Help! 25 Maxed out credit cards.....

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Herekittykitty
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Re: Help! 25 Maxed out credit cards.....

Post by Herekittykitty »

The questions of how to manage the maxed out credit cards including whatever got the young man into the situation and how to help him get out are very important and there is good advice and discussion about that.

I'm thinking maybe in the meantime as the credit card situation is dealt with, teach him more about money including saving and investing. A couple of books that might be good for him to start with:

If you Can by William Bernstein, available as a free PDF under Bernstein's Newer Books on Dr. Bernstein's website The Efficient Frontier: http://www.efficientfrontier.com/ (also available cheap on Amazon.)

I will Teach You to be Rich, 2nd edition, by Ramit Sethi.

The point would be to expand the way he looks at money and show him that he can take charge of his money and how, and that there is a future after debt.

Of course, dealing with his current credit card situation is top financial priority for him, but the overall financial education could come close behind or even parallel once he is in better shape with the credit cards.
I don't know anything.
Topic Author
fmzip
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Re: Help! 25 Maxed out credit cards.....

Post by fmzip »

Charon wrote: Tue Aug 16, 2022 5:45 pm
Hyperchicken wrote: Tue Aug 16, 2022 1:12 pm How does one even cancel someone else's card, or deny their access to it? Frankly some comments here are way out of touch.
OP says in the very first post that he can do this. You have control over other people's accounts to the extent that they allow you to have control, and it this case it seems like he has a fair bit of control.
EXACTLY! He gave up control, he asked for help. His cards are locked in our safe.

I've been sitting here quietly watching all the posts. Interesting that everyone has a lot of advice, some useful but quite a bit is way off base. How can anyone conclude anything based on a situation that they don't fully understand. I cannot fully describe it without typing a war and peace novel. And even if I did, 90% of the people wouldn't find this single post in the thread.

Long and short, the comments that provide a definitive conclusion to how this story ends is absurd. My decision was made on what I was doing before I even posted. Some read the opening post, and replied accordingly. I asked one question. How to close these accounts out properly? I appreciate those who provided some input, it was very helpful. I appreciate those that made some suggestion on money management etc etc. 95% of those suggestions were already in place.

Some responses to those with questions. He is going to move in with his girlfriend. I never once considered him poor nor on the verge of poverty after this is all paid off. IS there anything that he hasn't disclosed was one of the questions. He spilled the beans on everything, even balling his eyes out that he chews tobacco to his mom. He never asked for help with any of this, it all came out with some digging. Once the dig began, it started out with a comment my him of a few thousand in debt to his mom. Pressed for further details a few months later by me, $12,500 with 13 credit cards. Face to face meeting with me to discuss the details, meltdown the other 12 cards came out. Then the leasing app came out, then the chewing tobacco confession. The tears flowed for hours

The kid had issues. Condemn him if you'd like. Maybe those that condemn may understand why he held this all in for years on end. Being judged can be devestating. Many of you are judging me and don't know the slightest thing about me nor these circumstances. Fortunately I am able to gloss over those comments and gravitate to the kind words other conveyed. If I provide more details on the scenario, the cycle would just continue in this thread.

I had one kind soul PM me and I provided quite a bit more detail of this very sad story. To sum things up, if the prying never started, I truly believe I would be telling you about a funeral instead. There's a time for tough love, there's a time for compassion.

I'd suggest to those who have strong opinions in general, keep that this in mind the next time you post and pontificate. Those harsh words could become the last nail in someone else's coffin.
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arcticpineapplecorp.
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Re: Help! 25 Maxed out credit cards.....

Post by arcticpineapplecorp. »

fmzip wrote: Tue Aug 16, 2022 8:06 pm Some responses to those with questions. He is going to move in with his girlfriend. I never once considered him poor nor on the verge of poverty after this is all paid off. IS there anything that he hasn't disclosed was one of the questions. He spilled the beans on everything, even balling his eyes out that he chews tobacco to his mom. He never asked for help with any of this, it all came out with some digging. Once the dig began, it started out with a comment my him of a few thousand in debt to his mom. Pressed for further details a few months later by me, $12,500 with 13 credit cards. Face to face meeting with me to discuss the details, meltdown the other 12 cards came out. Then the leasing app came out, then the chewing tobacco confession. The tears flowed for hours.
this kinda reminds me of AA when you ask people how much they drink or use substances, it's assumed you should take what they say and double it. It doesn't all come out in one great/grand confession. It's a process. But as an addiction perhaps to shopping (?) and/or other substances (tobacco) is he getting any counseling, either for spenders anonymous or for other mental health issues (shame, etc?). I know we can't talk medical issues here, but it sounds like he may need the help of a trained counselor to help him with his hiding what's going on until confronted and then having a shame spiral upon confession. you don't have to respond to this. Just something to think about. i hope he gets the help he needs.

I have a relative who ended a marriage proposal after finding out about fiance hiding credit card debt. It was a breakdown of trust. Hopefully, he's more honest with his girlfriend about his struggles if they're going to work together.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
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fmzip
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Re: Help! 25 Maxed out credit cards.....

Post by fmzip »

arcticpineapplecorp. wrote: Tue Aug 16, 2022 9:09 pm
fmzip wrote: Tue Aug 16, 2022 8:06 pm Some responses to those with questions. He is going to move in with his girlfriend. I never once considered him poor nor on the verge of poverty after this is all paid off. IS there anything that he hasn't disclosed was one of the questions. He spilled the beans on everything, even balling his eyes out that he chews tobacco to his mom. He never asked for help with any of this, it all came out with some digging. Once the dig began, it started out with a comment my him of a few thousand in debt to his mom. Pressed for further details a few months later by me, $12,500 with 13 credit cards. Face to face meeting with me to discuss the details, meltdown the other 12 cards came out. Then the leasing app came out, then the chewing tobacco confession. The tears flowed for hours.
this kinda reminds me of AA when you ask people how much they drink or use substances, it's assumed you should take what they say and double it. It doesn't all come out in one great/grand confession. It's a process. But as an addiction perhaps to shopping (?) and/or other substances (tobacco) is he getting any counseling, either for spenders anonymous or for other mental health issues (shame, etc?). I know we can't talk medical issues here, but it sounds like he may need the help of a trained counselor to help him with his hiding what's going on until confronted and then having a shame spiral upon confession. you don't have to respond to this. Just something to think about. i hope he gets the help he needs.

I have a relative who ended a marriage proposal after finding out about fiance hiding credit card debt. It was a breakdown of trust. Hopefully, he's more honest with his girlfriend about his struggles if they're going to work together.

He did tell his girlfriend as well, along with his aunt and uncle. Both from my suggestions of explaining why it was necessary.

He said himself that he needs therapy as he can't easily find a way to let things out. First words out of his month after the long cry. I mentioned the concerns of addicted spending and how to get help. As I mentioned earlier, 95% of what's been suggested was already tabled and suggested well. I do appreciate your suggestions.
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PicassoSparks
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Re: Help! 25 Maxed out credit cards.....

Post by PicassoSparks »

I want to say again how lucky I think this young man is to have you in his life.
Ivygirl
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Re: Help! 25 Maxed out credit cards.....

Post by Ivygirl »

For those who think sub-$40k is plenty of money and is "middle class" - remember that stepson is about 9% poorer this year than last due to inflation.

"Middle class" is moving, upward out of reach, in real time you can see. Adjust your minds about the amount of money that is "middle class." Think about food and used cars, just to name two categories. Has stepson gotten anything close to a 9% raise?

I got a 4% raise this year. I'm 5% poorer than I was even though I was working, budgeting, saving, and doing everything right. "Middle class" lifestyle has been adjusted upward around me. If I had 25 maxed out little credit cards it would be 9% harder to pay them this year than last... that is, if the credit card company didn't also jack up its rate.
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Beensabu
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Re: Help! 25 Maxed out credit cards.....

Post by Beensabu »

PicassoSparks wrote: Tue Aug 16, 2022 9:47 pm I want to say again how lucky I think this young man is to have you in his life.
Seconded. Even just knowing that someone cares about you to the extent that OP obviously cares about their family member is a huge deal, arguably a bigger deal than the financial assistance itself.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
HomeStretch
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Re: Help! 25 Maxed out credit cards.....

Post by HomeStretch »

It sounds like you have good perspective on the issue and your stepson is lucky to have strong family/partner support. Everyone makes mistakes and your stepson deserves a chance to correct this one (more easily/less costly with your help). How you treat him after his confession is as important as the financial help given his emotional state.

Closing all cards but one or two of the oldest/best also makes sense. Perhaps the lenders for the 1-2 cards can significantly lower the card credit lines. His credit score should not be adversely affected and may improve after this debt clean-up.

Sounds like he will have reduced expenses for the next 7 months. Increasing income via a 2nd job or job change would be helpful.

After you help him understand budgeting better, perhaps some tools will help him stay on top of things:
1) YNAB or similar app for real time budget monitoring
2) credit card balance alerts to keep the balances on any cards visible to him
3) having his paycheck direct deposits split between savings and checking accounts
4) some banks allow sub-accounts where one can split their checking account deposit over sub-accounts for major expenses/savings goals.
ROIGuy
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Re: Help! 25 Maxed out credit cards.....

Post by ROIGuy »

The one thing you can help him with is financial education. Get him some books to read or podcasts to listen too. Getting a better understanding of how money and life works will go a long way to helping him avoid this problem in the future. There is a great list on this site that you can find of recommended books and podcast for him.
SuperTrooper87
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Re: Help! 25 Maxed out credit cards.....

Post by SuperTrooper87 »

fmzip wrote: Sun Aug 14, 2022 9:48 pm Open for suggestions
From reading the other posts, you seem to indicate there may be some other underlying issues aside from poor financial management. Without knowing the history / current stage of ongoing treatment for any mental health/drug use/etc it's hard to give solid advice as well as an order of operations for addressing things. If those are the issues that are DRIVING the spending then seeking professional help to address those will be needed before a sweeping debt payoff. As others have pointed out, he (and you) will be back in this situation before you know it.

Some folks have mentioned Dave Ramsey. I don't think that's a bad approach as this guy falls into his core demographic for his "plastic surgery" catch phrase. (Think scissors and credit cards). Seeking out a local Ramsey affiliated financial coach may not be a bad investment so that your and his relationship doesn't sour during this process. I foresee you paying these off, then during any future interaction wondering how he bought something new, pissed that he bought X when he still owes you Y, etc. Let someone else carry the burden of coaching him, let him dig himself out of his own hole (he will learn best this way), and you be there to support him and monitor things so he doesn't go off the deep end. In the end, this will save you headaches, souring the relationship and likely $$.

If he gets mad at you or disowns you for not flatly paying off his bills - that's on him. You're not his piggy bank or his superhero to save him from years of horrible financial decisions. He will not learn by you simply paying them off unless he learns and works hard to achieve milestones and learn some basics along the way. Good luck.
michaeljc70
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Re: Help! 25 Maxed out credit cards.....

Post by michaeljc70 »

I keep hearing that he only makes $40k a year, but it sounds like he doesn't have a mortgage or pay rent and lives with a relative. So, this is worse than it seems. My brother makes $30k per year and has a mortgage and no debt. He needs to come up with a reasonable budget and stick to it. He should get rid of all the credit cards except maybe one with a low credit line for emergencies and/or special situations (during Covid some places stopped accepting cash unless it was exact).
Ivygirl
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Re: Help! 25 Maxed out credit cards.....

Post by Ivygirl »

SuperTrooper87 wrote: Wed Aug 17, 2022 5:18 am
fmzip wrote: Sun Aug 14, 2022 9:48 pm Open for suggestions
From reading the other posts, you seem to indicate there may be some other underlying issues aside from poor financial management. Without knowing the history / current stage of ongoing treatment for any mental health/drug use/etc it's hard to give solid advice as well as an order of operations for addressing things. If those are the issues that are DRIVING the spending then seeking professional help to address those will be needed before a sweeping debt payoff. As others have pointed out, he (and you) will be back in this situation before you know it.

Some folks have mentioned Dave Ramsey. I don't think that's a bad approach as this guy falls into his core demographic for his "plastic surgery" catch phrase. (Think scissors and credit cards). Seeking out a local Ramsey affiliated financial coach may not be a bad investment so that your and his relationship doesn't sour during this process. I foresee you paying these off, then during any future interaction wondering how he bought something new, pissed that he bought X when he still owes you Y, etc. Let someone else carry the burden of coaching him, let him dig himself out of his own hole (he will learn best this way), and you be there to support him and monitor things so he doesn't go off the deep end. In the end, this will save you headaches, souring the relationship and likely $$.

If he gets mad at you or disowns you for not flatly paying off his bills - that's on him. You're not his piggy bank or his superhero to save him from years of horrible financial decisions. He will not learn by you simply paying them off unless he learns and works hard to achieve milestones and learn some basics along the way. Good luck.
Aren't we lucky that we have Mr. Ramsey to "carry the burden" of actually helping people who need it.

This is not aimed at you SuperTrooper87, I'm thinking of posters on this board who trash talk Dave Ramsey thoroughly, then admit the hard cases have to be turned over to him, because he is actually effective, and not too good to roll up his sleeves and meet people where they are.

Trash talkers of Dave Ramsey, who then admit only he can help, have admitted that he is the better man. That is all.
Nowizard
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Re: Help! 25 Maxed out credit cards.....

Post by Nowizard »

Though not the focus of the forum, it is important to think this through yourself in terms of how you want to convey the obvious, second part of what he could expect should something like this happen again. It has been going on for years, so it is not a simple issue. For example, what do the cards show he is spending money on, is he reliable with his job, does he manage other affairs at least reasonably well. Those questions give a window into how broad an issue this is other than finances. One aspect that often exists is substance abuse, among others. If there are mental health issues, it could be that covering treatment would be more helpful than paying off the credit cards.

Tim
Ivygirl
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Re: Help! 25 Maxed out credit cards.....

Post by Ivygirl »

HomeStretch wrote: Wed Aug 17, 2022 4:34 am It sounds like you have good perspective on the issue and your stepson is lucky to have strong family/partner support. Everyone makes mistakes and your stepson deserves a chance to correct this one (more easily/less costly with your help). How you treat him after his confession is as important as the financial help given his emotional state.

Closing all cards but one or two of the oldest/best also makes sense. Perhaps the lenders for the 1-2 cards can significantly lower the card credit lines. His credit score should not be adversely affected and may improve after this debt clean-up.

Sounds like he will have reduced expenses for the next 7 months. Increasing income via a 2nd job or job change would be helpful.

After you help him understand budgeting better, perhaps some tools will help him stay on top of things:
1) YNAB or similar app for real time budget monitoring
2) credit card balance alerts to keep the balances on any cards visible to him
3) having his paycheck direct deposits split between savings and checking accounts
4) some banks allow sub-accounts where one can split their checking account deposit over sub-accounts for major expenses/savings goals.
A very good post. Compassionate, actionable, and practical.
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fmzip
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Re: Help! 25 Maxed out credit cards.....

Post by fmzip »

michaeljc70 wrote: Wed Aug 17, 2022 7:11 am I keep hearing that he only makes $40k a year, but it sounds like he doesn't have a mortgage or pay rent and lives with a relative. So, this is worse than it seems. My brother makes $30k per year and has a mortgage and no debt. He needs to come up with a reasonable budget and stick to it. He should get rid of all the credit cards except maybe one with a low credit line for emergencies and/or special situations (during Covid some places stopped accepting cash unless it was exact).
He was living with his three friends when all this accumulated. It was the first time out on his own. One buddy moved out so he could no longer afford the rent and moved in with his Uncle.

Thant's when I started scratching my head and asking questions about debt as the added rent he would have needed to chip in was far less than if he had to find a rent elsewhere.......
Last edited by fmzip on Wed Aug 17, 2022 8:56 am, edited 1 time in total.
Topic Author
fmzip
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Re: Help! 25 Maxed out credit cards.....

Post by fmzip »

Beensabu wrote: Tue Aug 16, 2022 11:25 pm
PicassoSparks wrote: Tue Aug 16, 2022 9:47 pm I want to say again how lucky I think this young man is to have you in his life.
Seconded. Even just knowing that someone cares about you to the extent that OP obviously cares about their family member is a huge deal, arguably a bigger deal than the financial assistance itself.
Thank you both, it means a lot coming from random strangers. Very much appreciated
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fmzip
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Re: Help! 25 Maxed out credit cards.....

Post by fmzip »

Nowizard wrote: Wed Aug 17, 2022 7:30 am Though not the focus of the forum, it is important to think this through yourself in terms of how you want to convey the obvious, second part of what he could expect should something like this happen again. It has been going on for years, so it is not a simple issue. For example, what do the cards show he is spending money on, is he reliable with his job, does he manage other affairs at least reasonably well. Those questions give a window into how broad an issue this is other than finances. One aspect that often exists is substance abuse, among others. If there are mental health issues, it could be that covering treatment would be more helpful than paying off the credit cards.

Tim

He is super responsible with his job & taking in all the overtime he can get. He picks up odd jobs at his other aunts house from time to time whenever he can.

As far as his spending, it's the typical wasteful stuff. Clothes, sneakers, games, gaming computer, fancy monitor, TV etc etc.

Since it was his first experience living out of his childhood home ( Covid lockdown attributed to some debt) and he did not have good spending/saving habits, I am certain that attributed to things as well. Being self sufficient isn't easy and the wasteful spending cannot take place when you need something like a washer and a dryer and the giant bill from the oil delivery in the winter when the tank runs dry.

It is clear to him this is a once in a lifetime offer. He keeps reiterating he will make me proud, I do believe him.
Topic Author
fmzip
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Re: Help! 25 Maxed out credit cards.....

Post by fmzip »

SuperTrooper87 wrote: Wed Aug 17, 2022 5:18 am
fmzip wrote: Sun Aug 14, 2022 9:48 pm Open for suggestions
Seeking out a local Ramsey affiliated financial coach may not be a bad investment so that your and his relationship doesn't sour during this process. I foresee you paying these off, then during any future interaction wondering how he bought something new, pissed that he bought X when he still owes you Y, etc. Let someone else carry the burden of coaching him, let him dig himself out of his own hole (he will learn best this way), and you be there to support him and monitor things so he doesn't go off the deep end. In the end, this will save you headaches, souring the relationship and likely $$.

If he gets mad at you or disowns you for not flatly paying off his bills - that's on him. You're not his piggy bank or his superhero to save him from years of horrible financial decisions. He will not learn by you simply paying them off unless he learns and works hard to achieve milestones and learn some basics along the way. Good luck.
Spot on, this is exactly what I am doing. He actually just popped into my office after watching a Dave Ramsey Video. Told me about someone who was $800K in debt, felt grateful he addressed it now. I reiterated that point explaining it can follow you the rest of your life if your not careful. Then proceeded to provide some positive reinforcement for him.

I agree with your point 100% on the payback part. This is where things can get tricky. My thought was this. After the end of the 7 month stint of $1500 per month, there will be likely $11K balance. Depending how these next 7 months unfold (hopefully successful), I think I will allow him to simply pay me back at his own pace or more than likely agree to an amount per month once we go over his budget once he moves out with his girlfriend.

My original plan was to pay off his car for him before any of this unfolded. I have been having my best year in business and thought it would be nice for him to have a fresh start for him and his girlfriend. Instead, I could obviously do the same thing with the balance of the debt instead of the car like I first planned, but am a bit unsure that getting off this easy will prove beneficial. This is where it's a bit easier for me than my wife to be hard for all the right reasons. It's just deciding how hard to make it for and for how long. His 25 card payment plan has been going on for years, so the struggle has been real for him. I think some on the forum feel he should suffer indefinitely as they likely did. Coming up with an adequate recipe is the challenge and requires constant review and feel of the circumstances. That is something only my wife and I can do. Again I appreciate everyone support and suggestions as many of the ideas are helpful...
strummer6969
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Re: Help! 25 Maxed out credit cards.....

Post by strummer6969 »

fmzip wrote: Wed Aug 17, 2022 8:55 am
Nowizard wrote: Wed Aug 17, 2022 7:30 am Though not the focus of the forum, it is important to think this through yourself in terms of how you want to convey the obvious, second part of what he could expect should something like this happen again. It has been going on for years, so it is not a simple issue. For example, what do the cards show he is spending money on, is he reliable with his job, does he manage other affairs at least reasonably well. Those questions give a window into how broad an issue this is other than finances. One aspect that often exists is substance abuse, among others. If there are mental health issues, it could be that covering treatment would be more helpful than paying off the credit cards.

Tim

He is super responsible with his job & taking in all the overtime he can get. He picks up odd jobs at his other aunts house from time to time whenever he can.

As far as his spending, it's the typical wasteful stuff. Clothes, sneakers, games, gaming computer, fancy monitor, TV etc etc.

Since it was his first experience living out of his childhood home ( Covid lockdown attributed to some debt) and he did not have good spending/saving habits, I am certain that attributed to things as well. Being self sufficient isn't easy and the wasteful spending cannot take place when you need something like a washer and a dryer and the giant bill from the oil delivery in the winter when the tank runs dry.

It is clear to him this is a once in a lifetime offer. He keeps reiterating he will make me proud, I do believe him.
This sounds a bit like me after college. Probably his mindset is that he's excited to have his own money. He's thinking he's young and he'll pay off the tab later. Or maybe he'll get a better job and make more money. It's not his problem now, it's the future him's problem. Bailing out probably won't change the underlying behavior. The impulsiveness can be addressed through counseling; being surrounded by responsible peers also helps.
Boglegrappler
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Re: Help! 25 Maxed out credit cards.....

Post by Boglegrappler »

I haven't read every post, but wanted to chip in in case this hasn't been noted.

Given that credit card debt carries high interest rates, and given how that compounds, it's possible that the sum of his profligate debt is the consequence of initial spending that was much lower. It depends on over what period of time this occurred, and how he handed the payments.

My point is that this could be "good news" in that the restraint necessary to regain control might be more achievable than the numbers might suggest on their face.

In any case, I agree that he is lucky to have you in his corner, and I wish both of you good fortune in dealing with this challenge.
Herekittykitty
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Re: Help! 25 Maxed out credit cards.....

Post by Herekittykitty »

fmzip wrote: Wed Aug 17, 2022 9:26 am
......After the end of the 7 month stint of $1500 per month, there will be likely $11K balance. Depending how these next 7 months unfold (hopefully successful), I think I will allow him to simply pay me back at his own pace or more than likely agree to an amount per month once we go over his budget once he moves out with his girlfriend.......

My original plan was to pay off his car for him before any of this unfolded. I have been having my best year in business and thought it would be nice for him to have a fresh start for him and his girlfriend. Instead, I could obviously do the same thing with the balance of the debt instead of the car like I first planned, but am a bit unsure that getting off this easy will prove beneficial.........
Here are some thoughts.

I wouldn't have him pay you back. I would gift him what you have paid and are paying toward the debt. You have indicated you can afford it. Don't keep him in debt longer by having him owe you money. And don't let his owing you money come between the two of you. Just gift it to him.

But here's an idea of how to gift it to him - ifyou think it is a good idea - you could keep a list of the money you are paying toward his debts and every month that he does certain things toward learning about money, organizing money, and so on, you forgive a percentage of the debt so that at the end of six months or whatever time period makes sense to you, it is all forgiven. This would give him time to some degree to learn, put into action, and consolidate gains. I'm thinking an hour or two a week on his part for this plus discuss it with you weekly or monthly as you and he think most helpful. It should not be burdensome on either of you.

Things to consider to have him do and/or learn in return for the monthly chunk of debt forgiven could include (others may have more ideas or take issue with some of these):
-Learning to budget and keeping an organized budget. Go over it with you weekly to monthly - you decide. This is to help him learn how and encourage him as he builds the habit.
- Going to Dave Ramsey's Financial Peace University class series or at least viewing the videos if you think it would be helpful (yes, I know many here disagree with Dave Ramsey especially when he says to cut up all credit cards which IMHO is nuts to do and most if not all here disagree with his investing advice)
- Reading a (simple, straightforward, short) book about money. Suggestions (including a couple I mentioned in a post above): William Bernstein's "If You Can." "I will teach you to be Rich" by Ramit Sethi. "The Millionaire Next Door" by Thomas Stanley.
- Reading this site including the Wiki and the forum - you could show him threads in the forum or articles in the wiki although he may not be ready until he has more basics done and that could take him some months.

And - and yes this is nuts but so be it. My understanding is that he is living with an uncle for the next 7 months. Would it make sense for him to live with you for the next 3-6 months? This would be to let him keep earning money and putting it toward debt and savings, plus let him see you and your wife model financially responsible behavior.

And - if he learns and progresses well - think about funding a Roth IRA for him if you can easily afford it, once the debt is gone or close to it.

What a blessing you are for this young man. You have likely changed and possibly saved his life. And he may be a blessing to you and maybe your wife too as time goes on. The relationship between him and you is likely changed forever in a very good way.

Bless you.
I don't know anything.
Carousel
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Re: Help! 25 Maxed out credit cards.....

Post by Carousel »

fmzip wrote: Wed Aug 17, 2022 9:26 am My original plan was to pay off his car for him before any of this unfolded. I have been having my best year in business and thought it would be nice for him to have a fresh start for him and his girlfriend. Instead, I could obviously do the same thing with the balance of the debt instead of the car like I first planned, but am a bit unsure that getting off this easy will prove beneficial. This is where it's a bit easier for me than my wife to be hard for all the right reasons. It's just deciding how hard to make it for and for how long. His 25 card payment plan has been going on for years, so the struggle has been real for him.
...
You could also do a dollar matching plan, with your contribution going towards helping him pay off the debt (those $1000 debts would get knocked off very quickly that way!) or towards an IRA. (If he has felt crushed by the debt, seeing retirement savings build up could be very motivational, and he would learn the BH way.) If you feel there's any chance he will drift off track, having a payment partner to check in with could help him build good habits. otoh, it might be damaging to your relationship if he is struggling to stay on track with his contributions.
michaeljc70
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Re: Help! 25 Maxed out credit cards.....

Post by michaeljc70 »

Carousel wrote: Wed Aug 17, 2022 10:54 pm
fmzip wrote: Wed Aug 17, 2022 9:26 am My original plan was to pay off his car for him before any of this unfolded. I have been having my best year in business and thought it would be nice for him to have a fresh start for him and his girlfriend. Instead, I could obviously do the same thing with the balance of the debt instead of the car like I first planned, but am a bit unsure that getting off this easy will prove beneficial. This is where it's a bit easier for me than my wife to be hard for all the right reasons. It's just deciding how hard to make it for and for how long. His 25 card payment plan has been going on for years, so the struggle has been real for him.
...
You could also do a dollar matching plan, with your contribution going towards helping him pay off the debt (those $1000 debts would get knocked off very quickly that way!) or towards an IRA. (If he has felt crushed by the debt, seeing retirement savings build up could be very motivational, and he would learn the BH way.) If you feel there's any chance he will drift off track, having a payment partner to check in with could help him build good habits. otoh, it might be damaging to your relationship if he is struggling to stay on track with his contributions.
Exactly what I was going to say. It encourages them to have skin in the game. I wouldn't put money in an IRA though until after high interest debt was paid down.

My father paid off my deadbeat brother's mortgage after he quit his job and decided to lay around the house for years. After that my brother had no reason to work. He is young and hasn't worked in 10+ years.
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AnnetteLouisan
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Re: Help! 25 Maxed out credit cards.....

Post by AnnetteLouisan »

He had a reason, but no incentive to work. And I’ve read that the implicit message being sent with these types of family gifts is that the giver has no confidence in the recipient’s abilities, and the recipient often resents that message and feels controlled. I’m speaking from experience, both in my family and in my circle of (former) friends (because I meant them money). Then the efforts are directed against the giver rather than constructively to solve the problem.

I know someone who is very affluent but also extremely poor looking (friend of the family) whose response when brought a sad or difficult situation is to listen with interest and then ask, “so, what are your plans/ what are you going to do?” She says they often come up with a few approaches that were better than what she thought of. She said, using other words, that this reestablishes an equal relationship between them and respects the other person’s agency, while still being caring and respectful.

So OP I would be sensitive about sending any implied message about your stepson’s potential to manage in the future. Has to take some kind of talent to keep so many cards paid off with such a low income.

Excellent piece / video today in the wsj by the way about credit card fees, bank fees and interchange fees for using a card.
michaeljc70
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Re: Help! 25 Maxed out credit cards.....

Post by michaeljc70 »

AnnetteLouisan wrote: Thu Aug 18, 2022 7:18 am He had a reason, but no incentive to work. And I’ve read that the implicit message being sent with these types of family gifts is that the giver has no confidence in the recipient’s abilities, and the recipient often resents that message and feels controlled. I’m speaking from experience, both in my family and in my circle of (former) friends (because I meant them money). Then the efforts are directed against the giver rather than constructively to solve the problem.

I know someone who is very affluent but also extremely poor looking (friend of the family) whose response when brought a sad or difficult situation is to listen with interest and then ask, “so, what are your plans/ what are you going to do?” She says they often come up with a few approaches that were better than what she thought of. She said, using other words, that this reestablishes an equal relationship between them and respects the other person’s agency, while still being caring and respectful.

So OP I would be sensitive about sending any implied message about your stepson’s potential to manage in the future. Has to take some kind of talent to keep so many cards paid off with such a low income.
I think if someone resents an offer to help them out with strings, they have bigger problems than the debt. My money, my rules. No one is forced to accept my help. If you have confidence in someone, I am not saying just gifting them the money is bad. For example, they had a large, unexpected expense rather than an ongoing spending problem. Unfortunately, overspending is like overeating. Losing weight is like paying debts off. The "recidivism" rate is high for both.
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fmzip
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Re: Help! 25 Maxed out credit cards.....

Post by fmzip »

Herekittykitty wrote: Wed Aug 17, 2022 9:43 pm
fmzip wrote: Wed Aug 17, 2022 9:26 am
......After the end of the 7 month stint of $1500 per month, there will be likely $11K balance. Depending how these next 7 months unfold (hopefully successful), I think I will allow him to simply pay me back at his own pace or more than likely agree to an amount per month once we go over his budget once he moves out with his girlfriend.......

My original plan was to pay off his car for him before any of this unfolded. I have been having my best year in business and thought it would be nice for him to have a fresh start for him and his girlfriend. Instead, I could obviously do the same thing with the balance of the debt instead of the car like I first planned, but am a bit unsure that getting off this easy will prove beneficial.........
Here are some thoughts.

I wouldn't have him pay you back. I would gift him what you have paid and are paying toward the debt. You have indicated you can afford it. Don't keep him in debt longer by having him owe you money. And don't let his owing you money come between the two of you. Just gift it to him.

But here's an idea of how to gift it to him - ifyou think it is a good idea - you could keep a list of the money you are paying toward his debts and every month that he does certain things toward learning about money, organizing money, and so on, you forgive a percentage of the debt so that at the end of six months or whatever time period makes sense to you, it is all forgiven. This would give him time to some degree to learn, put into action, and consolidate gains. I'm thinking an hour or two a week on his part for this plus discuss it with you weekly or monthly as you and he think most helpful. It should not be burdensome on either of you.

Things to consider to have him do and/or learn in return for the monthly chunk of debt forgiven could include (others may have more ideas or take issue with some of these):
-Learning to budget and keeping an organized budget. Go over it with you weekly to monthly - you decide. This is to help him learn how and encourage him as he builds the habit.
- Going to Dave Ramsey's Financial Peace University class series or at least viewing the videos if you think it would be helpful (yes, I know many here disagree with Dave Ramsey especially when he says to cut up all credit cards which IMHO is nuts to do and most if not all here disagree with his investing advice)
- Reading a (simple, straightforward, short) book about money. Suggestions (including a couple I mentioned in a post above): William Bernstein's "If You Can." "I will teach you to be Rich" by Ramit Sethi. "The Millionaire Next Door" by Thomas Stanley.
- Reading this site including the Wiki and the forum - you could show him threads in the forum or articles in the wiki although he may not be ready until he has more basics done and that could take him some months.

And - and yes this is nuts but so be it. My understanding is that he is living with an uncle for the next 7 months. Would it make sense for him to live with you for the next 3-6 months? This would be to let him keep earning money and putting it toward debt and savings, plus let him see you and your wife model financially responsible behavior.

And - if he learns and progresses well - think about funding a Roth IRA for him if you can easily afford it, once the debt is gone or close to it.

What a blessing you are for this young man. You have likely changed and possibly saved his life. And he may be a blessing to you and maybe your wife too as time goes on. The relationship between him and you is likely changed forever in a very good way.

Bless you.
Thank you for the kind words.

I've already paid off $17K of the $21K balance in three weeks which is quite a bit more than I was considering to pay off for his car when all this first started. He hasn't made a payment yet to me so forgiving the whole thing right off the bat seems counter-productive. I think this would be a recipe for disaster if he made no repayments right now. It would be like filing for bankruptcy without any ramifications. His careless spending is the underlying problem. Having a free lunch by me would likely send the wrong message. Quite frankly, I don't think he'd accept it either

The reason he is living with the uncle is because I only have one spare bedroom which I need available for my elderly mom. Also, my wife and I are lunar opposites in disciplining. She treats him like a baby bird, I'd want him to fly the nest. Life would be far too easy in our home and that would certainly not help his situation. This is where it's challenging being the Step Dad and not a parent.

As far as giving him more money towards a Roth...I'm not printing money in the basement! Our government only has the ability to do that! :happy
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Re: Help! 25 Maxed out credit cards.....

Post by fmzip »

AnnetteLouisan wrote: Thu Aug 18, 2022 7:18 am He had a reason, but no incentive to work. And I’ve read that the implicit message being sent with these types of family gifts is that the giver has no confidence in the recipient’s abilities, and the recipient often resents that message and feels controlled. I’m speaking from experience, both in my family and in my circle of (former) friends (because I meant them money). Then the efforts are directed against the giver rather than constructively to solve the problem.

I know someone who is very affluent but also extremely poor looking (friend of the family) whose response when brought a sad or difficult situation is to listen with interest and then ask, “so, what are your plans/ what are you going to do?” She says they often come up with a few approaches that were better than what she thought of. She said, using other words, that this reestablishes an equal relationship between them and respects the other person’s agency, while still being caring and respectful.

So OP I would be sensitive about sending any implied message about your stepson’s potential to manage in the future. Has to take some kind of talent to keep so many cards paid off with such a low income.

Excellent piece / video today in the wsj by the way about credit card fees, bank fees and interchange fees for using a card.
I am not sure I follow much of what you wrote......

Your first sentence, He had a reason, but no incentive to work. what is this referring to?

What implied message am I or would I be sending? I too am amazed with card payment management, was the first thing I said to him. It's some of the posters here that have no confidence and are assuming he will be a repetitive failure based on his past

In past re-payment arrangements with my step son we both discuss the terms and come to an agreement that works. There's no controlling implied nor sent. I always have had every confidence in his repayment plan. We've defined the first 7 month @ $1500 per month this time around. His only other fixed expenses are the car loan @ $300, Insurance @ $140 and Cell @ $160 (Yes I know this should go/be reduced and has been discussed). Gas is $75 every two weeks. He brings home between $700-$800 per week depending on OT and odd jobs. He feels empowered right now, not overwhelmed. We will see what happens one day at a time
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Re: Help! 25 Maxed out credit cards.....

Post by AnnetteLouisan »

Sorry for any confusion. I was referring to Michaeljc70’s brother, mentioned above, who received money to pay off his mortgage and was said to have no reason to work. I didn’t copy his entire comment just to save space.

The brother, like all of us, had a reason to work (self sufficiency, self development, income) but lost the immediate incentive of needing to work to remain housed.

OP’s stepson is working and has reason and incentive to work.

My comment related to the potential of sending the unintended message, with the bailout, that OP has no trust or confidence in the stepson’s abilities, whereas the opposite is the case. OP is helping precisely because he knows the stepson can do better.
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ResearchMed
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Re: Help! 25 Maxed out credit cards.....

Post by ResearchMed »

AnnetteLouisan wrote: Thu Aug 18, 2022 7:18 am I know someone who is very affluent but also extremely poor looking (friend of the family) whose response when brought a sad or difficult situation is to listen with interest and then ask, “so, what are your plans/ what are you going to do?” She says they often come up with a few approaches that were better than what she thought of. She said, using other words, that this reestablishes an equal relationship between them and respects the other person’s agency, while still being caring and respectful.

What am I missing about your affluent acquaintance's appearance?
Whether she is "unattractive" or looks less wealthy than she is... how does that matter in terms of helping?

RM
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AnnetteLouisan
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Re: Help! 25 Maxed out credit cards.....

Post by AnnetteLouisan »

ResearchMed wrote: Thu Aug 18, 2022 12:43 pm
AnnetteLouisan wrote: Thu Aug 18, 2022 7:18 am I know someone who is very affluent but also extremely poor looking (friend of the family) whose response when brought a sad or difficult situation is to listen with interest and then ask, “so, what are your plans/ what are you going to do?” She says they often come up with a few approaches that were better than what she thought of. She said, using other words, that this reestablishes an equal relationship between them and respects the other person’s agency, while still being caring and respectful.

What am I missing about your affluent acquaintance's appearance?
Whether she is "unattractive" or looks less wealthy than she is... how does that matter in terms of helping?

RM
Point was not about her attractiveness one way or the other, it was that she doesn’t look rich, she is unassuming and dresses down, so she doesn’t have that visual representation of being moneyed getting in the way of or affecting her interactions with her much less affluent employees, tenants and contractors.

She doesn’t flaunt it because, among other reasons, in her business it would be counterproductive. Much like the prototypical prodigious accumulators of wealth in The Millionaire Next Door, who as told in the book wore jeans to business meetings in Texas, or turned down his children’s gift of a Rolls Royce because his employees would not react well to it (and because he couldn’t throw fish in the back seat after a day fishing, like he can with his truck).

Image management is a pretty fascinating topic, no matter what your level of wealth or other circumstance.
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Re: Help! 25 Maxed out credit cards.....

Post by FireProof »

whodidntante wrote: Mon Aug 15, 2022 8:00 am "less than 40k per year" will require a pretty basic lifestyle. I've run the numbers on it and that is not a lifestyle I would want to live. It doesn't sound your stepson has been living that lifestyle, either.

I would honestly coach on him on how to make significantly more money. That will do a lot more to improve his life than crazy Dave Ramsey crap. He will be able to figure out his finances once he has a real income. To improve your finances through management you first need to go get some.
Running a balance of 20K doesn't significantly change your lifestyle. You only charge that money one time (and less really, given interest). And 40K per capita is more than average, so I think he'll be OK.
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Re: Help! 25 Maxed out credit cards.....

Post by getthatmarshmallow »

Just my $0.02:

A) kid is fortunate that you are able to help, and that he recognized he had a problem now and not in another year or two or after universal default.
B) If it's in your means and you want to, then help! This is what having a safety net means. But make sure you help, not enable. I think a plan where you pay off the debt and he repays you without interest will inflict the "pain" and allow him to learn discipline/habit of repayment without it swallowing his future. I think your plan sounds good.
C) get him a subscription to YNAB. It's apt for his use case. (Better than Dave Ramsey unless you're already into prosperity theology.). First line item in the budget: repayment to Stepdad. You can put in the payoff amount and the monthly payment and see the little progress bar move along.
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Re: Help! 25 Maxed out credit cards.....

Post by PicassoSparks »

When I was younger, I dug myself into a hole a bit shallower than the one we’re talking about here. I was trying to make ends meet but just a little too willing to order out instead of cook when I was exhausted, a little bad at anticipating unplanned expenses, and a little too much keeping up with friends. When you are on the edge like that, there is less room for error and those errors turn into late fees which push you further behind. It was suffocating. I was never in arrears but I was never catching up, either. Like the stepson, I didn’t plan on telling my parents about it and when it did come out, it was through tears.

They bailed me out.

This completely changed my finances. When you are not paying XX.x% APR to rent money, suddenly your knife edge budget has a surplus. You can breathe easier. You can make plans to change jobs because you can afford a brief gap in employment. You can cover emergencies. Budgeting isn’t a confrontation with hopelessness but a way to control your future.

My parents didn’t feel the need to make me pay it back immediately. As it turns out, the crushing leadup to the bailout was plenty of lesson. They did keep track of the debt and of times when they helped my brother as well — start a business, do a few other things. Many years later, they provided us both with an accounting, evened it out and told us that was all early inheritance.

The stability their generosity provided has compounded tremendously. It gave me a chance to start over and apply what I’d learned. It set me up to have a comfortable but frugal lifestyle, which has enabled me to easily save for retirement and to build a substantial war chest for never being trapped in a bad job ever again. The conditions enabled by the early inheritance far outstrip whatever benefit I’d have gotten from a late life windfall which (I hope!) is still decades away.
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Re: Help! 25 Maxed out credit cards.....

Post by ddbtoth »

fmzip wrote: Tue Aug 16, 2022 8:06 pm
Charon wrote: Tue Aug 16, 2022 5:45 pm
Hyperchicken wrote: Tue Aug 16, 2022 1:12 pm How does one even cancel someone else's card, or deny their access to it? Frankly some comments here are way out of touch.
OP says in the very first post that he can do this. You have control over other people's accounts to the extent that they allow you to have control, and it this case it seems like he has a fair bit of control.
EXACTLY! He gave up control, he asked for help. His cards are locked in our safe.

I've been sitting here quietly watching all the posts. Interesting that everyone has a lot of advice, some useful but quite a bit is way off base. How can anyone conclude anything based on a situation that they don't fully understand. I cannot fully describe it without typing a war and peace novel. And even if I did, 90% of the people wouldn't find this single post in the thread.

Long and short, the comments that provide a definitive conclusion to how this story ends is absurd. My decision was made on what I was doing before I even posted. Some read the opening post, and replied accordingly. I asked one question. How to close these accounts out properly? I appreciate those who provided some input, it was very helpful. I appreciate those that made some suggestion on money management etc etc. 95% of those suggestions were already in place.

Some responses to those with questions. He is going to move in with his girlfriend. I never once considered him poor nor on the verge of poverty after this is all paid off. IS there anything that he hasn't disclosed was one of the questions. He spilled the beans on everything, even balling his eyes out that he chews tobacco to his mom. He never asked for help with any of this, it all came out with some digging. Once the dig began, it started out with a comment my him of a few thousand in debt to his mom. Pressed for further details a few months later by me, $12,500 with 13 credit cards. Face to face meeting with me to discuss the details, meltdown the other 12 cards came out. Then the leasing app came out, then the chewing tobacco confession. The tears flowed for hours

The kid had issues. Condemn him if you'd like. Maybe those that condemn may understand why he held this all in for years on end. Being judged can be devestating. Many of you are judging me and don't know the slightest thing about me nor these circumstances. Fortunately I am able to gloss over those comments and gravitate to the kind words other conveyed. If I provide more details on the scenario, the cycle would just continue in this thread.

I had one kind soul PM me and I provided quite a bit more detail of this very sad story. To sum things up, if the prying never started, I truly believe I would be telling you about a funeral instead. There's a time for tough love, there's a time for compassion.

I'd suggest to those who have strong opinions in general, keep that this in mind the next time you post and pontificate. Those harsh words could become the last nail in someone else's coffin.
That's the fun thing asking for opinions, sometimes you get some you don't like. And as to all the comments about he doesn't understand money, sounds like he's got it nailed down and knows everything he needs to up to this point. It's not what you know, it's what you do that matters.
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ResearchMed
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Re: Help! 25 Maxed out credit cards.....

Post by ResearchMed »

PicassoSparks wrote: Thu Aug 18, 2022 3:13 pm When I was younger, I dug myself into a hole a bit shallower than the one we’re talking about here. I was trying to make ends meet but just a little too willing to order out instead of cook when I was exhausted, a little bad at anticipating unplanned expenses, and a little too much keeping up with friends. When you are on the edge like that, there is less room for error and those errors turn into late fees which push you further behind. It was suffocating. I was never in arrears but I was never catching up, either. Like the stepson, I didn’t plan on telling my parents about it and when it did come out, it was through tears.

They bailed me out.

This completely changed my finances. When you are not paying XX.x% APR to rent money, suddenly your knife edge budget has a surplus. You can breathe easier. You can make plans to change jobs because you can afford a brief gap in employment. You can cover emergencies. Budgeting isn’t a confrontation with hopelessness but a way to control your future.

My parents didn’t feel the need to make me pay it back immediately. As it turns out, the crushing leadup to the bailout was plenty of lesson. They did keep track of the debt and of times when they helped my brother as well — start a business, do a few other things. Many years later, they provided us both with an accounting, evened it out and told us that was all early inheritance.

The stability their generosity provided has compounded tremendously. It gave me a chance to start over and apply what I’d learned. It set me up to have a comfortable but frugal lifestyle, which has enabled me to easily save for retirement and to build a substantial war chest for never being trapped in a bad job ever again. The conditions enabled by the early inheritance far outstrip whatever benefit I’d have gotten from a late life windfall which (I hope!) is still decades away.

Thanks for sharing that.
It reinforces what a few of us here were trying to communicate, that one-time help for someone who has not been a serial offender might - just might - provide the help needed to get a fresh start.

Many here assume that someone with one bad, very bad, experience like this will naturally go on to become a debt addict.
Or... it might give someone the fresh start they need, a fresh start that they are dearly expecting to lead to a better life, after "quite a learning experience". That "crushing experience" can be quite a motivator... for "never again!"

VERY glad that you got through that. You've given some details of a good example of how it can end up working out for the better.

RM
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Re: Help! 25 Maxed out credit cards.....

Post by Dottie57 »

Saving$ wrote: Sun Aug 14, 2022 11:15 pm
GettingComfortable wrote: Sun Aug 14, 2022 9:55 pm They are his accounts. He'll max them out again.

Better, IMHO, would have been to help him learn to manage his finances. Then to pay them off himself.
+1000

Does the repayment plan include sitting down with you once per month to review his credit report, on something like Credit Karma?
$50 less car loan per month is not this kids problem. Sure it will help, but what will help most is him learning. I fear he may not learn since you paid them all off...

HOWEVER, with 25 paid off CC's he should have a stellar credit score. If you really want to simplify things and take away temptations, sit down with him and have him close the 13 newest cards, and keep the others, but not use them.
No.

One credit card is more than enough.
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Re: Help! 25 Maxed out credit cards.....

Post by Californiastate »

OP
Please provide and update in 24 months.
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Tyrael314
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Re: Help! 25 Maxed out credit cards.....

Post by Tyrael314 »

Here are my .02

He seems like a perfect candidate for Dave Ramsey's Financial Peace if for no other reason than budgeting and avoiding debt. Yeah there are people out there who have the discipline to utilize credit cards effectively but he isn't one of those people, at least not now. I would buy it for him and go through it with him to provide support. He is lucky to have you in his life and in his corner. Wishing him the best of luck!
"A society grows great when old men plants trees under whose shade they know they shall never sit."
michaeljc70
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Re: Help! 25 Maxed out credit cards.....

Post by michaeljc70 »

There have been several comments on helping but not enabling. I am curious what that line is. Obviously, it is fuzzy. Responses seem to range from paying off the whole debt without string and hoping they don't incur CC debt again to only helping them if they will wind up living under a bridge. It seems to me if they have a spending problem and you reduce their future CC payments you are enabling them to spend more.

To answer my own question, I think the cause of the debt has to be considered. Aka spending problem vs. unexpected life event. As I said above, I think a dollar for dollar (or reasonable other proportion) matching seems reasonable to me to help them but have them still have skin the game.
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Re: Help! 25 Maxed out credit cards.....

Post by SuperTrooper87 »

fmzip wrote: Wed Aug 17, 2022 9:26 am
SuperTrooper87 wrote: Wed Aug 17, 2022 5:18 am
fmzip wrote: Sun Aug 14, 2022 9:48 pm Open for suggestions
Seeking out a local Ramsey affiliated financial coach may not be a bad investment so that your and his relationship doesn't sour during this process. I foresee you paying these off, then during any future interaction wondering how he bought something new, pissed that he bought X when he still owes you Y, etc. Let someone else carry the burden of coaching him, let him dig himself out of his own hole (he will learn best this way), and you be there to support him and monitor things so he doesn't go off the deep end. In the end, this will save you headaches, souring the relationship and likely $$.

If he gets mad at you or disowns you for not flatly paying off his bills - that's on him. You're not his piggy bank or his superhero to save him from years of horrible financial decisions. He will not learn by you simply paying them off unless he learns and works hard to achieve milestones and learn some basics along the way. Good luck.
Spot on, this is exactly what I am doing. He actually just popped into my office after watching a Dave Ramsey Video. Told me about someone who was $800K in debt, felt grateful he addressed it now. I reiterated that point explaining it can follow you the rest of your life if your not careful. Then proceeded to provide some positive reinforcement for him.

I agree with your point 100% on the payback part. This is where things can get tricky. My thought was this. After the end of the 7 month stint of $1500 per month, there will be likely $11K balance. Depending how these next 7 months unfold (hopefully successful), I think I will allow him to simply pay me back at his own pace or more than likely agree to an amount per month once we go over his budget once he moves out with his girlfriend.

My original plan was to pay off his car for him before any of this unfolded. I have been having my best year in business and thought it would be nice for him to have a fresh start for him and his girlfriend. Instead, I could obviously do the same thing with the balance of the debt instead of the car like I first planned, but am a bit unsure that getting off this easy will prove beneficial. This is where it's a bit easier for me than my wife to be hard for all the right reasons. It's just deciding how hard to make it for and for how long. His 25 card payment plan has been going on for years, so the struggle has been real for him. I think some on the forum feel he should suffer indefinitely as they likely did. Coming up with an adequate recipe is the challenge and requires constant review and feel of the circumstances. That is something only my wife and I can do. Again I appreciate everyone support and suggestions as many of the ideas are helpful...
What may seem like an easier solution now - paying it for him, may create a worse situation later - repeat of events. Once he has established a good understanding, foundation and perhaps pays a few off himself, you could create a plan of matching payments. Where whatever he puts toward it, you agree to match. This way he is working toward solving the issue and you are able to help him, but with incentive to continue working/learning/growing good habits.
SuperTrooper87
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Re: Help! 25 Maxed out credit cards.....

Post by SuperTrooper87 »

Ivygirl wrote: Wed Aug 17, 2022 7:23 am
SuperTrooper87 wrote: Wed Aug 17, 2022 5:18 am
fmzip wrote: Sun Aug 14, 2022 9:48 pm Open for suggestions
From reading the other posts, you seem to indicate there may be some other underlying issues aside from poor financial management. Without knowing the history / current stage of ongoing treatment for any mental health/drug use/etc it's hard to give solid advice as well as an order of operations for addressing things. If those are the issues that are DRIVING the spending then seeking professional help to address those will be needed before a sweeping debt payoff. As others have pointed out, he (and you) will be back in this situation before you know it.

Some folks have mentioned Dave Ramsey. I don't think that's a bad approach as this guy falls into his core demographic for his "plastic surgery" catch phrase. (Think scissors and credit cards). Seeking out a local Ramsey affiliated financial coach may not be a bad investment so that your and his relationship doesn't sour during this process. I foresee you paying these off, then during any future interaction wondering how he bought something new, pissed that he bought X when he still owes you Y, etc. Let someone else carry the burden of coaching him, let him dig himself out of his own hole (he will learn best this way), and you be there to support him and monitor things so he doesn't go off the deep end. In the end, this will save you headaches, souring the relationship and likely $$.

If he gets mad at you or disowns you for not flatly paying off his bills - that's on him. You're not his piggy bank or his superhero to save him from years of horrible financial decisions. He will not learn by you simply paying them off unless he learns and works hard to achieve milestones and learn some basics along the way. Good luck.
Aren't we lucky that we have Mr. Ramsey to "carry the burden" of actually helping people who need it.

This is not aimed at you SuperTrooper87, I'm thinking of posters on this board who trash talk Dave Ramsey thoroughly, then admit the hard cases have to be turned over to him, because he is actually effective, and not too good to roll up his sleeves and meet people where they are.

Trash talkers of Dave Ramsey, who then admit only he can help, have admitted that he is the better man. That is all.
Agreed and no offense taken. I think there are certain people who will thrive with his guidance and others who are beyond it and so it's hard for them to wrap their head around it because it may not seem the most effective. As someone who witnessed his parents piss away their money, lose their house and have nothing for years as well as building my own net worth from a solid negative leaving college, Dave was a good reference and constant reminder in the back of my head. I reflect back on his info to help keep me grounded, but cherish the information learned hear from Bogle's as I see myself moving into the next chapter of my life.
RudyS
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Re: Help! 25 Maxed out credit cards.....

Post by RudyS »

Dottie57 wrote: Thu Aug 18, 2022 4:04 pm
Saving$ wrote: Sun Aug 14, 2022 11:15 pm
GettingComfortable wrote: Sun Aug 14, 2022 9:55 pm They are his accounts. He'll max them out again.

Better, IMHO, would have been to help him learn to manage his finances. Then to pay them off himself.
+1000

Does the repayment plan include sitting down with you once per month to review his credit report, on something like Credit Karma?
$50 less car loan per month is not this kids problem. Sure it will help, but what will help most is him learning. I fear he may not learn since you paid them all off...

HOWEVER, with 25 paid off CC's he should have a stellar credit score. If you really want to simplify things and take away temptations, sit down with him and have him close the 13 newest cards, and keep the others, but not use them.
No.

One credit card is more than enough.
No. Under normal circumstances maybe, but one should always have a spare in case one card gets deactivated due to fraud, suspected fraud, etc. [Someone upthread already said this.]
mdavis6890
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Re: Help! 25 Maxed out credit cards.....

Post by mdavis6890 »

fmzip wrote: Sun Aug 14, 2022 10:42 pm I'm just trying to pave a path to establishing good credit and what good credit provides.
I can see why you are focused on credit score. It's probably something you've optimized in your own life. It's also something easy to measure, track and tactically improve. But I think this is a horrible thing for this person to be focused on. Credit score should be very far from their mind. They need to learn to manage money independently and responsibility, and avoid debt/credit entirely for as long as possible and only then maybe if they buy a house.

This person has no need for a credit score in their life.
Dottie57
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Re: Help! 25 Maxed out credit cards.....

Post by Dottie57 »

RudyS wrote: Fri Aug 19, 2022 10:06 am
Dottie57 wrote: Thu Aug 18, 2022 4:04 pm
Saving$ wrote: Sun Aug 14, 2022 11:15 pm
GettingComfortable wrote: Sun Aug 14, 2022 9:55 pm They are his accounts. He'll max them out again.

Better, IMHO, would have been to help him learn to manage his finances. Then to pay them off himself.
+1000

Does the repayment plan include sitting down with you once per month to review his credit report, on something like Credit Karma?
$50 less car loan per month is not this kids problem. Sure it will help, but what will help most is him learning. I fear he may not learn since you paid them all off...

HOWEVER, with 25 paid off CC's he should have a stellar credit score. If you really want to simplify things and take away temptations, sit down with him and have him close the 13 newest cards, and keep the others, but not use them.
No.

One credit card is more than enough.
No. Under normal circumstances maybe, but one should always have a spare in case one card gets deactivated due to fraud, suspected fraud, etc. [Someone upthread already said this.]
Maybe. I have 3. One for in person buying , one for internet buying and one related to costco.

I do think for someone with credit card problems they should have only 1, pay for most things with cash. Having 24 more than the
1 is insane. No more credit purchases. The son is buying with future income.
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fmzip
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Re: Help! 25 Maxed out credit cards.....

Post by fmzip »

PicassoSparks wrote: Thu Aug 18, 2022 3:13 pm When I was younger, I dug myself into a hole a bit shallower than the one we’re talking about here. I was trying to make ends meet but just a little too willing to order out instead of cook when I was exhausted, a little bad at anticipating unplanned expenses, and a little too much keeping up with friends. When you are on the edge like that, there is less room for error and those errors turn into late fees which push you further behind. It was suffocating. I was never in arrears but I was never catching up, either. Like the stepson, I didn’t plan on telling my parents about it and when it did come out, it was through tears.

They bailed me out.

This completely changed my finances. When you are not paying XX.x% APR to rent money, suddenly your knife edge budget has a surplus. You can breathe easier. You can make plans to change jobs because you can afford a brief gap in employment. You can cover emergencies. Budgeting isn’t a confrontation with hopelessness but a way to control your future.

My parents didn’t feel the need to make me pay it back immediately. As it turns out, the crushing leadup to the bailout was plenty of lesson. They did keep track of the debt and of times when they helped my brother as well — start a business, do a few other things. Many years later, they provided us both with an accounting, evened it out and told us that was all early inheritance.

The stability their generosity provided has compounded tremendously. It gave me a chance to start over and apply what I’d learned. It set me up to have a comfortable but frugal lifestyle, which has enabled me to easily save for retirement and to build a substantial war chest for never being trapped in a bad job ever again. The conditions enabled by the early inheritance far outstrip whatever benefit I’d have gotten from a late life windfall which (I hope!) is still decades away.
Thanks for the share. Great story, hoping my stepson finds the same path.
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fmzip
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Re: Help! 25 Maxed out credit cards.....

Post by fmzip »

mdavis6890 wrote: Fri Aug 19, 2022 11:27 am
fmzip wrote: Sun Aug 14, 2022 10:42 pm I'm just trying to pave a path to establishing good credit and what good credit provides.
I can see why you are focused on credit score. It's probably something you've optimized in your own life. It's also something easy to measure, track and tactically improve. But I think this is a horrible thing for this person to be focused on. Credit score should be very far from their mind. They need to learn to manage money independently and responsibility, and avoid debt/credit entirely for as long as possible and only then maybe if they buy a house.

This person has no need for a credit score in their life.
I am not interested in explaining this my stepson at this point in his life. I am hoping his credit score will improve so he can find an apartment. Both him and his girlfriend do not have good credit. I have never focused on a score. A reaped the benefits of HAVING a good score.

And really??? He has no need for a credit score in his LIFE? This sounds EXTREMELY logical.....WOW
Topic Author
fmzip
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Re: Help! 25 Maxed out credit cards.....

Post by fmzip »

Californiastate wrote: Thu Aug 18, 2022 4:08 pm OP
Please provide and update in 24 months.

Will do....
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arcticpineapplecorp.
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Re: Help! 25 Maxed out credit cards.....

Post by arcticpineapplecorp. »

Herekittykitty wrote: Tue Aug 16, 2022 7:17 pm The questions of how to manage the maxed out credit cards including whatever got the young man into the situation and how to help him get out are very important and there is good advice and discussion about that.

I'm thinking maybe in the meantime as the credit card situation is dealt with, teach him more about money including saving and investing. A couple of books that might be good for him to start with:

If you Can by William Bernstein, available as a free PDF under Bernstein's Newer Books on Dr. Bernstein's website The Efficient Frontier: http://www.efficientfrontier.com/ (also available cheap on Amazon.)

I will Teach You to be Rich, 2nd edition, by Ramit Sethi.

The point would be to expand the way he looks at money and show him that he can take charge of his money and how, and that there is a future after debt.

Of course, dealing with his current credit card situation is top financial priority for him, but the overall financial education could come close behind or even parallel once he is in better shape with the credit cards.
i'm 100 pages in (epub) the 900 some pages of Ramit's book. He just talked about money scripts. Very interesting stuff. Understanding that might be a good start to seeing the connections between narrative and money habits.

he gives examples of these invisible money scripts from less bad to more bad:
benign (It's not so bad. everybody has debt. at least i don't have as much as so and so." Doesn't change our situation but makes us feel better)

normalizing ("Paying interest is just like any other fee") while failing to understand how 21% interest can lead to crushing, inescapable debt.

surrendering of responsibility ("These credit card companies just try to trap you"). Sure. like it's their fault you're broke?

hopeless ("I don't even know how much I owe"). I call this the ostrich strategy.

most hopeless ("I'm just trying to do my best") This person is saying they have no control over their finances. Life is just something that "happens" to you. You've surrendered your agency/locus of control. He says, It's very difficult for these people to ever change. Probably because it takes an internal locus of control to affect change.

Read the book and pass it on to him. It could change his life. It has for others. I downloaded a copy from my library. Didn't cost me a thing. Didn't have to put it on a credit card.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
JBTX
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Re: Help! 25 Maxed out credit cards.....

Post by JBTX »

fmzip wrote: Tue Aug 16, 2022 8:06 pm
Charon wrote: Tue Aug 16, 2022 5:45 pm
Hyperchicken wrote: Tue Aug 16, 2022 1:12 pm How does one even cancel someone else's card, or deny their access to it? Frankly some comments here are way out of touch.
OP says in the very first post that he can do this. You have control over other people's accounts to the extent that they allow you to have control, and it this case it seems like he has a fair bit of control.
EXACTLY! He gave up control, he asked for help. His cards are locked in our safe.

I've been sitting here quietly watching all the posts. Interesting that everyone has a lot of advice, some useful but quite a bit is way off base. How can anyone conclude anything based on a situation that they don't fully understand. I cannot fully describe it without typing a war and peace novel. And even if I did, 90% of the people wouldn't find this single post in the thread.

Long and short, the comments that provide a definitive conclusion to how this story ends is absurd. My decision was made on what I was doing before I even posted. Some read the opening post, and replied accordingly. I asked one question. How to close these accounts out properly? I appreciate those who provided some input, it was very helpful. I appreciate those that made some suggestion on money management etc etc. 95% of those suggestions were already in place.

Some responses to those with questions. He is going to move in with his girlfriend. I never once considered him poor nor on the verge of poverty after this is all paid off. IS there anything that he hasn't disclosed was one of the questions. He spilled the beans on everything, even balling his eyes out that he chews tobacco to his mom. He never asked for help with any of this, it all came out with some digging. Once the dig began, it started out with a comment my him of a few thousand in debt to his mom. Pressed for further details a few months later by me, $12,500 with 13 credit cards. Face to face meeting with me to discuss the details, meltdown the other 12 cards came out. Then the leasing app came out, then the chewing tobacco confession. The tears flowed for hours

The kid had issues. Condemn him if you'd like. Maybe those that condemn may understand why he held this all in for years on end. Being judged can be devestating. Many of you are judging me and don't know the slightest thing about me nor these circumstances. Fortunately I am able to gloss over those comments and gravitate to the kind words other conveyed. If I provide more details on the scenario, the cycle would just continue in this thread.

I had one kind soul PM me and I provided quite a bit more detail of this very sad story. To sum things up, if the prying never started, I truly believe I would be telling you about a funeral instead. There's a time for tough love, there's a time for compassion.

I'd suggest to those who have strong opinions in general, keep that this in mind the next time you post and pontificate. Those harsh words could become the last nail in someone else's coffin.
It is impossible to know all the details of anyones situation. Most have not experienced this, and bring their own values into it.

In our case we have a college age daughter, history of mental illness. I thought I was helping by putting her on a couple of cards that got her credit score over 750. But ultimately that enabled her to max out those cards, and buy a $20k car, all without a consistent job. Now she has $50k in debt.

There is little doubt in my mind this will end in bankruptcy. But right now mental health and other things are the priority. I’m not going to pay these debts because I tried to get her to not do it but she was determined to be independent. I’ve learned the hard way that some kids have to fail and feel the pain for themselves. Whenever I help it usually just enables more bad behavior.

To do bankruptcy right now is probably a waste. We will wait until she is in a better place.

This was our experience. It may not be applicable at all to yours. Having been through this and other things, I’ve learned not to judge others on parenting issues. Not every approach works with every person.

In general I’ve found on most subjects, that the people who have the strongest opinions are typically the ones who know the least.

As to your original question, given my experience, I would be inclined to shut down most of the cards. It will be easy enough to build the credit score up once he needs it and can handle it. Worst case scenario you can put him as a co-signer on a couple of your cards (but don’t give him the actual card). But I wouldn’t do any of that until he has developed good financial habits.

Ultimately addressing the issues that caused the destructive behaviors in the first place is the most important thing, or else there will be more destructive behaviors in the future.
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PicassoSparks
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Re: Help! 25 Maxed out credit cards.....

Post by PicassoSparks »

fmzip wrote: Fri Aug 19, 2022 7:48 pm And really??? He has no need for a credit score in his LIFE? This sounds EXTREMELY logical.....WOW
Just to warn you: This is literally one of Dave Ramsey’s teachings.

Several people have pointed you to Ramsey as a potential source of good advice for budgeting. And it is true that for many people, some of the key ideas he teaches have been a lifeline and his “tough love” way of delivering it lands well. But he also has some extremely weird ideas about debt and some very non-Boglehead ideas about investing. It’s all wrapped up in a prosperity theology that is some find helpful and some find offputting through to damaging.

The core of Ramsey’s good advice—envelope budgeting, getting real about your expenses, short term frugality compounds to long term wellbeing—can be found from many other sources which come with different (in my view, less) baggage. Dave is best consumed in moderation and with a balanced meal of other styles of frugal budgeting advice.
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