Giving 'Money' Gifts
I have a friend who has a lot of credit card debt. She wants to start investing but knows she should pay off her debt first. For Christmas, I'd like to help her with her financial situation. Should I buy some sort of investment for her as a gift? If so, what? Or is there a way I can make a payment on her credit card?
A Book to Help Paying Off Debts
I would recommend doing neither of these options. Instead, purchase a copy of Mary Hunt's Debt Proof Living for your friend and strongly encourage her to read it and put it into practice. It is very easy to read, to use, and incredibly helpful in paying off debts and then in getting started investing.
Long Term Benefits
Yes, you can make a payment on her credit card provided you know her account number. All you have to do is send a check to her credit card company with her account number on it and they will credit it like any other payment received. Usually of course when you pay the bill you have the little statement slip, but they always ask you to write your account number on your check anyway, so that if the slip gets separated your payment can easily be credited. Do not send a check without an account number even if you include a note asking them to credit it to Julie Smith's account, because there could be dozens of Julie Smiths. Also, be sure to let your friend know that you have done this so that she can verify that the payment is properly credited.
If you don't want to go that route, yes, you can open an investment account for someone else, but again, you need some information from her. You'll need her legal name (not Julie Smith, but Julia A. Smith) and her social security number. I think it's a wonderful idea to help your friend in this way, and maybe you could make it an ongoing challenge/gift to her to keep her moving in the right direction. Open that investment account and make an initial investment in her name. Then to keep it ongoing, every time the two of you decide to get together and say go out to dinner. Instead of spending $30 on dinner, stop off together at the grocery store, spend $10 on items to cook at one of your homes, and take the other $20 and put it into that investment account.
Try to find a place where you can invest small amounts without paying high fees, or else you should open an interim savings account to put these smaller amounts until you have the required minimum and then transfer it to the investment. Not only are you helping her continue to invest, but you are also showing her that spending large amounts of money aren't absolutely necessary to have a wonderful time. Isn't the conversation over dinner and the time spent together more memorable and fun than that overpriced steak?
There are dozens of way you can show her that with little changes in attitude she can still have the quality of life that she wants, but without the debt! Take her to your favorite Goodwill store instead of to Nordstrom's.
Remember "if you give a man a fish you feed him for a day, if you teach him how to fish, you feed him forever". Teach her how to save on her own and before you know it she'll be out of debt and have a financially sound investment future!
Help is Appreciated
I also have a lot of credit card debt, and I've let it be known that a check made out to one of the credit card companies is fine! That way, the giver can make the check out in the amount that will fit their budget, and I can send it to whichever credit card has the next payment coming. The presentation can be a big part of the gift, though. I've gotten a check taped around a can of soup, stuck in a card, etc. Use your imagination, but do know that it's appreciated!
US Savings Bonds
Give her a savings bond. A $50 bond costs $25 and is usually worth the full amount if held 5 years. www.savingsbonds.gov.
Take the Next Step
- Are you getting the best CD rate? Use our simple tool to find out. It's completely private, extrememly simple and you'll know what rate is available to you in seconds!
- Compare money market rates with our best rate finder. Don't let your bank pay you less than you deserve. It only takes a minute and your privacy is completely protected.
Trending on TDS
- A great way to save for your kids' college TDS Recommends
- Are there any good generic dog food brands?
- A financial safety net for single moms
- Keeping your kids well-clothed for less
- Fun recipes to keep the kids busy this summer
- Kids' parties: Keeping the expenses down while turning up the fun
- 5 big bills you can cut fast
- What you shouldn't (and should) buy in May
- Raising a child with financial smarts Video
- Savings challenge: Make your own fresh dog food
- 4 steps to a simpler (and more frugal) life
- What is the cost of raising a child?
- Spouse income calculator
- Should my spouse work, too?
- College savings calculator
- Home budget calculator