Pay-it-forward givers sometimes provide debt relief

Someone does something nice for you and instead of returning the favor directly, you help someone else. Sound familiar? It should. The pay-it-forward movement has zoomed into modern popularity with an eponymous book and a Hollywood movie. Many participate by covering the cost of a coffee or toll of the person behind them in line. And while that feels good, starting and maintaining a debt deletion chain can have especially profound results.

"We hear stories all the time of people who lost their job and someone steps in and pays their rent or stops their car from being repossessed," says Charley Johnson, president of the Pay It Forward Foundation. "That's a powerful impact on someone's life."

Pay-it-forward debt relief

As for all the givers' profiles, Johnson eschews generalities. "Their reasons for paying-it-forward for debt relief are as individual as they are."

According to Johnson, the majority of those who conduct such kind acts as helping people with their bills choose to remain incognito. "I would like to change that," says Johnson. "I want people to not be anonymous." Why? Because who they are and why they do what they do can inspire others to do the same.

Some, though, have come forward to explain what in particular drives them to donate funds to those in dire financial need -- and why they'd like the cycle of giving in this way to remain unbroken.

Political motivations
Nancy Schimmel of Berkeley, California, contributed $500 to Strike Debt's Rolling Jubilee program, an offshoot of Occupy Wall Street. The program, closed in December 2013, accepted donations to repay out-of-control balances that people incurred for such essentials such as medical care, so the bills didn't go into collection. The group's mission, according to its website, was to "help each other out and highlight how the predatory debt system affects our families and communities."

Schimmel considers herself lucky because other than buying a house, long since paid off, she's suffered few financial troubles. "My parents left me enough money for a good down payment," she says. "Most people don't have that start." To give back, she paid it forward with donations to the program, which distributed it to debtors who had not been so fortunate.

I could help in a way that expressed my belief that people should not have to go into debt to pay for needed medical care.

-- Nancy Schimmel
Berkeley, California

"I could help in a way that expressed my belief that people should not have to go into debt to pay for needed medical care," says Schimmel. "It also says something about the need for better health insurance so illness and accidents don't bankrupt people."

Religious tenets
Author and financial stability coach Ken Rupert from Hampstead, Maryland, also relieves indebted people in the pay-it-forward fashion. Rupert's Christian faith inspires him as does his personal experience with economic hardship.

"When I was in my 20s, I was helped financially by a family member when I faced the difficult transition from military service to civilian work force," says Rupert. Since then, he and his wife have remained debt-free and made a commitment to stay that way so they could help others.

Today, Rupert and his wife contribute to loved ones as well as strangers who are struggling with their obligations. Donations range from $200 to $1,000, and their biblical principles keep them going. "It's in Proverbs, the ability to be a blessing," says Rupert. "Paying it forward takes on a much more spiritual role and significance."

To find those who could use financial assistance, Rupert keeps his antenna up. "We look for opportunities about who God wants us to bless. In social circles we listen; we identify people. Maybe we hear of someone who has a sick child, but can't pay the hospital bills." With a little investigative work, they discover the person's contact information and then begin.

"They don't know us, but we know them," says Rupert. "It's through the mail and comes with a card. It gives us the opportunity to say we've been blessed by the Holy Spirit. Now they are, too."

It's not only strangers, though, explains Rupert: "One guy I helped I knew as a high school student. Later he got married, then divorced, lost his job and had an eviction. So many debts. I said, 'If I pay them, you can pay for someone else later.' Helping others down the line is always in mind. This is not a pay it backward thing, it's pay it forward!"

Altruism and family values
Cary, North Carolina, resident Hollis Gardner Vaughen says that paying it forward for debt relief is a family tradition that she is simply carrying on. Her parents came to her rescue when she was in arrears, and now she and her husband continue the spirit by coming to the aid of relatives as well as strangers when they are in need.

"I like to be helpful and useful, so if I can give in a way that helps someone out, I feel really good," says Vaughen.

The short-term impact is seen immediately -- for example, avoiding repossession, eviction, foreclosure.

-- Hollis Gardner Vaughen
Cary, North Carolina

When Vaughen discovered that someone she met in an online group hit a temporary tough spot, she and others in the community sent money to cover her growing bills. "Several of us sent her small amounts via PayPal," says Vaughen. "She was so grateful and has paid it forward since."

"The short-term impact is seen immediately -- for example, avoiding repossession, eviction, foreclosure," says Vaughen. Her hope, however, is that the contributions will eventually help recipients improve their financial standing to the point where they are debt-free and can help someone else out later.

"Even if the chance never presented itself, just being in the position to be able to help someone if necessary is a victory of its own," says Vaughen.

David Bakke, a contributor to the financial education website Money Crashers, lives in the Greater Atlanta area, and has both expertise and experience in the debt-related, paying-it-forward system. As with Vaughen, his family helped with his obligations when he was in dire straits.

"My parents paid it forward with me a long time ago and that has always stuck with me and has motivated me to help others," says Bakke. In turn, he assisted his sister with her debts, which arose from a health issue. "My sibling was incredibly gracious when she saw that she owed a lot less. She said it helped a lot with her stress level as well," says Bakke.

While he doesn't explicitly expect his sister to jump on the bandwagon and pay another person's debts, Bakke does hope she will when her situation improves. "I will mention it," says Bakke. "If she ever wants to pay me back, I'll suggest paying it forward with someone else."

The unwritten pay-it-forward-for-debt-relief rules
Despite the inherent and highly personal motivation for behaving so generously, three traditions remain constant when paying it forward for debt relief:

  • The debt should be for something necessary. Across the board, how the debt occurred factors heavily in the decision to step in. Rampant overspending doesn't inspire acts goodwill. "If we think the problem was because of foolishness, such as too much shopping, we don't give," says Rupert. Same for Schimmel, whose altruistic endeavors are certainly not focused on consumerism gone mad, but rather crazy health-care costs. Vaughen, too, would pause before giving someone a loan or monetary gift if the person "had frittered away money on luxuries or non-necessities, or wasn't doing cost-cutting measures to save money." Still, when you don't have much background on someone, you can't know for certain that the money will be spent wisely. But look for the good in people, says Johnson, and listen to your inner voice before making the donation: "Go with your gut. It tells you if something is weird and doesn't feel right."
  • The endowment should have a lasting, positive effect. The donation should have an impact, not just today, but into the future. "Working to change the causes of need seems better to me than just filling it, though both have to be done," says Schimmel. Though she may maintain a more idealist perspective than some, the root is the same for all: The best way to pay it forward is when the debtor will get more than a momentary boost. Before giving, the Ruperts evaluate whether the recipient possesses decent money management skills. They tend not to give to those who just have high credit card bills because they're afraid the person will get back into debt later. Assuring that the funds will make a lasting difference is important. "Not just because I'm judgmental or want to have strings attached to any loan or gift," says Vaughen. "But because I would feel, in the long run, the money we'd give or loan wouldn't solve any problems."
  • You can encourage, but not require, pay-it-forward action. Ultimately, the pay-it-forward concept is all about doing good deeds with the desire -- not the demand -- that those who benefit will also follow suit. When the cash has shifted from your account and into someone else's, let go. "Once you've given the money, you have no right or responsibly to control it," stresses Rupert.

Bakke also believes that the beneficiary's role is not to insist on improved credit, a sounder budget or future charitable contributions to others. But are such wishes worth a mention? Absolutely, says Bakke. "It should be suggested if it's important to you, which I think it should be."

"One of the biggest problems with pay-it-forward is expectations," says Johnson. "Get rid of them. Don't help someone with their bills then make demands. Just be who you are and allow it to happen naturally."

See related: CFPB: Credit scores for medical debt are unfair, Want to help a relative in debt? Do it carefully

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Updated: 11-23-2017