Is it a good idea to help those struggling with debt?
I read an article about a famous actor from Wales. He bought the debt from his community at a discount to help his community overcome the challenge of credit card debt. If you didn’t know, credit cards will sell bad debt at a discount so that someone else has the cost and burden of trying to collect.
They often buy debt for around 10% of what is owed. In this instance the actor bought over a million pounds of debt for around $130,000. He felt it was too hard for people who are using credit cards to heat their home, or buy food, and he wants to help them.
In America there is at least one church that buys medical debt. Its the same idea only instead of paying off credit card debt they pay off medical debt. The biggest difference is that medical debt is not something people have in the UK (I don’t think, I’m no expert).
I love the idea of a hand up. Often it takes much less than you would imagine to really help someone. For instance an experimental program in Stockton, California offered $500.00 per month for two years to a 125 people selected by random to measure the outcomes over that period. The people were living at or below the average median income for the area, so wealthier people were excluded.
What they found was great. Among many positive outcomes included reduced depression, and better health outcomes. More opportunity to improve employment options and increase earning power. Some participants used the extra income to fix their cars allowing them more job opportunities in areas that may be difficult to reach due to limited public transportation options. Some participants went to school to increase their opportunities in the job market. Some went to the dentist.
When I was a young mother with two kids under two, my neighbor collected bread and bakery items from a large local grocery store to donate to a resource center in the area. Before he dropped off the day old bread he would stop by and ask the neighbors if they wanted anything. I would routinely grab a couple loaves of bread and occasionally grab a pie or cake if it was part of the offering. I didn’t buy bread for five+ years. When I moved and had to buy bread again, it was a surprise to realize how expensive it had become. On reflection the small hand up wasn’t life changing, but it was helpful as I struggled to make ends meet. I always had bread and peanut butter for my kids if things were tight.
Not long ago, my daughter was in a car accident, thankfully no one was seriously hurt, but her car was totaled. When she finally got her settlement from the insurance agency, we went to a used car dealership to get her a replacement car. The car she picked was about $1,400.00 more than her settlement. She is a single mother so that money was important to her and financing was something I didn’t want for her. I strongly believe in having cash to pay for a car versus financing. I gave her the extra money for her car. It was not all the money in the world it was a hand up so she didn’t have an issue later paying for something else she would need. It just makes sense that when you can help you should. Especially if the amount isn’t a big deal to you.
Similarly when we shopped for trinkets when traveling in a country that uses bargaining, we don’t get too caught up in negotiating. Often the amount is inconsequential for me, but highly consequential for the seller. Same goes for tipping. If adding an extra buck to two to the tip amount helps someone buy formula for their kids, I’m happy to pay a little more.
But what about paying off credit card debt. I’m unsure how I feel about this. I like the idea of “teach a man to fish…” more than I like the idea of gifting someone in a way that may prevent an opportunity to learn something. I don’t know how debt works in the UK. Perhaps it is less common than in the United States of America. Medical debt is totally different, because no one chooses big medical bills, health care isn’t always under our control.
Spending is nearly always under our control. If paying off someone's credit card helped them and they could assure me they would not use their credit card again, I think it is a good use of charitable giving. But it seems unlikely that a person would learn a lesson about finances if they are gifted in that way. Struggle is part of learning and it’s good to struggle sometimes.
My aim is to help people understand how to thrive by living within their means. It’s a long haul, I’ve been on this soap box since 2011, and I don’t think anyone has heard me yell that debt is not a good idea. But I’ll not stop trying. I want everyone I speak with to truly know the absolute amazing freedom I feel. I don’t have fancy things, but I’m happy and I want others to be happy as well.
I’m happy for the individuals who received help from the famous Welsh actor. When you are considering how you provide charitable giving, are you simply donating to an organization or are you directly reaching out to those in need?
My spouse frequently gives money to unhoused people, they are always appreciative. I have a friend who would give their children twenty dollars in small bills so they could give to the unhoused in San Francisco. I think of this often when I’m with my grand kids, but we don’t typically go to the city where there are some unhoused folks but I want to help them gain a great lesson in charity, so as they mature perhaps we will find a way that works for all of us.
Recently I cleaned my closet and brought my collection of hardly used high heel shoes and hand bags to a local charity that helps needy people. I support the mission of my local charity. They have very low overhead, versus some national charities with the CEO making millions each year. They don’t charge recipients for items, and no one is turned away. They also have food pantries which are in high demand right now. Basically I like the work they do so I feel confident my contribution is going to someone who is truly in need.
How are you helping others?
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