parable. Were you, or were you referring to individuals?
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Chi
13 years ago
This has always been a political analogy. There is no friend with a credit card.

And yes, welcome to the US. Where some people care more about who wins the next election than the well-being of the entire country. Where many, many people vote not on the issues but because of their hatred of certain parties. Where our elected officials fight like stubborn pre-schoolers while we're left helpless with nothing to do but watch.

It's just way too over simplistic to just say "well stop spending" because that doesn't solve the problem right now, which is that in exactly 2 days we could have a crisis. People who depend on social security checks might not get them. Loss of our credit rating means car loans, mortgages, all interest rates will shoot up. Our dollar will fall even lower than it is now. All the people who depend on social security, that they paid into, will risk defaulting on their own mortgages and bills because they don't get their check on time.

This painful recession will be nothing compared to what will happen if the US can't pay it's bills and loses it's top credit rating. Anyone who relies on social security, on medicare, on medicaid, on disability, on military pensions, on any kind of government assistance will not be able to rely on that income anymore. Everyone is saying "Don't spend more!" but where do you think these checks come from? And trust me, social security will NOT be the first thing the US pays if it has to pick and choose bills.

Figuring out the debt, raising taxes, cutting spending...that's all fine and well but those things take time. We don't have time.

I hope everyone who relies on this money has a back up plan.
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suzieque
13 years ago
Correct - OJ's post wzs about the debt ceiling from the beginning. He was trying to make a point by comparing it to a friend needing another credit card and trying to teach an economy lesson. I get the point.

I agree with posters that we in the US are in deep trouble if our leaders, etc. don't figure this out and come together somehow on it. We're effectively out of time now.
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bulldinkie
13 years ago
No,No.No I have helped sooo many people Only to get stabbed ,its gonna stop no more,if you do get it in writing forwhen youll have to sue...Make sure they sign & date.
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susanjf_gw
13 years ago
why not ask the koch brothers for a loan or norquist..they seem to dish out plenty of tea bags...
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jannie
13 years ago
I wouldn't borrow or lend to a friend or relative. I am currently in debt (dumb,I know) on credit cards but I'm paying them off slowly but surely and I'll be out of their grasp within 3 years. I once borrowed $1000 from my Mom to buy a car for work, but I paid her back (with intetest) within a year.
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patti43
13 years ago
Chi83, IMHO you are so right in everything you've said so far. But if we default, if won't be just our country that suffers.

Cynic, since you seem to know, will you please explain to me why you think there's a big difference in whether it's a citizen being able to pay his bills or a government? I've read that myself, but nobody ever explains just what the difference is. Explain in English, if you don't mind. I'm sure I'm not the only one that fails to see the difference.
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A deep-in-debt friend asks your help to get another credit card

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