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How to Help a Loved One in Debt


This is a guest post by Samantha Peters, who is a regular contributor on Paid Twice a personal finance blog, where she writes about practical ways to reduce personal debt.

My older brother had been in dire financial straits for sometime, and was far too proud to ask his little sister for help. It’s a standard personal finance rule to resist getting involved in the money messes of relatives, but of all the money management rules we’re meant to follow, this one is broken the most. So if I was going to decide to help my big brother get out of debt, how was I going to go about it without getting myself in trouble or robbing him of his self-respect?

I decided to sit down and devise a series of rules and regulations to follow. Not only have they helped to minimize risk while maximizing my ability to get involved, they’ve also helped to reduce the embarrassment my brother doesn’t want to experience, which was one of the main reasons he wasn’t seeking help in the first place.

The following is my very own how to help a loved one in debt manifesto, which so far has been working out quite well:

Demand to See Everything

I decided that before getting involved financially with my brother’s debt problems, it was imperative that I have a complete understanding of his entire situation. By asking my brother to fetch every shred of paper proof of his total debt, he actually discovered he owed a little bit more than he thought he did. While it would have been an innocent mistake, his underestimation could have potentially made any efforts of mine to help utterly irrelevant.

Exhaust All Third Party Resources

Upon talking with my brother about his debt, I discovered he hadn’t even bothered to call his student loan lender, let alone anyone else he owed money to. I wanted to make sure that all the obvious moves had been made before getting myself involved any further than as an acting advisor. You’d be surprised what people won’t do simply because of pride.

Provide Tools and Offer Limited-Risk Options

Before I lent any money, I wanted to makes sure that all other non monetary options had been explored. I was willing to offer a spare bedroom if my brother was willing to sell hi home to pay off his debtdebt. I had a used compact car that I was willing to sell at discount to him if he was willing to sell his brand new truck to reduce his debt. While my brother didn’t take me up on all of my offers, it gave me the opportunity to explore options that didn’t mean a cash hand out plus see how serious he was at getting rid of his debt. I think it’s important to see if these sorts of options can solve a loved one’s personal debt crisis before choosing to lend cash instead.

Write up a Contract if Money Is Exchanged

I decided early on that if the only way my brother was going to get out of debt was if he borrowed money from me, that we would get it in writing. While it may seem as though such a formal agreement would alienate a loved one looking for help, I found that a personal loan contract had the opposite affect. My brother was ashamed of his debt and he felt as though a contract made it less like charity and more like a business transaction.

Virtually every personal finance guru out there tells you to avoid helping relatives get out of debt at all costs. But the honest truth is that when loved ones that are close to you need help, it’s almost impossible to say no. With that being said, it’s critical that you take the proper steps to ensure that such assistance actually helps and that it doesn’t put you at risk for getting into debt yourself.

We are always looking for interesing, motivational and real life personal debt stories. If you have a personal debt story that you’d like to share, feel free to contact us so that we can share it with all the readers.

How to be a Frugal Mom and Still Buy Pampers


By Sleeping Mama

This is a guest post: “Sleeping Mama” is a 30-something mom to a two-year-old little boy. Her blog, Sleeping Should Be Easy, chronicles the day-to-day life of her toddler, from proud moments to challenging days and everything in between.

I buy Pampers instead of generic, shop at a farmers market, and buy new toys for my toddler. Despite all that, I still claim to be a frugal mom.

How? By choosing to spend on what’s important to my family while aggressively cutting back on what’s not.

Take diapers, for instance. We tried several brands and even considered cloth diapers, but Pampers won my baby’s heart (and bottom). If I ran my budget strictly by the numbers, I would have insisted on buying the least expensive brand, regardless of its performance and ease. Instead, I’m willing to spend more on what works for us and find ways to lower costs as much as possible (I buy Pampers in bulk online using my credit card rewards mall, which gives me an extra 15 points per dollar for that particular online store).

Buying organic food is another example. We shop at the farmers market so for several reasons—to support local communities and eat tastier food among them—but we limit how much we spend per week (that $30 fish would just eat up our budget!) and use most of our purchases to cook at home.

Frugality is a lifestyle, and like any long-term lifestyle, needs to be sustainable. Yes, we could deprive ourselves and live bare bones, but that mindset will hardly go far and is likely difficult to maintain. Instead, we’ll gladly pay the cost of something we enjoy (assuming that it doesn’t eat up most of our income) and skimp on everything else.

So while diapers and food remain a high cost for our family, we’ve tightened our budget on a few other categories:

We frequent the library

Every week I borrow at least six library books for my toddler to read. I can run a search through my library’s website, place holds on the books I’m interested in and pick them up at my convenience—all for free! If my toddler isn’t interested in particular books, I don’t have to worry about buyer’s remorse since we don’t own them. We still buy him books, but at least he’s “test-driven” them before we even spent a dime. The library also hosts free children’s events such as story time or musical performances that we’ve attended.

We cook at home

We hardly eat at restaurants and rely on home-cooked meals. Since we don’t mind spending time in the kitchen, we’re able to save quite a bit, especially since we use leftovers for lunch at work the next day.

We hang out at the park and find free entertainment

My toddler loves going to the park, whether it’s to run on the grass, climb around on the playground, look for pine cones, scoop some sand, or even simply sit and pick flowers from the ground. We’ve gone to practically every park there is in our city. We also find free entertainment or venues: parades, festivals, free museum days. Even shopping centers offer free playgrounds or fountains (if you can avoid walking into the stores!).

We don’t drive fancy cars

When the time came to replace my dying Corolla, we were tempted to take the money we’ve saved and use it as a down payment for a fancier (or even larger) car. But we had enough money saved that would have allowed us to buy another basic Corolla with cash, which is what we did. For us, we just wanted a car that functions and provides basic comfort.

We look for promo codes and printable coupons

Although we buy our toddler new clothes, we opt for lower-cost brands and look for promo codes or printable coupons. Any time I shop online and there’s a field to enter a promo code, I’ll quickly google the store’s name and the words “promo code” to see if anything comes up. Or if I’m planning to go to the actual store, I’ll google the store’s name and “printable coupons.” Usually there’s a code for free shipping or a coupon for a percentage off your purchase.

We don’t buy our toddler too many toys and gifts

This past Christmas, we bought our toddler one gift—and it cost $16. For his birthday, we didn’t buy him any gifts and instead threw a little party with his immediate family. Children don’t really need too many toys and gadgets. I even think boredom is good for them since it forces them to crank up their imagination. And when we do buy him a toy, we’re almost always sure he’ll love it (because we know what he’s interested in) and they’re usually good-quality, long-lasting toys.

What’s important to you?

Our expenditures may be similar to some families while completely opposite for others; neither is necessarily more frugal than the other. So long as you’re clear about your priorities and your budget has room, you can continue spending on what matters to you and cut back on those that don’t.