Image courtesy of Wrestlingentrophy

I was visiting a good friend the other day and while sitting down at her dining room table, I noticed a HUGE stack of unopened bills. I joked with her that she was going to be in the dark since the top bill looked like it was from the power company. She laughed and told me that if I was really a good friend, I would open all of them and pay them for her.

She knows that I like anything related to personal finance and she knows that I write a personal finance blog. She does not know the address and has not asked for it since she has ZERO interest in personal finance. I think she would rather go to the dentist than read anything related to personal finance. I asked her if she really needed help, I would be happy to help her.

Apparently, this was exactly what she wanted me to say. She ran and got her checkbook (with the blank check register) and told me to fire up the laptop.
With her permission, I am posting her story (without names and identifying information).

Long story short, her personal finances are OUT OF CONTROL. Most of her accounts are late. She is paying late fees all over the place. I checked the last six months of her bank statement and she is also paying needless monthly bank fees. S
he keeps all of her money in a checking account that doesn't pay interest and she does not have a savings account. Thankfully, the only credit card debt she has is on one credit card account with a balance of about $4400.00.

Here's what we did to try and get her on the right track:
  • Opened a savings account. She had about $6800.00 in her checking account. I recommended an ING Orange Savings account and explained the account in detail. She was pretty excited about it so we opened an account and setup a once time transfer of $2500. She then setup biweekly transfers of $250 from her checking account to go to savings.
  • Changed to a free checking account. She was paying $7.50 a month for a no frills checking account with one of the large megabanks. She liked the convenience of the bank so she wanted to stay but we were able to switch her over to a free account with direct deposit.
  • Credit Check. She had no clue what her credit was like. She had missed a few payments on her credit card. She didn't miss the payments because she didn't have the money, she missed them because she just forgot about the due date. We ran a three bureau credit report from Equifax and looks like she is in the clear. Luckily, none of the late payments had been reported by her creditor. She also has a good credit score in the mid 700s.
  • Balance Transfer. We moved the balance from her old credit card to a new Discover Card with a 12 month 0% balance transfer. She will be able to pay off the balance in full before the 0% rate expires. She had an interest rate of 18.99% on her old card.
Hopefully, the above steps will help her get on the right track. Her situation is a little different and a lot easier to correct. She makes a good salary and her income comfortable exceeds her expenses. We've setup weekly meetings to make sure all the loose ends are wrapped up. We'll make sure all the bills are paid on time, the checkbook is balanced and the credit card debt is being eliminated. I'll keep you guys updated on how things are going.

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  1. Unknown // December 2, 2008 at 9:08 AM  

    Would you like to exchange 100 click and 1000 impression per month,so please add me on yahoo mesenger

  2. Anonymous // December 2, 2008 at 10:17 AM  

    Good for you and your friend! Tell her to keep up the good work, it is worth it. You are a good friend to donate your time. I wish I could have the opportunity to do that. Well, I have sort of helped my mom by getting her motivated and set up a savings account and stuff, she paid off her credit card last month! I am more than willing and would love to help my friends and family out. I volunteered to be interviewed for a debt article in our local paper. I wanted to do it b/c if it inspired even one person it is all worth it!

  3. Anonymous // December 2, 2008 at 11:00 AM  

    I'm kind of amazed that with paying no attention to her finances she was actually living below her income. That's great that she wanted help. I bet when she sees what a difference it makes she will get interested in personal finance. Let's hope!

  4. Leslie // December 2, 2008 at 1:37 PM  

    She's lucky to have you as a friend, and lucky to have been able to "get things under control" with so little effort.

    Even if you aren't a PF nut having a basic understanding of your money and spending is vital.

    Best of luck to both of you.

  5. Anonymous // December 2, 2008 at 2:43 PM  

    Wow, good for you. I've had quite a few people come up to me recently to talk about their finances too. Once they knew I had a blog about it, they decided I was the best person to ask.

    And you know what, I get a buzz from helping people too. One of the reasons is, I hope that when I retire, there will be people my own age retired too so we can go out and have fun! That would be pretty awesome.

  6. MEG // December 3, 2008 at 12:22 PM  

    Aw, that is awesome! I love it when just a few simple changes can really make a big difference to somebody. I have a couple of friends who I wish would let me help them out in a similar way...

  7. Anonymous // December 3, 2008 at 7:28 PM  


    You want to help me.

  8. Miss M // December 9, 2008 at 9:53 AM  

    How nice of you to help her out. For someone who really let her finances lapse she isn't in bad shape, her credit is good and you've set her on the right path. I made the change a few years ago and discovered I love personal finance, I had no idea.

  9. Anonymous // December 10, 2008 at 10:05 AM  

    If she's living within her means, her finances aren't exactly out of control...though that $4400 credit card debt ain't good.

    Some folks are just not interested in financial matters, any more than I am in tracking football scores. If the stuff bores you stupid, it's very hard to set up an effective personal finance system and even harder to stick with it.

  10. moocifer // December 13, 2008 at 7:40 PM  

    This woman was not in debt, as she had more money in her savings account than she did on her credit card. Basically she was just disorganized and didn't really care...that much. She cared enough to take care of it with a friend's help. Maybe she has some kind of psychological block about being on top of her financial situation and would benefit from finding a friend in a similar situation who she could get together with for "dates" to talk and take care of financial stuff. '

    Actually, that's not a bad idea!

    I am guessing she is making more than $$60,000 per year if she can not pay attention to her finances and yet not slide into debt.

    Kind of reminds me of one of my ex-girlfriends, who pulled in $90,000 per year, yet was not able to save a penny. I was always astonished, because I'm pretty certain I could save $50,000 per year on a job like she had, even living in the city she lives in. Hopefully for her sake she'll start to save some o f her cash and her job will still exist in the next year.

    Basically, there is little hope financially for most people who don't take an interest in their own financial life. At some point when they don't, they are going to get whacked by life. It seems such a shame when people don't take advantage of their position in life--but I guess o n the larger scale of things there are larger tragedies in the world.