It's never easy to have someone else look at your finances and start questioning your decisions. After all, she is an adult and has somehow managed so far:) and I guess her kid turned out fine too:)
Appreciate the opportunity she is giving you to help her out of this fine mess - with the right attitude from both sides she will one day proudly say how clever her son in law? is.
Considering that she is in her late 50s and that she has two side gigs already plus she has a full time job, I'd say this is someone who has seen the light.
She may be a bit reluctant to show you all the statements - I mean, it is embarrassing for her. Try to remember that it is much harder for her than for you:), even if you don't think so at present.
So be kind and let her know you are on her side against those evil credit card companies. You'll figure it out together - no big deal, unless you make it so:)
There are always options, so let her make the final decision on which way to go about it - once you have developed a strategy. If she is not part of the process she has no skin in the game.
1. Here are a couple considerations - you said she cleans occasionally, have her specifically find two jobs a week that she can reliably do and dedicate that income directly to the lowest credit card balance until it is paid off.
It would be a commitment that quickly pays off - result first paid off card. Yay!
After the first card is paid off thanks to her efforts, she can then decide if she can handle the extra work of two gigs and if not, drop one. Pick the next lowest balance card and that is the only way that card will be paid off, since obviously her income is not enough to handle her past lifestyle.
I bet there will be at least two cards that will be relatively easy wins. It's just that it all has become too overwhelming for her to deal with, once she realized that she cannot fully pay off any of her credit cards anymore. It's depressing and upsetting - been there done that:)
One good thing that will happen right away is, that from now on there will no more late payments - saving not just the late fees, but the terrible consequence of suddenly having to pay something like 27% interest - that is indeed evil!
2. The card with the highest balance and/or the highest interest rate - that is the one you will focus on. Call the credit card company to reduce the interest, more than once if the first call was not successful. If need be, discuss if you can help her pay off just this one bogey bear credit card.
Whatever makes sense to you - no need to pay it all off for her.
Perhaps you could pay it for the next six months or pay half each month until it is paid off - whatever it takes to take the pressure off, so she can breathe again and feel like she can handle the rest on her own.
If her credit isn't totally shot to hell, you might consider a zero percent interest card for 15 months if possible, to use for a balance transfer. Or if she happens to have one credit card with some room and a significantly better interest rate - transfer a partial balance, to at least get some relief.
Do the math for every card and reshuffle if you can.
3. Come up with a realistic pay off plan and make sure you really have a good understanding of her true monthly expenses. You don't want to set her up for failure - if next month her taxes on the house are due or whatever it would derail her immediately.
4. Don't close any cards - that will hurt her credit. Ask her to freeze all but one card in her freezer in a plastic container filled with water - it won't hurt the cards and she'll feel silly de-thawing them and by the time they are she will hopefully have changed her mind.
5. Understand that she may need one card, maybe there is one card at a decent rate and middling balance with rewards points, that she can continue to use. If that is out of the question, buy her a prepaid card for say $200 or $500, the kind you can buy at your bank that is refillable.
It may make sense for you to contribute say $100 to her budget for the next six months so she isn't forced to use the card just to get through the month.
You could refill her card online once a month for $100 - just a suggestion.
It is good of you to want to help, but without having an accurate and concise picture of all of her finances the credit card dilemma cannot be fixed. She needs a good long term plan, not overly ambitious to where she is doomed to fail - rather set her up to win, by working out several different scenarios with her.
6. Don't forget to look into if there are rewards points that may be redeemed as cash or used for the payment balance. If there is more than one, let her have the cash from one of the cards, the rest goes to balance payoff.
I obviously don't know her, but I like little rewards and a free bottle of wine thanks to the credit card company while I celebrate slaying the dragon, can be a good motivator.
Cheers to you, you blood sucking ...:)
7. ... and of course, the two biggies,
get her credit report from all three agencies, free once a year:)
and set up online access for each credit card for both you and her, so that you can monitor usage and payments.
... and while you are at it, set up the automatic payments that you agreed on, according to the pay off plan!!!
Obviously you want to make everything as clear and easy and transparent as possible, without her full involvement this cannot be a success.
Think of this as a long term project, so go easy, review and sleep on it and discuss a time or two, before you finalize your first plan - TOGETHER. Be flexible and ready to make adjustments along the way. She may surprise you and take off running, once she sees a way out of her devilish dilemma.
Too much debt and not enough money to deal with it has a way of messing with your head - ask anyone who's ever been under water.
8. Jewelry making - an expensive hobby:)
First off, jewelry making is addictive and expensive and leads to hoarding - it is also super fun and can bring in good money at the right venues. Having a creative outlet is wonderful and stress reducing, but if she is forced to "work" at it, it will backfire.
Encourage her to go through her supplies and challenge her to create a new collection for sale, made only from her current stash.
Discuss if she has a venue where she likes to sell, or if she could set up a website with her jewelry, so it is up by October at the latest to be ready for Christmas sales.
Try to gauge if this is a viable way for her to pay off some debt - it may very well not be. Ask her to seriously consider whether this is a winning solution or a losing proposition.
No judgement here, it is what it is. This is simply a discussion about what, where and how, if at all.
If she is good, she might be able to teach classes or at the very least make a custom necklace set for a grand kid or a friend instead of adding debt to her credit card for holiday gifts.
I make jewelry for gifts, but I don't sell any, for me it would take the joy out of a creative process, but I do sell my photography online - so go figure.
Good luck - I hope it all goes well for both of you!:) You can do this!
Debt consolidation - sounds like the easy way out, but not only do they charge for it, there are plenty of them that are criminal, don't send in the payments as agreed and do no monitoring at all. Don't become a statistic with a horror tale to tell - sort it out, yourself, call the companies you need to and set up your own action plan.
With today's online banking and automatic payment options there is no reason not to tackle this matter yourself.
