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Today, we have an inspiring guest post from Mr. FWP of Finances with a Purpose. He is a small-town guy with an ivy-league education and professional career. He impressively repaid $200,000 in student loans and now encourages others to improve their own finances and achieve greater purpose in life at his blog.
Could you take a homeless* (see footnote) person and move them to financial stability?
My father’s final year, he gave a gift that keeps giving: helping a homeless person become a financially stable saver.
Growing up, we would sometimes visit my mother’s friend. She lived in one of those houses where you don’t see the house from the road, a country highway. Instead, you saw a long, winding driveway that wound over a bridge, through the tall oaks, and curved up the hill beyond. Twenty years later, I remember that driveway and the home at the end of it. I never would have guessed, as a kid, that its owner would become homeless.
Yet twenty years later, I pursued a professional career, while my mother’s friend—we’ll call her Lisa—was divorced, broke, and homeless. Her last close friend had kicked her to the streets: she lived in her car. She had financially deteriorated for years, but now, even her own relatives refused to help her. She had called in every favor, used every indulgence.
My parents, however, decided to give her a chance. But they would do so only if she worked her own way towards independence, and eventually, she changed the course of her life.
Beginning a New Story…Assessing the Problems, Making a Plan
Despite some unease, my parents allowed Lisa to stay temporarily, but they insisted Lisa pay rent. She would have one month to work with my father and make a plan to become independent again, or she was on her own.
She agreed, moved in, and sat down with my father to create a budget—for the first time ever. They went through her finances and discovered that Lisa had some unpaid consumer debts and paid too much for things like insurance. She could squeeze together enough money from her low-wage hourly job to make her basic payments if she managed her money well, though, even though she was deeply underwater on a usurious car loan with a car that needed significant maintenance. The car had no easy solution; she needed to pay down the remainder of the loan as quickly as possible. (Lenders will charge 25+% interest to those with poor credit, which is like paying a 25% tax every year on what you owe!)
Dad had her plan to save up an emergency fund each month until she reached $1,000 in the bank. She didn’t like it and didn’t see the need for it, but eventually, she assented. They also began saving up her “down payment” money so that she could find an alternative living arrangement with a deposit and a month’s rent in advance.
They set up a system of cash envelopes, and Lisa began managing her money.
A Bumpy Start
For the first few weeks, everything went well: Lisa made her major payments, and everything seemed OK. So another month went by. But, by the end of month two, my parents realized something was off: Lisa was struggling hard to make some payments and continue saving, yet, she wasn’t struggling at all to go out to bars and buy some drinks most weekends, even though it wasn’t in her budget.
My parents confronted her, and she confessed: she had been hiding extra income from overtime. She was actually making a good deal more than she had disclosed. She didn’t want to tell them about that, because she wanted to continue having fun times—even though she couldn’t pay for her own place to live.
Rather than kick her out, my parents decided to give her a firm new plan: she could give up control of her finances, and agree to use all of her income to help herself become independent, or she could move out at the end of the month.
Once again, she agreed—she had no other option, and really wanted to be back on her own—even though she still didn’t see how it would happen. At times, she would hint about staying longer, or renting for a longer period of time.
But my parents continued to make their boundaries clear: they had allowed her to stay a month, then a few months, but they decided that she had to be out in a year’s time total—that was more than enough for her to get back on her feet. And, she would have to leave if she quit moving towards independence at any point.
Changing Hearts to Change Finances
My parents did nothing for her that Lisa could do herself (such as make meals) and encouraged her to transition towards living independently. They admitted that the biggest challenge wasn’t finances, it was Lisa’s attitudes about life. She believed she could never have much money, manage money, take care of things herself, or that she was worth it as a person. (Money is like a mirror: it reveals emotional problems, spiritual problems, and ignorance—sometimes all of them at once.) My parents gently reminded Lisa that she was worth it, and that anyone could manage money. All it requires is some self-discipline and planning.
Month after month, Lisa brought her cashed checks home to my father, who would sit down with her, go over her budget, make sure she paid her bills, and refill her envelopes. She didn’t seem to believe them, but she didn’t want to be on the streets, either, so she complied.
Confronting Challenging Attitudes About Money
One day, Lisa became ill as a chronic health problem flared up. She knew she needed medication, but she refused to go to the doctor: she owed him $75, so he would refuse to see her until she paid him, and she didn’t see any need to pay a debt that couldn’t be collected.
Her solution was simple: feign a crisis, call 911, and hop aboard an ambulance. The county would pony up thousands of dollars for a chauffeured emergency room visit at no cost to her. Plus, she had no credit and no assets, so the county could never recover any money from her. She was right about the financial math. The government would pay for it, she reasoned, so why should she?
My mother, however, who worked for a government, pulled her aside and told her she absolutely could not do that, not while living with them, at least: my parents wouldn’t incur thousands of dollars’ expense for county taxpayers because their tenant refused to pay a $100 bill.
My parents told Lisa that her doctor, like her, deserved to be paid for his time. She couldn’t refuse to pay him any more than her own employer could refuse to pay her. Nor could she force others to pay piles of money for her. At their insistence, she dug into her budget, even into the emergency fund, and paid the $100.
(There’s a lesson here about how all the government plans and free money in the world cannot fix human problems when it comes to health care or finances, which politicians should learn, but we’ll leave that for another day…)
Changing Attitudes…From Homeless to Hopeful
Even after the doctor visit, Lisa began to accrue some modest savings in her emergency fund. She also began accruing money towards a new place to live. At three months, she could see that she was slowly saving money.
But then, a month or two later, she came home sobbing (yes, sobbing): her car had broken down. My father took her to his mechanic, and they told her it would be $500 to keep her car on the road. Her maintenance fund had less than $100.
She had no idea how she would ever pay for it, or where the money would come from. Lisa felt defeated and thought her plans were done. (She knew my parents wouldn’t lend her $500.)
“But Lisa, that sounds like an emergency,” my father said. “This is why you have an emergency fund.” Her face changed, and she agreed. They gathered the money and paid for the repair.
Afterwards, she began sobbing more intensely: “I’ve never had the money to pay for a car repair.” She told my parents that she would borrow money, beg friends to help her, or obtain personal loans to pay for repairs. She said it was the first time in decades that she had money for a repair. She literally couldn’t believe that she had money.
After that, she gained intensity, and by six months, she was fully invested: she would sit down with my father and actually work more to add to her savings. She would even offer her own limited fun money for her down payment fund instead. She became eager to find a place to live.
At the same time, her relationships with friends and family improved: Lisa no longer came to them asking or begging for things, and she continued working through some of the attitudes and issues that were causing her both financial problems and relationship problems. She began having more spring in her step and looking forward to her future.
A Home for the Homeless
Lisa and my father made a plan, and well before the year was up, they began shopping: she would buy a trailer and move into a trailer park. It may not be fancy, but when you have no roof of your own, it’s a cheap and effective option.
My father joined her and helped her pick a suitable and affordable one that she preferred. (He didn’t want her to buy something with a leaky roof or poor construction: that wouldn’t help anyone.) My parents decided to chip in all the rent money she had paid that year, even though she had enough to buy a trailer on her own. She wisely used that money to buy a nicer trailer and save more for her down payment/rent.
Before long, they found the one, a trailer that had barely been used; I visited it with them. They negotiated for it, bought it, delivered it to my parents’ house, and she began moving in her things. They found a place that was both safe and close to her workplace, and she arranged for a start date.
As Lisa’s year ended, my father gave Lisa her envelopes, including her emergency fund, and we all bid her well on her new adventure. My father, unfortunately, became increasingly unwell (he had chronic problems). At the hospital, he smiled on his deathbed as he learned that Lisa had moved into her trailer.
The Importance of Boundaries
I can’t recommend that you take in a homeless person, especially a stranger, but the one thing that made it all work was boundaries. My parents placed boundaries with Lisa, knew their limits, and would kindly but firmly continue enforcing those boundaries.
Rather than enable Lisa, they confronted her about her overspending. They insisted she do something about it, or move on. Rather than feed her for free, they allowed her to take care of her own meals and remain independent. Rather than give her money, they helped her use her own money effectively. That, in turn, encouraged her to go and make more eventually. They insisted that she live peaceably with others (no ambulances!) and encouraged her to take care of herself.
Giving her money would have simply enabled her to continue making poor decisions. Instead, she learned that she really could do this herself, without any help from anyone. (There’s a lesson here for how we should approach giving to others in need.)
We also learned from her: being homeless often means being spiritually poor, emotionally poor, and relationally poor as well. More so than we knew. So my parents had to have great boundaries to avoid being swept into poverty themselves.
Boundaries are important in all areas of life, and nowhere more than when you’re helping someone who struggles with them. (If you want more on boundaries, there’s an excellent book on the subject: Boundaries.)
How did things fare after Lisa left and was on her own, though? That’s the best part.
A Life-Changing Success
Not every story ends happily: we had no contact from Lisa again for more than a year. We wondered whether she had jumped back into those old, well-worn habits and buried herself in debt again.
But eventually, my mother ran into her – it’s a small town – and Lisa ran up and hugged her. She told my mother how much she appreciated my father. “I would have never made it if it wasn’t for David.”
She still has an emergency fund, still saves, and still uses my father’s lessons on finances. Lisa shared eagerly with my mom how she was doing. She lives in the same trailer and has money saved to do the things she wants to do now. She said that her time with my parents had transformed her entire perspective on money. Now, she hates spending because it depletes her savings, and her savings allows her to be independent.
We ran into Lisa again more recently, now several years since her stay. She showed us pictures of an almost-new car which she recently purchased (mostly with cash!). She is already saving up for her next place to live, but this time, she has a plan…
Have you helped someone in dire financial need? How did it work out? Or, do you have a personal rags-to-riches story?
*Although appropriate here, homeless, the word, is a misnomer. Researchers refer to the problem we call homelessness as “chronic vagrancy.” Research reveals that a high percentage of “homeless” people actually have reliable places to sleep. Many have apartments. But we see “street people” or beggars and think of them as homeless. The term “homeless” became politically popular and has stuck ever since. Chronic vagrants may appear unkempt or beg for money (and some do actually lack a reliable “home”), but what sets them apart as a group is that many eschew societal norms regarding public spaces: they will sleep in public, beg for money (often before taking a job), urinate in public, and so on. Thus, researchers refer to the group we think of as “homeless” instead as chronic vagrants; they are characterized by a chronic refusal to obey societal norms. Truly homeless people are a much smaller group.