According to his death certificate, my dad died of myocardial infarction, aka a heart attack. His health deteriorated for some time beforehand, so his loss wasn’t a total surprise. But what really killed him?
He gained weight and was diagnosed with Type 2 diabetes. He had two bypass surgeries: one triple, one quadruple. His diet was unhealthy, he didn’t get enough exercise and was constantly stressed.
Still, his heart alone didn’t kill him. It was debt.
My dad racked up hefty credit card balances and never got spending habits in check. He took cash advances on one card to make payments on another. He took out a second mortgage just to make minimum payments on his credit cards, all of which carried interest rates in the range of 20% to 30%.
I saw the stress weigh on him. I have no doubt that one major reason he gained so much weight was his gravitating toward unhealthy comfort food. Constant worry about money also robbed him of the initiative to exercise.
One of my biggest regrets, which I share in my book Soldier of Finance, is that I never confronted dad about his debt. I think somehow I believed that things would just work out. They didn’t.
If you know someone struggling with debt, you can watch for signs – and you can take action.
Constantly fretting about how to pay bills. You can tell when this becomes a problem for someone you know. For one thing, the subject creeps into conversation in the form of comments that allude to financial desperation.
Watch for other signs. I remember walking into my dad’s house and seeing a list of dunning credit card notices and bills debts next to his computer. Worry is difficult to hide.
Using credit to pay for credit. Your friend or loved one using one credit card to make minimum payments on another or taking a cash advance on a card to make a payment means multiple problems. Making minimum payments usually doesn’t reduce a card’s balance significantly; the lion’s share just whittles interest and adds to the total debt.
Frequently borrowing money – sometimes from you. The request always sounds like a great chance to help. The loan will solve all problems and take the pressure off, allowing him or her to consolidate bills into one payment. Problem is, it rarely works out that way.
I once lent my dad $8,000 to help him pay off debt. Not only did he run up new debt as fast as he paid off the old, but when he realized that he couldn’t pay me back he took out a life insurance policy with me as the beneficiary. Instead of eliminating debt, he added another monthly payment.
If a close friend or relative shows the above symptoms, there are a few things you can do:
1. Gently yet clearly express concerns. Do your best to keep from sounding judgmental; emphasize that you are worried about the stress that the person’s financial habits put on your relationship, and, more importantly, the health dangers. Be honest.
2. Stop enabling. When my grandmother died, both dad and I inherited money. True to form, dad wanted to borrow my share to pay off his debts and planned to pay me back in monthly installments.
My girlfriend – later my wife – confronted me as I knew I needed to confront my dad. “It won’t help him, and it won’t help you,” she said bluntly. She was right, and I knew it.
That was the first time I ever told dad no – the hardest thing I ever had to do. I had to say it for his sake and for mine.
Learn to say no. Don’t even co-sign a loan: You’ll only add to the problem.
3. Offer real help. This might be as involved as helping organize bills or developing a detailed plan to reduce debt (and getting that person to stick to it). At the very least, you can introduce a financial adviser to help get things under control.
Don’t wait or sit back silently, hoping something will change. Above all, offer encouragement and support.
I wish I’d spoken to my dad early on. I never did, but I do believe that I learned from both our mistakes.
Follow AdviceIQ on Twitter at @adviceiq.
Jeff Rose, CFP, is the founder of Alliance Wealth Management in Carbondale, Ill., and also is the founder of the website Good Financial Cents and Life Insurance by Jeff.
AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.