Financial debt can be a heavy burden. One that affects a person’s financial well-being and mental and emotional health. If someone you know is struggling with debt, your support can make a difference.
In this guide, we will walk you through various steps, online tools, and resources to help someone in debt.
Table of Contents
11 steps you should take when someone is struggling with debt
1. Approach the situation with empathy
Bringing up someone else’s personal financial matters can feel like overstepping. Which is why it’s crucial to approach the situation with empathy. Understand that financial difficulties can happen to anyone. It’s essential to create a safe and non-judgmental space for them to open up.
2. Educate yourself about debt management
Take the time to educate yourself about debt management. Look at strategies, financial resources, and available financial support services. This will help you to provide guidance to the person in debt.
3. Offer practical assistance
Assist the person in creating a realistic budget. Helping them analyse their income, expenses, and debt obligations. Encourage them to prioritise essential expenses. And explore ways to reduce non-essential spending. Offer to help them research and negotiate with creditors. Look for potential payment plans or debt consolidation options.
4. Encourage professional help
Suggest help from a non-profit credit counselling agency. Or financial advisors who specialise in debt management. Financial counselling can provide personalised advice, It can create a repayment plan. And negotiate with creditors on their behalf.
5. Support them in creating a debt repayment plan
Assist your friend or family member in developing a repayment plan that suits their financial situation. Encourage them to prioritise high-interest debts. And explore strategies such as the debt snowball or avalanche method. Offer to review their plan and provide feedback or suggestions.
6. Provide emotional support
Dealing with debts like credit card bills, payday loans, etc., can be emotionally challenging. Offer emotional support by being a listening ear. And reminding them of their progress. Help them stay motivated and focused on their financial goals.
7. Encourage self-care and stress management
Remind the person to prioritise self-care and stress management. Encourage them to engage in activities that help reduce stress. Like exercise, meditation, or spending time with loved ones. Offer to join the activities to provide more support.
8. Help them improve their financial literacy
Empower your loved one by providing financial support. And helping them improve their financial literacy. Share educational resources, and recommend books or online courses. And encourage them to attend financial workshops or seminars. The more they understand about personal finance, the better. They will be able to make informed decisions, control their finances, and avoid future debt.
9. Share your own stories
Discussing your personal experiences with family or friends can help. It’s common for people in financial trouble to feel hesitant about seeking advice. And they might not be open to suggestions on managing their finances. But they might feel at ease if you share your experiences.
10. Monitor progress
Regularly check in with them to monitor their progress. And offer ongoing support. Celebrate milestones and provide encouragement to stay motivated.
11. Celebrate financial milestones
Celebrate significant milestones. This could be paying off a debt or reaching a savings goal, acknowledging their hard work.
What if they don’t want your help?
If someone doesn’t want your help it’s important to respect their decision. Here are some steps you can take:
Respect their decision: Everyone has the right to manage their personal matters in their own way. If they decline your help, respect their choice. And let them know you’re there if they change their mind.
Keep communication open: Let them know that you’re available to talk about any topic. Not just their financial situation. Keeping communication open can help maintain your relationship. And may make them more comfortable seeking your help in the future.
Be patient: It can take time for someone to accept that they need help. Be patient and give them the space they need.
How to recognise the signs of financial debt?
Recognising signs of financial burden in others can be challenging. However, there are things that can help you identify potential signs:
1. Changes in spending habits
Excessive shopping, frequent splurges, or a sudden decrease in spending, can be a sign of debt. They may be trying to compensate for their financial difficulties. Or using credit to maintain their lifestyle.
2. Increased borrowing or requests for money
If someone frequently asks to borrow money. Or consistently seeks financial assistance, it may indicate that they are facing difficulties.
3. Avoiding discussions about money
People who are burdened by debt may avoid conversations about money. Or become uncomfortable when the topic arises. They may change the subject. Or exhibit signs of anxiety or stress when financial matters are brought up.
4. Unpaid bills or late payments
If you notice that someone consistently has unpaid bills. Or frequently makes late payments. It could be a sign that they are struggling to manage their debt obligations.
5. Selling personal belongings
Selling belongings can be a sign that someone is trying to generate quick cash. They may be doing this to address their financial obligations.
6. Increased stress or anxiety
Financial debt can cause significant stress and anxiety. If you observe someone displaying signs of heightened stress, it may suggest they are dealing with debt-related issues.
7. Changes in lifestyle or social activities
People burdened by debt may make noticeable changes in their lifestyle. They may avoid going out, decline invitations, or express concerns about the cost of activities.
8. Unmanageable credit card debt
Accumulating high credit card balances. And struggling to make payments beyond the minimum requirement can be a sign of mounting debt. Credit card debt with interest rates can quickly become unmanageable.
Bottom line
Supporting a friend or family member in financial distress requires empathy, understanding, and patience. Remember, it’s not just about helping them overcome debt problems. But also, about restoring their confidence and well-being. Your commitment to their financial and personal lives can make a difference in their recovery.
FAQs
How do you help someone who is struggling financially?
Firstly, it’s crucial to lend a caring ear. Following this, help them assess their financial situation. Do this by identifying their sources of income, monthly expenses, outstanding debts, and assets.
What can a person do to help themselves get out of debt?
Individuals can start by assessing their debt situation. Following this create a budget that prioritises essentials and cuts non-essential spending. Other considerations include increasing their income where possible. Or choosing a debt repayment strategy (like snowball or avalanche. When in doubt, seek guidance from credit counselling services if necessary.
What not to say to a financially struggling person?
Avoid saying things that may worsen the situation or be insensitive. Such as blaming them for their financial struggles. Or comparing their situation to others. Instead, offer empathy, support, and help if appropriate.
Disclaimer: The information given above is provided for reference only. This is not financial advice.
Related guides:
Should I Pay Off My Mortgage Early Or Save