How social networking can help credit card debtors

Online debt relief support groups offer anonymity, advice

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.

The average household with revolving debt has more than $5,000 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 card debt.

"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

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Updated: 01-23-2018