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Helping my brother with credit card debt.
italianranma
Registered User regular
Registered User regular
I just found out my little brother has about $3,000 of credit card debt. He's 26, still in college, still living with our parents. He's got a part-time job working in the career field he eventually wants to get into (finance & accounting), but generally works less than 20 hours a week while he is enrolled full-time. My parents were the ones to find out and tell me about it, and we'd like to come up with a good plan for helping him become more responsible with his money. It would be absolutely effortless on my part to buy out his debt, but I'm worried that it wouldn't fix the underlying cause and he'd quickly return to being in debt. While I understand that credit card debt isn't uncommon for college students, I think this is a little troubling for two reasons: first is that as a finance major I think he should know better, and second is that this debt is 100% due to wants rather than needs. He has a separate credit card he can use to fill up on gas, buy textbooks, etc, and our parents are paying for tuition. This debt is from buying games, movie tickets, fast food, and other similar purchases. I remember the pain of being a poor starving college student, but I budgeted well enough to finance a trip to Japan and have a rainy-day fund in addition to having a moderate social life and paying for my own tuition. I think that he should do the same and that he doesn't suggests a fundamental misunderstanding or character flaw that's going to make independent adult life difficult for him.
He's also got a long-term, somewhat long-distance relationship with a lovely young woman that's headed towards marriage. The family fully supports this and we want to help finance their wedding, which we expect might happen in the next two years. Prior to learning about his debt, I was going to forward him a nice chunk of change to buy an engagement ring, but now I worry that if I simply send him the money it will go towards something else, and moreover I feel a little concerned about what kind of message I would send by giving him something nice and ignoring the debt. His girlfriend likewise has a similar amount of debt for similar reasons.
Is my thinking out of line here? Should I let the problem resolve itself or wait until it gets worse to intervene? When and how should I intervene in that case? What options exist for financial counseling or other services to teach him to find his own way out of the problem? What about the engagement ring? I have promised to help him with it but I didn't give any specifics.
He's also got a long-term, somewhat long-distance relationship with a lovely young woman that's headed towards marriage. The family fully supports this and we want to help finance their wedding, which we expect might happen in the next two years. Prior to learning about his debt, I was going to forward him a nice chunk of change to buy an engagement ring, but now I worry that if I simply send him the money it will go towards something else, and moreover I feel a little concerned about what kind of message I would send by giving him something nice and ignoring the debt. His girlfriend likewise has a similar amount of debt for similar reasons.
Is my thinking out of line here? Should I let the problem resolve itself or wait until it gets worse to intervene? When and how should I intervene in that case? What options exist for financial counseling or other services to teach him to find his own way out of the problem? What about the engagement ring? I have promised to help him with it but I didn't give any specifics.
飛べねぇ豚はただの豚だ。
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I'm not sure you've said enough for us to understand why 3k credit card debt leads to "can't be trusted to use ring funds for a ring"
edit: I definitely don't think you're out of line, per se. It's a legitimate thing to worry about. You might be at the 'serious conversation' stage rather than any 'treat him differently or give him less/more stuff' stage, though
Reading your post, it's coming off like you're bagging on him because he's not thinking the exact way you do, and you're pretty much looking down on him because you think you know better because you're a finance major and therefore know absolutely everything about his financial life. His life =/= your life. If the debt gets out of hand, or he suddenly has another ten or twenty thousand in debt from doing really stupid stuff, then you'd be right to be concerned.
Honestly, like Powerpuppies suggested, there's not enough evidence that says he'd misuse the funds; to me it looks like you're just looking for a reason to not give him the money for his ring.
If it helps, just think of it as him establishing good credit history- as long as he makes all the payments he's supposed to, doesn't that mean he's actually building credit instead of throwing money away?
Stop comparing his life to your life. If you don't feel comfortable giving him the ring money, don't give it to him.
I can has cheezburger, yes?
I think it really depends on how he built it up and whether it's still growing.
If he has it under control I think you should absolutely nothing.
-Is he maxed out and unable to pay?
-Is he not maxed out but unable to pay his monthly minimums?
-Is he asking for money from others (particularly your parents) as a result?
-Is he unable to make it through a month without consistently putting more on his card(s) than he pays off?
These kinds of things are signs of credit card problems. Having $x in debt in and of itself isn't.
There are multiple schools of thought ("use it for all the routine stuff but pay it all off every month" "use it for large purchases and keep routine spending on your bank account" "use it minimally until a large unplanned expense comes up" etc) on how to ideally use credit cards, and if somebody doesn't hold the same one you do, they are not wrong because of that.
Credit scoring algorithms are a black box, the reporting agencies don't share it with the public and change it without notice, and one of the reasons they change it is because strategies for gaming the system become popular. In the long run, the only strategy that always works is don't default on debts, so perhaps the question that matters:
Is his debt stagnating, so that he is both paying and spending? There are downsides to this, but this is not a problem that requires intervention in an adult's life.
Was his debt higher at some point and now decreasing? This is not a problem, full stop. This is a valid use of credit. It's one some people disagree with, but it is not wrong on its face.
Is your brother's debt growing beyond his ability to pay? This is a problem, and a possible solution is to convince him to relinquish the cards and commit to a budget. Do not pay the debt yourself unless it's a matter of saving him from impending foreclosure or repossession or if it completely exceeds his ability to make even small payments.
Another point: He's in a phase of life where he doesn't have his own rent or utilities. His income is limited, but so are his expenses. One's ability to carry debt is higher in this situation than living alone and things that are entirely sustainable can be alarming if you're looking at it through the filter of mortgage and car payments and medical bills. It's a good time to take advantage of credit cards to purchase and pay down things you won't be able to buy even with credit once you're paying bills and rent and upkeep and the like. At one point living at home, I had about $6,000 in credit card debt - I bought appliances and electronics, all of which I owned until I got married and many of which I still do. I was never in danger of defaulting or overdrawing. It's true that now even making way more I've got $1700 that keeps me up at night, but my situation is a lot different now with a house and cars and kids and prescriptions.
He doesn't need help. He's already receiving lots of financial assistance, providing more will not be beneficial.
Specifically for my brother, when I was stationed close to home in 2013 I found out that he'd been hiding a very low GPA (1.12 or something close to it) after 2 years at community college. He had no plan for what he wanted to do with life and had a terrible relationship with our parents because of this. We all had a big sit down and developed a 5-year plan to either get him through college or into a trade school and out of the house. Now we're about 1.5 years behind on this plan (it's incredibly difficult for me to follow through on this, but I do take some of the blame), but overall I think he's got a good trajectory: he's raised his GPA to 2.94 and should graduate next summer and he's got a realistic, attainable goal and a clear path to get there.
However this behavior is still a bit worrying to me as it shows either a failure to budget and/or a lack of self-control. Self-control in the ability to delay gratification is shown to be a personality trait with a very positive correlation to success in life, so I'd like to influence him to gain that trait if possible. Additionally I'm a little hurt that he wouldn't come to me for advice, but I can empathize with wanting to keep one's troubles private.
To answer some questions:
- He's working part-time, often less than 20-hours a week, while going to school full time (I think he's got 15 units this semester). I think that's pretty normal, and it was the same as my experience, but I never overspent and carried a balance month-to-month. I know a lot of people do though, but it's a big drain on money in the long run and I wouldn't consider it to be desirable or healthy. Without getting more data I'm not even sure what sort of interest he's accruing or what his ability to pay it off would be. I'm out of my depth here, but there are some military resources I'll go to next week to see what advice they'd give.
- The reason I wouldn't trust him to use the ring funds on his own is because he's got a history of lying and concealing unfavorable or embarrassing information from his family, reference the GPA business above. It wouldn't be out of character for him to take that money and either pay off his and his girlfriend's debt (which is totally understandable and pragmatic) or to use it as spending money and buy a cheap ring instead. Regardless I'm just not sure what kind of message I'd send by giving him this big influx of cash on the one hand while counseling him on being more austere to pay off debt on the other.
- My mindset here is that while he might sort it out on his own, the fact that it's this bad already (which also shows that he's burnt through all his savings) shows that he's on a poor trajectory and more likely than not it's going to get worse before it gets better. 3k is one thing, 20k is a whole different story.
- Hevach you ask some good questions, and I'm going to get those answers, but I wanted to look at some options and opinions before we all sit down together. Thinking back to that time period I imagine 3k is about his limit, and I would guess he's paying off the minimum balance but I won't be sure until we chat it out. You bring up some great points, but the reason we're so concerned is that he's accruing debt solely due to entertainment wants, which we know because any other purchase he needs is covered by our parents.
Aside from the ethics of ring buying does anyone have suggestions on where to go for budgeting help? I’ve got access to a military councilor, but they’re not under any obligation to help my family. I’m sure they’ll give some general advice, but I imagine that’s the extent of what they’ll offer.
Edit: And I guess if I could add something else I'm looking for, it would be people who have had a similar experience and could tell me what they learned from it, realizing of course that when we talk about things of this nature that it's highly dependent on the individuals involved.
If you buy her the ring, it's not him saving the money he can and picking out a ring... it's family giving him money to buy a ring. Everyone I know who has worn an engagement ring cared more about the person who gave it to them and the attached and very personal effort made to give one, than the price tag.
Let him exist without interference and sort out his own relationship and minor finance struggles.
Edit:
I know the intention is to help. This all just seems very controlling.
Edit2:
Intrusive might be a better word.
I agree with dispatch.o that you are getting too into your brother's life. It'll mean more to him if he buys the engagement ring himself with his own money... although useful brotherly advice might be that you don't have to spend many thousands on it. A good fiancee will not look up the price tag!
What you're looking for is called credit counseling. There are usually free or relatively cheap options available if you search in your area. It'd be about an hour or so.
That said, it's only counseling. If he agrees to go they can lay out his options for budgeting but aren't going to tell him what he should do.
Start with talking with him as though he were a functional adult and as though you were a concerned family member and ask him what's up. Then offer advice or help if he wants it. Honestly, $3,000 isn't a lot of debt, especially if he's managing to pay it down. Long term it's not great to keep paying credit card interest but in the grand scheme of things it's not a big deal. As long as he's clear on the consequences of his behavior and you've offered your help, I fail to see what else you should be doing here.
I'd also caution you as to how you bring this up to your brother. If you take the tack that this is just yet another example of his gaping character flaws, then it's not going to go well. This might be something he's ashamed of or has been putting out of his mind and ignoring because he hasn't ever had to deal with money since your parents largely pay for everything. Neither of those things indicate some kind of evil, intentional malfeasance on his part. He might just need a reminder that finances, like grades, need to be tended.
And I'm not sure how else to say this so I'm just going to come out and say it - the way you talk about the ring is a little off-putting. For one, a gift is a gift. If you want to give him a gift then give him a gift. If you don't, then don't. But if you do give a gift, don't expect to be able to say or do anything about where the money goes, and don't hold it against him if they spend that gift "unwisely". Otherwise it's a loan and there are strings attached. And you know the old saying about loaning family money. For two, as far as I know, he didn't ask for anything on the order of what you're thinking. So you're doing this weird thing where you're planning on giving him this extravagant gift and then attaching all sorts of caveats to it when it's not something he asked for in the first place. This kind of behavior and thinking leads to some very unhealthy relationship dynamics when taken to the extreme.
Let me put it this way: If you want advice about how to talk to or help your brother, that's one thing. If you want advice on whether you should give the gift or not, it's a pretty straightforward calculation. Do you know how to give gifts without attaching emotional strings to them? If not, then don't give the gift because YOU can't handle it regardless of what the other person does. The two aren't really connected except in your mind. So it's not his problem - it's yours. And the easiest way to manage it is to either give him an amount you are comfortable properly treating as a gift, or don't give him anything at all.
There's an old saying that goes something like, "Everyone is a good sailor in calm seas." You don't know whether someone is a good sailor until you see how they behave when the shit hits the fan. Take this as an opportunity to observe your brother and let him show you how much he has matured as a person. He's not perfect, and he's not you, but he has clearly improved himself and his life. Continuing to treat him as a child and holding his hand does not give him the chance to prove to you that he can do it. Maybe 6 years ago when he was barely out of high school he had a shitty GPA. He doesn't have a shitty GPA anymore. Continuing to bring that up as anything other than a success story does neither of you any favors. Give him credit for what he's done and how he's grown, rather than looking for reasons to expect him to regress.
Maybe when you talk to him as a loving brother you can remind him about all the progress he's made, and how proud you are of everything he's done and of the fantastic relationship he's found. And you can point out that it would make things a lot easier for the both of them in the future if he had his finances in order so they can build their life together. Offer your help and advice, rather than guilt in the guise of a gift. I'm pretty sure he'll surprise you with how he responds.
A gift is a gift: I get that. It's not the first or the last gift I'll give to him or the rest of my family. What I'm most concerned about is the messaging it sends, and to be honest I expected a little more nuanced thought from this forum on messaging. And I agree that 3k debt isn't a serious issue, but rather it's the total lack of fiscal responsibility: it's something he's never shown which makes it a problem. Early intervention is the best way, and I think that a formal sit-down is the correct setting for talking about something serious like this. It puts a clear delineation to our roles as mentor and mentee and establishes the proper mood. If you're interested I can talk a little more in depth about this, but rest assured this isn't just some personal quirk of mine but rather a learned skill directly related to my job and training. Honestly I don't want to be the one to do this kind of counseling, but unfortunately my parents are just not suited to this kind of mentorship and are unwilling to learn at this point in their lives, and more over they've asked for my help in this.
So yeah I know a thing or two about counseling, and it's not going to be a one-way conversation. But like a good mentor I'm going to walk into this conversation prepared and armed with answers. I do realize that I did ask for feedback on the situation and if intervention is necessary, but I think I've solidified in my mind that it is.
Thank you Quid. This is exactly the kind of info I was looking for.
Did he want things and have an issue with impulse control? Is he hedonistic? Or does he have an atypical perspective of debt and finance? Does $3,000 mean less to him than the usual person? Etc. These are the kinds of questions that will lead to solutions.
Just as an example: say you come to find out he just simply has impulse control issues and has issues in the past with stopping himself from procuring debt. There are actually many variables that can go into cultivating this circumstance. Even down to how he percieves himself. If you take two people in identical financial circumstances and one believes in their own potency as a person while the other feels hopeless and powerless, the former might actually have an easier time incurring more debt due to feeling as though they will be able to resolve their financial circumstance in time. The latter might panic and beat themselves up over placing themselves in debt, and they very well might just "cut up their cards" there, so to speak because the shame combined with their lack of self-empowerment could force their hand and stop the cycle right there. Alternatively, though, the inverse might happen: if buying things is the person's outlet and they feel terrible about themselves, they might actually buy more and incur more debt in an attempt to feel better.
My point is that the situation can be extraordinarily dynamic and his actions alone don't expressly merit a cause for concern. But if you're curious, and especially if you believe he's in a position where he could severely impact his future circumstance and his livelihood, ask him for his motivations behind these decisions. Be careful not to come from a position of judgement and condemnation, and ask him to reveal to you why he does what he does and why he feels the way he feels. Get to the bottom of the causes.
If you do and find you would like further advice on altering his decisions by changing his emotional state, don't hesitate to dump the info you gather back here for us to work off of. Even PM me if you want, we can arrange that somehow I'm sure. Whatever you want. Options there if you feel so inclined.
God bless and good luck.
Oh and if you feel like the engagement ring is worth it -- if you feel like you want to hold up your promise and you feel the woman is worth it -- most certainly do help him on that front. Additional joy and engagement to this woman might actually cultivate additional incentive for fiscal responsibility.