I have a friend. Yay! OK actually he's been my best friend since we were 8 years old (that's awhile back!) He's the kind of guy that would stick his neck out for you no matter what. We pretty much share everything about each other's lives because we can trust each other completely. So it KILLS me to find out he's struggling financially. Well not struggling per se...but he just has never had a plan. He's the kinda guy that if he had the tools I would have no doubt that he could succeed.
That being said I've tried a few things to get him rolling on a plan. He knows we worked the baby steps and he's read TMMO and even gone through FPU with his spouse. I understand Dave isn't one size fits all so I'm not pushing him to follow Dave's plan. I've said I don't care what you do but do something. I think procrastination is his worst enemy.
So here's a quick synopsis: He's 35, wife is 46. Two kids (his stepkids) in college. Net income: $12k/mo. Net expenses: $6k/mo. Debt: $84k (47k student loan, 20k car 1, 12k car 2, 4.5k credit card.) No liquid savings and not currently contributing to retirement (has $150k in retirement.) I'm sure you can already see my frustration just on this little bit of info.
I don't know if anyone else has someone they know in a similar situation. Based on the numbers that float around about people not saving enough and not putting enough away for retirement I'm sure there are a lot more people out there like my friend. I just really want to help him...even though I can only provide the map. I can't drive him there...he needs to put it in drive and go. I'm just trying to think of ways to help him get to where he wants to go. Any advice as always is appreciated.
Helping friends help themselves
September 7th, 2012 at 02:06 pm
September 7th, 2012 at 02:41 pm 1347025278
Maybe do the math on how much taxes he would save and match he could earn if he participated in a 401k plan? Ask him if he rather pay $3500 to the government, or keep it because he moved $10k to his retirement plan. {Granted, I live in California so these numbers tend to be bigger than average}. But say he got a $1500 match. That's really only paying $5k in the end, to increase retirement by $10k. Maybe he would be more motivated if he understood the numbers. There is a lot wrong here, but this part really jumps out at me.
So, if his expenses are half of his net income, where is the rest going?
September 7th, 2012 at 02:52 pm 1347025948
In the last century, employer pension plans automatically deducted between 7%-12% right off the top. Now it's the responsibility of the individual and statistically a huge failure. It's been made clear that the majority are still living w-aaay beyond their means, couldn't come up with $1,000. cash to met an emergency.
September 7th, 2012 at 03:03 pm 1347026580
I don't really trust the expense number either. If he's got that much cash left over and it's not in savings or retirement he must be missing it in his budget. I think he means well but I think he's letting a lot of things slip through the cracks and it's costing him. The student loan is a parent plus loan at 7.9 percent which really kills me. The cars are at 3.99 on the 12k and 2.49 on the 20k and the credit card is 0 percent B/T (which really wasn't depending on what he paid on the transfer.)
It's frustrating.
September 7th, 2012 at 03:06 pm 1347026799
September 7th, 2012 at 03:12 pm 1347027146
September 7th, 2012 at 03:15 pm 1347027329
September 7th, 2012 at 03:20 pm 1347027617
It just adds to the frustration.
September 7th, 2012 at 03:46 pm 1347029175
September 7th, 2012 at 03:48 pm 1347029338
September 7th, 2012 at 04:07 pm 1347030447
MEC: I think you hit the nail on the head. I think he's overthinking it and it's paralyzing him from making a decision. I told him to just fill out the form and he's not going to miss it. If he's having a hard time figuring out where his income is going at least this 10 percent would be going to his (and his family's!) future.
I've talked to him about sitting down with a financial planner to at least get a handle on things but he really seems to want to do this on his own. I said if that's the case you have to take one step at a time but you have to take that first step. I think that happens to a lot of people.
September 16th, 2012 at 08:10 pm 1347822630
Jerry