How social networking can help credit card debtors
Online debt relief support groups offer anonymity, advice
By Linda Childers
If you find yourself struggling to pay off credit card bills
and wondering why it seems as if there is too much month at the end of the
money, you're not alone.
According to Federal Reserve figures, the average
household has more than $8,000 in revolving debt -- mainly from credit cards. In 2009, credit card defaults in the
United States reached their highest level in 20 years, as many consumers found
themselves coping with unemployment and the inability to pay their debts.
Consumers considering bankruptcy or debt settlement are discovering
a third option in the form of online debt relief support groups. While social
networking has long offered support groups targeting those who want to lose
weight or who are coping with a chronic disease, those struggling with mounting
debts can now also find relief online.
"It's not uncommon for people with financial problems
to not want to talk about their situation," says Reeta Wolfsohn, founder
of the Center for Financial Social Work in Asheville, N.C., "They are often
too embarrassed or too ashamed and feel that others are judging them. In a
financial support group, you can retain your anonymity while talking with
others in similar situations and receiving support and sound advice."
Nonjudgmental financial advice
The Women in Red Racers (WIRR) were one of the first groups
to demonstrate success. With more than 1,000 members who communicate in a
message board forum, the group paid back a total of $1.6 million in debt
shortly after celebrating their first anniversary. The WIRR board is hosted by MSN financial columnist MP Dunleavy and was founded
by Becky Purvis of Raleigh, N.C. Other consumers have found online debt relief
through websites such as iVillage and Frugal Village.
"An online support group offers validation to consumers
who are struggling with the stress of mounting debts," says Shoshana
Bennett, a clinical psychologist in Danville, Calif., who has seen an
increase in the number of patients who attribute much of their anxiety and
depression to increased debt. "It offers a chance to be truly understood
by others who are experiencing the same issue. Credit card debt support groups
can offer coping skills from those who are going through this mix of emotions,
and better yet from those who have conquered their debts."
Could an online financial
support group be right for you?
If your debts are spiraling out of control,
an online support group might be just the solution to help you with the following:
- Accountability. Since you will be checking in each week
with your fellow members, it's much more difficult to ignore your debts. Your
group can offer support as you work toward achieving your goals whether it's
paying down your bills or starting to save money.
- A sounding board. You come home at the end of the day and
need to vent about the stack of bills in your mailbox, but don't feel
comfortable talking to your family and friends. Your group members can talk you
down, empathize with how you're feeling and offer some words of wisdom.
- Education. If you think it's impossible to save money,
group members can offer advice on how they cut costs and go through your bills
with a fine tooth comb to see if you can obtain better rates on car insurance,
phone plans, etc.
Center for Financial Social Work's Wolfsohn began offering
online financial therapy support groups to consumers in December 2009, after
being inundated with requests from consumers seeking help managing their credit
"A lot of consumers feel helpless and hopeless about
their debts but don't know who to turn to for practical and nonjudgmental
financial advice," Wolfsohn says. "A financial therapy support group
teaches them to be proactive rather than reactive, and shows them how to make
changes while offering them support and motivation."
Private, but public
All of the online groups offer anonymity with participants
typically being identified only by a first name. Members update groups regularly
on their progress and share debt elimination advice and money saving tips.
Rewards and incentives are also offered to keep members motivated. The Women in
Red Racers have a reward system where every time a woman pays off $100, she
puts a virtual smiley face next to her name. In Wolfsohn's group, members who
achieve specific milestones with their debt and savings receive recognition and
acknowledgement at weekly meetings.
"The motto of our groups is education, motivation and
support," Wolfsohn says. "One of the main components of our groups is
the psychosocial aspect that helps people to change their attitudes and
behavior toward debt. If you don't have self-confidence and good self-esteem,
it can be hard to make significant changes in your financial habits and to feel
worthy of having a better financial future."
Consumers pay Wolfsohn a one-time registration fee of $10
and $8 per week to participate in the financial therapy support groups. Each
week, members are e-mailed a different lesson with specific instructions,
mini-exercises and motivational quotes designed to help them make the most of
the group experience. Each weekly meeting is one hour and members agree to
confidentiality around all issues shared. Participants can sign up for as many
weeks as they'd like to attend.
"Credit card debt is a very personal and private topic,
but that doesn't mean it isn't one that can't be shared with the proper
boundaries that allow participants to share and grow their wisdom and
experiences," Wolfsohn says. "Members are sent exercises each week
that help them identify their spending triggers, set goals, develop a net worth
statement and more."
Comfort found among strangers
Christina Kelly of Long Island, NY, signed up for Wolfsohn's
online support group hoping to finally take control of her family's finances.
"Reeta gave us some great tools to create a personal
savings and spending plan," Kelly says. "The other members of the
group were very supportive and offered ideas that had worked for them. It was
so comforting to realize that I wasn't the only one struggling, and as a
result, I became more motivated to save and pay down my debt."
iVillage reports that postings on
their debt relief message board have increased 81 percent over the past year.
Topics of discussion include how to start a "sinking" fund for those
once-a-year expenses that crop up including vehicle registrations, vet
appointments and holiday shopping, and how to pay off debts when you have a
salary that varies each month. Regular weekly check-ins help keep members
motivated and give them a chance to share their accomplishments with others.
With so many online support groups popping up on the Web,
experts say it's wise to conduct due diligence before you sign up. A
legitimate support group should never ask for your credit card account
information or attempt to sell you any products or services beyond the initial
registration fee. Look for a group that offers practical advice and seeks to
inspire, it won't help to become involved in a group where other members just
bemoan their lack of money.
"Personal finance is 80 percent behavior,"
Wolfsohn says. "In order to tackle your debts, consumers need to learn how
to change their spending and saving behaviors."
See related: How debt settlement works, how it affects credit scores
, Social networking: Your key to easy credit?
, Credit card addiction: How to break the spending cycle
Published: February 23, 2010