If only my debt came from reckless spending sprees or exotic holidays!...
10 debt warning signs: does your friend has a debt problem?
You’ve suspected for a while now that someone you care about is going through a rough patch with money. Now you’re asking yourself just how to help someone with financial problems? And what are the debt warning signs?
Their face is constantly tight with worry, or they’re not as talkative as usual. You can’t have a five-minute conversation without their phone ringing, and every time it does they let out a world-weary sigh. Sometimes the opposite is true; your friend could be trying too hard to pretend that everything’s fine by living beyond their means or ignoring the stack of unopened bills on the table.
There could be many reasons why they’re struggling. Maybe they recently had their hours cut at work, or their partner walked out. Perhaps they’re struggling with credit card debt, or their household expenses have been creeping up in price over time (you might’ve noticed this yourself). You want to help but don’t know how.
Our friends at the Money Advice Service (MAS) know how difficult it can be to watch someone deal with this kind of stress. During their Talk Money Week campaign (Nov 12 – 18 2018) they want to help everyone talk openly and fearlessly about debt and money. Does your friend need to talk too? Here’s how you can help.
Debt warning signs
According to MAS, fewer than 1 in 5 people will seek help with their debt problems. It often takes them hitting a ‘tipping point’ where something happens that makes things worse (such as an emergency expense or sudden change in circumstances). It’s at this point where the financial reality finally hits home.
If you suspect that your loved one may be in debt, keep an eye out for these 10 ‘red flags’:
- They’ve been in debt in the past. Debt can be very difficult to fully escape from, especially if they had it at a young age. One common debt that people struggle with is an overdraft – once you’re in too far, it can be really tough to get back out.
- They’ve had a recent loss of income. Obvious examples include childbirth, being made redundant, illness, divorce or bereavement
- They’re living beyond their means or over spending. They always seem to have the latest ‘must have’ items although they don’t have the income to cover this
- They seem anxious, withdrawn or depressed. They’re not as eager to socialise as much and can seem distracted with their own thoughts. They may even panic if you try to plan a social event that involves spending money
- They may seem more secretive and avoid talking about their finances
- They’ve changed their spending habits, either by reducing spending (e.g. going on fewer holidays or eating out less) or overspending (spending without a plan for repayment e.g. putting luxury items on credit)
- They’ve sold their car and switched to public transport. Keeping a car isn’t cheap, so doing away with it altogether could mean they’ve had to eliminate car-related expenses.
- They seem tired or are having trouble sleeping
- Unopened bills lying around the house
- They avoid speaking to you or seeing you altogether. This can hurt, but it’s important to understand the shame that comes along with being in debt. In fact, people often withdraw when they need support from others the most.
There’s rarely one, clearly visible, tipping point that makes a person struggle with debt. Rather, it’s often a mix of several, smaller symptoms.
So now that we’re identified some of the warning signs of a debt problem, let’s think about how you could give your loved one the support they need.
Penny for your thoughts?
Saying “I’m in debt and I don’t know what to do” out loud, even to someone you trust, can be terrifying. Look at your friend and the loved ones surrounding them – who are they most likely to open up to? Is it you or someone else?
Talk to a mutual friend or family member in confidence – make them promise to discuss nothing with the person in debt until you’ve figured out a plan of action together. You may find that this other friend has noticed the same things you have.
Safety in numbers
Your loved one needs to know they’re not alone. Visit the Debt-Free Wannabe section of the MoneySavingExpert.com forums. There you’ll see plenty of people who need support in paying off their debts. Invite your friend to read some of the stories on there.
And if you want to gauge your friend’s reaction to getting debt advice you can make up a story about someone else you know having debt problems. Telling your friend that “Deborah from work was really struggling but got in touch with StepChange Debt Charity and now she’s much happier”, it might just encourage them to get in touch, even if they don’t tell you that they’re going to.
Never a borrower nor a lender be…
We don’t doubt that you want to help your friend or loved one, and chances are you’ve probably lent them the odd tenner every now and again. Resist the urge to lend any huge sums. Many clients who get in touch with us have fallen into debt because they sacrificed their own income in order to help someone they care about.
For example, turn on the TV and sooner or later you’ll be accosted by adverts selling guarantor loans. It might seem like something your friend or loved one can apply for, but few things tear friendships and families apart like money.
If your friend is struggling now, chances are they’ll struggle to pay back a loan on time each month as well. So if a loved one asks you to be a guarantor on a loan kindly but firmly tell them no. Explain that you don’t want money or debt to ruin your relationship, but that you’re there for them and will do all you can to positively help their situation..
This would be the perfect opportunity to suggest they get confidential debt advice. You could also look at different ways they could make some extra money, including:
- How to make money as a stay-at-home parent
- How to make money on eBay
- How to make money as a freelancer
They can get more great money-saving and money-making tips in their inbox every month by signing up to our newsletter.
How do I get involved with Talk Money Week?
There are lots of ways to get involved with the conversation. You can:
- Look out for posters in your local bank, government buildings and where you work, and start having a chat about it
- Follow Money Advice Service on Facebook and Twitter and share their updates
- Tweet your money thoughts with the hashtag #TalkMoney
08 Nov 2018