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Making bad financial decisions

June 4th, 2014 at 07:25 am

I have a friend in a very difficult situation. She and her husband are going to divorce eventually. They have three kids and I can't say I blame her. Long term cheating is the reason (4 years), but she's trying to get her life in order to leave.

I suggested that she really organize herself and finances before saying she wants a divorce. But it's hard obviously she's a stay at home mom, and she needs to get her license reinstated to work. She used to be a mental health counselor. I think she's a good person but seriously she's terrible with finances and I don't know if she can ever get herself righted.

She spends money like it's water. She only shops at whole foods and throws away food left and right. She said yesterday "I need to stop buying precut fruits and make an effort to cook dinner." I suggested buying frozen dinners and start from there to get into the habit of cooking, then learn after getting used to cooking.

But the real trouble? Both she and her husband make a ton of bad financial decisions and have no idea how much money they make or have.

Bad decisions
1. Bought a new to her Mercedes Diesel SUV 7 seater. Got a loan because she said they needed credit.
2. Spends on a credit card and just makes payments to have room to spend more.
3. Doesn't file taxes so her husbands paychecks are garnished by IRS for no payment.

Because she wants to leave I suggested to her that perhaps she start by collecting all paperwork to figure out how much money they make. And to file taxes. I even offered to help. I told her go around her house and collect any remotely financial paperwork.

But then she does things like get plastic surgery, go on week long yoga retreats to Belize; while saying she can't afford preschool for her kids. That paying $5k/year, what I pay for mine is too much. I couldn't help myself but I said one week in Belize cost more than $5k. She said it did. So right there was preschool tuition.

I don't know if she'll be able to get her act together. I don't know how to advise her to get on a budget or even to know what they make. Her husband gives her a cash allowance. She asks him for money when she needs it. Sometimes it's there and sometimes it's not.

She really has no idea about her financial house. I'm not even sure where she should start. Her husband works construction half the year. Then has his own business as a mechanic and plows snow in the winter. He has a shop but she has no idea how much he makes.

If she wants to leave him she needs to get her finances in order. But it will be a long process. I hope she can get herself pulled together.

Tips or ideas for someone really bad with money? I do worry about her and really have suggested that I help her with mint or just sorting paperwork. But the truth is that she says she'll get to gathering paperwork but never does.

4 Responses to “Making bad financial decisions”

  1. ceejay74 Says:

    My main tip is to be there for her, offer advice without being overbearing, but don't get too emotionally involved in whether your efforts succeed or fail. I have tried to help friends, and sometimes it works and sometimes it doesn't. Just realize that success or failure is in her hands, not yours, so feel good about what you tried to do even if it doesn't work.

  2. Joan.of.the.Arch Says:

    Wow, my first thought was along the lines of, "Mental health counselor, heal thyself," because what you describe sounds like some kind of pathology to me. Self medicating with stuff and travel? Also, she should be pretty good at finding the help resources she needs, right? Yeah, I'd stay out of the financial stuff; it needs something other than just rationality to get that in order.

  3. LivingAlmostLarge Says:

    CJ, you'll laugh but I watched her kids a few times but she didn't really get organized. I was hoping she'd at least get a checkbook balanced. Oh well at least I try.

    Joan, she helps people with substance abuse previously. She's a good person who went through a particularly rocky 6 months. I hope she at least organizes her finances enough so she's not running around trying to get cash to buy groceries. It's very depressing hearing her talk about that.

  4. Nika Says:

    You should let her know that unless she is extremely informed about every single account, every single expense and debt, and what money is coming in and how, it will be very easy for her ex and his future GF to completely screw her financially in the divorce and she will be basically placed at his mercy and given money at his discretion. And as divorce progresses and becomes more adversarial, this will be a really bad situation for her to be in, not just financially, but also emotionally, as he ex would retain a lot of control.

    Since her husband is a tax evader now, in a divorce situation he will do the same thing. Unless she can nail him to the wall by showing how much money was coming into the house before, he will claim he makes next to nothing, and her support will be based of that.

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