Taking a vacation with bankruptcy looming

[Ratracespectator]

My BFF lost her moderately well-paying job a year ago, and her unemployment benefits were reduced after the 2013 sequester. Despite refinancing her mortgage, and her husband's steady job, they are now accumulating credit card debt, probably around $8k now. Her unemployment runs out within a month, then they are going to be deficit spending for necessary expenses, like food and utilities. No savings, no 401K, no accessible assets or equity....yet last wek, they drove to take a  vacation inMaine, which is at least $1,300 for the rental, not to mention $130 for the schooner trip they took. Plus, at their normal home, they still subscribe to cable, 5 magazines and 1 newspaper. I want to be a good friend and be supportive andsympathetic, but these expenditures seem irresponsible. What do you recommend I do or say when my friend starts to cry about her financial situation?

[ace1224]

maybe they don't care? a person at my place of work actually knew they'd have to declare br and just ran up the credit cards anyways with the attitude that it would all get "taken care of" when they declared bankruptcy.

[Mr.Macinstache]

What do you recommend I do or say when my friend starts to cry about her financial situation?

You don't say anything. When they complain, just suggest going on another vacation to take her mind off of things. :)

[BlueMR2]

Seems to be fairly common.  The people I know that are struggling the most and are teetering on the edge of bankruptcy are the ones that somehow manage to come up with the funding for multiple vacations every year.  We get invited along, but always decline due to the cost...  I can understand trying to get away from a life on the edge, but I have no idea how to explain that if they'd quit taking so many expensive vacations that they wouldn't be on the edge...  Every day would be more relaxing.  :-(

[sol]

What do you recommend I do or say when my friend starts to cry about her financial situation?

Until she's ready to hear it, nothing you say is going to get through to her.  The most logical and kindly phrased approach imaginable would still get dismissed out of hand.

So I'd say focus on getting her to that lightbulb moment on her own, rather than trying to help her dig her way out of debt.  Some suggestions:

"If only there were some way to lower your expenses to be more in line with your income!"

"When your unemployment runs out, what expenses will you have to cut in order to avoid going deeper into debt?"

"Have you figured out when you'll have to declare bankruptcy?  How much sooner will that date get here because of the $1500 you just spent on that vacation?"

Okay that last one might be a little harsh.

[Forcus]

Seems to be fairly common.  The people I know that are struggling the most and are teetering on the edge of bankruptcy are the ones that somehow manage to come up with the funding for multiple vacations every year.  We get invited along, but always decline due to the cost...  I can understand trying to get away from a life on the edge, but I have no idea how to explain that if they'd quit taking so many expensive vacations that they wouldn't be on the edge...  Every day would be more relaxing.  :-(

Yeah I don't get it either, see it on Facebook all the time. On one hand, praying for relief for crushing debt, then on the other, adding to their debt load by "getting away from the stress" on an expensive vacation. Can't do anything about stupid, I guess.

[Hunny156]

Seems to be fairly common.  The people I know that are struggling the most and are teetering on the edge of bankruptcy are the ones that somehow manage to come up with the funding for multiple vacations every year.  We get invited along, but always decline due to the cost...  I can understand trying to get away from a life on the edge, but I have no idea how to explain that if they'd quit taking so many expensive vacations that they wouldn't be on the edge...  Every day would be more relaxing.  :-(

Yeah I don't get it either, see it on Facebook all the time. On one hand, praying for relief for crushing debt, then on the other, adding to their debt load by "getting away from the stress" on an expensive vacation. Can't do anything about stupid, I guess.

Several of our neighbors are selling their homes due to this.  The run up in values is awesome, but it's so sad to hear that they are using that cash to pay off a bunch of debt incurred from mindless spending.  In one case, the sale hasn't officially closed yet, but their FB page shows non-stop pictures of their travels and expensive meals all over the country.

They told a neighbor they plan to rent in the area for a year, and then buy back into our neighborhood.  I guess they have to think that way to justify the hole they are digging.  :(

[Matte]

I know quite a few families who do similar things.  I guess they see it as an escape from the mess they created. I don't judge though, if I had anywhere near that amount of financial commitments, debt or stress I would need a vacation too! I guess they see their situation as hopeless and that a big consequence is coming and their vacation will have little to no effect on it.

[Nords]

I want to be a good friend and be supportive and sympathetic, but these expenditures seem irresponsible. What do you recommend I do or say when my friend starts to cry about her financial situation?

These are the types of situations that cause you to question the basis of your friendship and whether you need a new BFF.

I doubt that they're expecting you to provide a solution, but it's probably considered polite to offer a short comment like "That sounds like a tough problem"-- and then change the subject.

[kimmarg]

My BFF lost her moderately well-paying job a year ago, and her unemployment benefits were reduced after the 2013 sequester. Despite refinancing her mortgage, and her husband's steady job, they are now accumulating credit card debt, probably around $8k now. Her unemployment runs out within a month, then they are going to be deficit spending for necessary expenses, like food and utilities. No savings, no 401K, no accessible assets or equity....yet last wek, they drove to take a  vacation inMaine, which is at least $1,300 for the rental, not to mention $130 for the schooner trip they took. Plus, at their normal home, they still subscribe to cable, 5 magazines and 1 newspaper. I want to be a good friend and be supportive andsympathetic, but these expenditures seem irresponsible. What do you recommend I do or say when my friend starts to cry about her financial situation?

Wow $1300/week rental in Maine? Maybe I should move out of my Maine residence from June 15 To sept 1 - I'd get my whole years mortgage covered!

[hybrid]

I want to be a good friend and be supportive and sympathetic, but these expenditures seem irresponsible. What do you recommend I do or say when my friend starts to cry about her financial situation?

These are the types of situations that cause you to question the basis of your friendship and whether you need a new BFF.

I doubt that they're expecting you to provide a solution, but it's probably considered polite to offer a short comment like "That sounds like a tough problem"-- and then change the subject.

That's the start of an interesting topic for sure...  I have a lot of friends I've known for 20+ years.  And as you would imagine, we're not all in the same places financially.  I have a buddy that desperately needs to get his spending under control and is in a bad marriage to boot, but I've known the guy for over 30 years and we share a lot of the same values and hobbies.  The fact that we are not in the same place and seem to be moving in different directions may prove to be more and more diffciult over time.  I hope not.

[footenote]

Provide advice when asked for advice. The rest of the time you can be perceived somewhere on a spectrum: from "my crazy-cheap friend" to "the person who was my financial role model before I realized I needed one."

In my experience, the only time you run into trouble is when people need someone who models their consumerist behavior to make them feel better about that behavior.

[Dee 72013]

Boy that's tough, you want to really show them ways they can cut their spending and not get more into debt but they may need to hit rock bottom before growing up. I just hope they don't ask to borrow money from you, that would really put a strain on your relationship. I hope when they hit rock bottom they don't get bitter and resent you and your family for making good choices with your money. Sometimes the less your friends know about your money the better. We've had friends that we've lost over the years due to the same circumstances and them treating us like crap because it wasn't happing to us also. It really makes things awkward and tense when your friend's tell you they have x amount until next payday, not enough to pay bills but you've seen them over the years buy designer clothes,take nice vacations and go to several concerts a year but then you have to be their shoulder when the money runs out. You then feel guilty if you have a trip planned or something good happening in your life at that time. Try to be as supportive as you can but don't put up with any crap that maybe the fallout from their mistakes.
Just remember you're not responsible for their actions or decisions... Good Luck!!

[impaire]

What do you recommend I do or say when my friend starts to cry about her financial situation?

What I would do for a true friend: I would commiserate, then offer a variant on the theme "you know, I have been working on my own finances a lot recently, and I may have learned a few things that could help you. You don't have to take me up on it, and I'm sure you've already done some thinking yourself, but if you want to come over for tea and cookies next Saturday, I'd be happy to go over your situation and help you formulate a plan, to the best of my ability, of course." Then I'd drop it -- her call if and when she wants to take you up on it. Further, I wouldn't do much, certainly not offer financial support. I may share my netflix login, make sure that all activities we do together are cheap, but that's about it.

That's all you can do...

[MrsPete]

I see this all the time on another board I read -- a board that's about vacations. 

Fairly often I see threads that discuss "lost my job, already paid hotel and plane tickets for vacation a week from now, should I go?"  The answer is almost always, "Yes!  You shouldn't lose the money you've paid.  Go take a break from your problems, and come back refreshed and ready to begin again! 

Stupid, stupid advice. 

[NumberJohnny5]

Fairly often I see threads that discuss "lost my job, already paid hotel and plane tickets for vacation a week from now, should I go?"  The answer is almost always, "Yes!  You shouldn't lose the money you've paid.  Go take a break from your problems, and come back refreshed and ready to begin again! 

Stupid, stupid advice.

I disagree, at least with what little was posted here. Perhaps if you add a "and we're tens/hundreds of thousands of dollars in debt, and still have to pay a huge amount for transportation, park tickets, going out to eat expensive meals three times a day, and...", then I'd agree.

But if the vast majority of the vacation is already paid for, to the extent that there would be little/no money savings in staying home (we're talking plane tickets, any attraction tickets, motels; so the only extra expenditure would be a few cheaper meals out, plus they're planning on eating in the motel for breakfast and having picnic lunches); OR they're in a pretty good situation financially, I'd say to go ahead. Skipping a paid-for vacation would be a knee-jerk reaction in that scenario.

[Goose]

I see this all the time on another board I read -- a board that's about vacations. 

Fairly often I see threads that discuss "lost my job, already paid hotel and plane tickets for vacation a week from now, should I go?"  The answer is almost always, "Yes!  You shouldn't lose the money you've paid.  Go take a break from your problems, and come back refreshed and ready to begin again! 

Stupid, stupid advice.

Disagree - if you are in good financial shape, then go for it.  In 2010 I separated from my company of 10 years but had prepared for life's disruptions and could go with it.  Three weeks after my release, we went on a cruise that was already bought and paid for........best week of my life as I REALLY didn't have any work related crap to think about.

FYI - I also turned down the first two offers I had received.  As we discuss on this site, having a strong financial foundation gives you options.  All in all, only out for 3 months.  Now it is 2014 and planning to retire in 2019 at age 50.

[MrsPete]

Goose and Josetann, I was making up a generalized "should I go on this vacation" . . . on the other board I was describing, the actual situations are never a matter of "I'm generally secure but have just lost my job".  They're always more dire with multiple negative circumstances.  I'm remembering one right now in which a family was something like 5K in debt to the electric company (hadn't paid in over a year) and owed other similar bills.  These people are posting to get validation before they make what they know is a mistake.   

[NumberJohnny5]

Welp, it's a good thing I said "I disagree, at least with what little was posted here" and "But if the vast majority of the vacation is already paid for, to the extent that there would be little/no money savings in staying home...."

Even if you're not that well off financially, if your vacation is 90% paid for, it may make sense to go even in the face of something like losing a job. A vacation to DisneyWorld is expensive; but if airfare, park tickets, hotel room, meal plan, etc. have already been paid for...why not go? The cost of staying home and buying groceries (plus higher electric/gas usage) would probably equal the negligible additional costs of going on the paid-for vacation (most of which could be eliminated, such as buying souvenirs). Of course, this assumes that most/all of the expenses are non-refundable; if you can get your hotel stay and airfare refunded, that changes the equation.

I just think we're too quick to jump to conclusions sometimes. A person losing their job and asking if it's ok to go on vacation, is not necessarily being stupid. Even if their finances aren't in the best of shape. Losing one's job, having no savings, being behind on basic bills, and asking if they should use a $5,000 tax refund on a Disney vacation or to pay some bills, should have the obvious answer pointed out (and anyone suggesting to go blow the $5k on a trip should be chastised). But I'm sure there's also plenty of people who have prepaid a lot of their trip (most of my vacation expenses are non-refundable, especially within weeks of the trip), and it's not such a clear-cut answer then. Perhaps they'd save $100 by not going on the paid-for trip; a trip that they spent many thousands of dollars on, that would bring a lot of enjoyment. Anything that's been prepaid and cannot be refunded should be looked at as a sunk cost. So that week of Disney isn't costing $5k...at the point of becoming unemployed it's going to cost $100. Even if it would in fact be better for them to not go, we're talking about a $100 mistake and not $5k (or whatever their actual numbers were).

Of course, it's entirely possible that this forum you speak of is in fact filled with nothing but people losing their jobs, then immediately booking an expensive vacation, even with foreclosure looming. If that's the case, then I agree with you wholeheartedly.