What's your financial breaking point?

We have a 20-something friend who has struggled with debt most of his adult life. We've talked about better money management from time to time. He has said he would get it under control, and did -- from time to time.

Then he'd overspend and the credit card bills started growing again, prompting, we suspect, a lot of worry and some self-loathing.

Now, he's reached his breaking point: He had to borrow money from a friend to pay the rent. (Thank goodness he realized that a payday loan would only aggravate the situation.)

Many bloggers have written about the mistakes they made that got them into debt and how they reached their moment of reckoning. Our partner blogger Trent Hamm at The Simple Dollar called his a "meltdown." It's the moment you realize you can no longer tolerate living with self-inflicted financial stress.

Our friend reached his meltdown after a few small debit card purchases -- made after the bank Web site incorrectly showed there was money in his account -- produced a load of NSF fees. (He wrote in an e-mail: "Isn't it great how they don't stop you from using the card when you've got no money? And when someone is a habitual debit card user, a day or two of overdraft fees adds up very quickly.")

The rent was due, and payday was still a week away.

That was a week ago. Since then, he has:

• Opened an online savings account, with automatic deposit from his checking account after each payday.
• Come up with a menu plan and a grocery shopping list. One of the spending habits that got him into trouble was eating out twice a day. That's $12 to $14 every day. He has a basic cookbook and is going to teach himself how to cook.
• Made an appointment with HR to set up a 401(k).
• Made a budget, which is still being refined as he reads about budget basics. It will allocate money for basic bills, retirement savings, short-term savings, debt -- and some fun money.
• Retired the debit card and moved to cash. That means the spending will end when the budgeted amount of cash is gone.

He is signing up for a community personal-finance course. This is another great move. We think that his overspending wasn't due to recklessness or a desire to keep up with the Joneses, but to inattention to detail and a shortage of understanding of how things work.

What can you do if you have a friend who has problems managing money? Be helpful but not overbearing, and don't be judgmental. And be supportive when that breaking point arrives.

Related reading:

• When banks turn evil
• Never pay another bounced-check fee
• 9 money rules to live by

Published Jan. 15, 2009