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Ask Dave

Keep the Debt From Coming Back

Anna and her husband work for Anna's in-laws. There's an employee who receives collections calls at work and asks for loans from the business. They want to break this cycle. What's the best way to do so?

QUESTION: Anna in Alabama and her husband work for Anna’s in-laws. There’s an employee who has been with the company for 10 years, and he isn’t good at handling his money. He receives collections calls at work and asks for loans from the business. They want to break this cycle. What’s the best way to do so?

ANSWER: Larry Burkett used to say that debt is not the problem; it is the symptom of other problems. Debt is the result of bad management. It’s the result of being immature and buying things impulsively. It’s the result of bad judgment. It’s the result of bad things—bad decision-making processes. Not having insurance, not having a savings for emergencies, these kinds of things. Debt ends up happening because of those things.

What we’ve got to do in his situation is to help him figure out what’s causing the debt and keep it from coming back. Now that would be real help. Giving him money or loaning him money isn’t real help because he keeps doing the same stupid things over and over. We’ve got to break his cycle, as you said. That was well-termed on your part.

What I would do were it one of my team members who had that, I would offer to send them through Financial Peace University—our nine-week series on how to handle money—and as they go through that, they bring their budget in and I get to go over their budget and their debts with them and we make some analysis. Then they need to sell a few things ; they need to have a garage sale. I might offer them some overtime. Then I might match them a little bit. I wouldn’t loan them money, but I might give them money. In other words, out of the $675 he thinks he needs, he can probably cover that by selling some things on Craigslist and having a garage sale this weekend. I might match a little bit with him. If he puts up $100, I put up $100. I don’t write him the check. I write the check directly to the company that is owed the money, and it’s a gift—it is not a loan.

All of this is contingent upon he and his wife agreeing to attend the nine-week series Financial Peace University. I will give that to you to give to him if you want to do that. That’ll be my gift—my part of this. I’m not trying to sell you something, in other words. I really think he needs to go through the course and learn how to handle money so that he doesn’t keep coming back in here and doesn’t keep getting the collections calls. He’s got to—as you said—break the cycle. As I say, stop the insanity.