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How to help friends and family struggling with debt

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There are ways to lend a hand without lending a penny.

When someone you love is struggling with debt, it can be difficult to remain inactive while watching it deal with stress, anxiety and financial uncertainty. And if you have the knowledge or the means to help, it is natural to want to intervene.

But helping someone change their financial behavior is no small matter, and getting involved carries serious risks. After all, if things go wrong, it can deeply damage a relationship that matters to you.

That is why it is important to know the correct ways to help them in this problematic moment.

While there is no safe step-by-step formula to help someone overcome their debt problems, here are three best practices I learned from my time as a certified financial planner, as well as the hundreds of emails from readers I receive. the popular personal finance blog The paths to wealth.

Understand your goals
Tip # 1: Understand your goals

If you have read a good amount of personal finance books and blogs, you can be inclined to open the conversation by talking about different debt payment strategies, such as the popular one. Snowball debt or debt avalanche methods.

While those may be the right strategies for your friends or loved ones to accept them, it is better to save that conversation for later. Their first step should be to learn about what is most important to them, both in terms of their finances and their broader life goals.

A great question to start with is something like this: "What would be the first thing you would do if you were debt free?"

This is because what really inspires people to take action is not the goal of getting rid of debts, but objectives such as having more flexibility with their time or being able to leave a job that is not adequate to find something that fills them of Joy and satisfaction.

Goals like these have concrete benefits: people can specifically see how taking steps to get out of debt can improve their quality of life.

Therefore, it is your job to discover what the person you are trying to help cares enough to commit to a real change; Understand what will serve as a motivator strong enough to take you through what is often a long and difficult process.

Prioritize a small goalTip # 2: Prioritize a small goal

Once you know what is important to them, you can start discussing the real strategies that can help you achieve your goals.

And although you can certainly make a list of strategies, it is better to start thinking small and focusing on an easy goal to achieve.

For example, instead of building a six month emergency fund – a difficult task even for those with financial discipline – focus on helping them save $ 500. Similarly, instead of focusing on the long-term goal of becoming debt free, set a short-term goal to pay first. the debt with the smallest balance.

Why not start big?

Think of this process as an exercise routine for someone who has just started exercising. A good personal trainer knows that starting day 1 of the new regime with complex movements and heavy weights can be intimidating, overwhelming and discouraging. It is a good way to prevent a person from showing up for day 2.

Instead, a good coach knows the people where they are, even if that place is not ideal. If that means walking on a treadmill for five minutes, that's fine, it's five minutes longer than you walked yesterday. And tomorrow, maybe they will go for six, and then seven, and so on until they can begin to feel how the time and effort they are investing is improving their health and well-being.

A good mentality to have at this stage is that you are trying to help the person you love to develop their financial muscle. Yes, it is true, eventually, they will have to achieve bigger financial goals. But first, they need a base on which to build. Reaching that first small goal is an excellent way to start placing blocks on that base.

Participate in a communityTip # 3: Involve them in a community

Decades ago, famous personal development speaker Jim Rohn said: "You are the average of the five people you spend the most time with."

Today, this concept is backed by research.

In the best selling book Atomic habits, author James Clear writes:

As a general rule, the closer we are to someone, the more likely we are to mimic some of their habits. An innovative study tracked twelve thousand people for thirty-two years and found that "a person's chances of becoming obese increased by 57 percent if he or she had a friend who became obese." It also works in reverse. Another study found that if one person in a relationship lost weight, the other couple would also lose weight about a third of the time. Our friends and family provide a kind of invisible pressure that pushes us in their direction.

With this in mind, there are two steps you can take to help someone struggling with debt.

The first is to be a great example yourself. The better you are with your own finances, the more likely someone else will listen to you.

The second is to help them find a community where natural behavior is to be wise with money.

There are dozens of support communities, both online and local, where living a debt-free life is normal behavior. A good example is the financial independence community, where you can find active Facebook groups, excellent podcasts, books and local meetings.

In this community, getting a high interest loan to buy a new car of more than $ 40,000, something that a lot of people do every day without thinking much about it, isn't even on the radar. Being part of a supportive community that shares the values ​​and habits that your loved ones aspire to can help you stay focused on your goals and resist the need to fall out of the car.

Final thoughts

Helping someone overcome their debt has very little to do with their financial knowledge, although it can certainly be a valuable asset, if it has one. What is much more important is having high emotional intelligence and understanding why and how people change their behavior. These may not be the first skills you think of when it comes to personal finance, but in my experience, they are the most crucial.

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