Most important point first – Do not lend him any more money. Lending money is only a short term solution, while we should be looking for a long term permanent solution.

Secondly – Do not tell him what to do. A person permanently in debt is like a person with addiction problems. They will shoot the messenger before admitting that they have a problem.

So how do you help that person out? Here are some pointers

1.       Lead by Example:  Tell him how you got out of a similar solution by better finance management and how some books helped you. Point him out to some tools that you used to get out of the situation.

2.       Talk about what he is missing: Tell him what he is already missing by being in debt and having to pay off the debtors. For example, let him know that by paying of the debts for the next 5 years (say), he is going to miss out on five vacations or latest mobile models or latest car models or whatever he is into. And if he is going to take still more loans, that five years can easily become ten years.

3.       Show him how much his loan is costing him currently. Calculate for him how much a lunch at your favorite restaurant is going to cost given that his card balance is overdue. Or how much the car loan he is planning to take is going to cost ultimately.

Again reiterating a point, because this cannot be stressed enough – Do not tell them what to do. Let them decide what to do. What we should be aiming to do is to make them aware of the consequences of their action. If the person who is in debt feels that it is his decision to get out of debt, there is a better chance of them getting out of it.

The most important thing we should keep in mind when talking with someone who is always in debt is “Teach, don’t Preach”. Unless a decision is taken by them, or they feel that it is their decision, nothing will come about. They already have an issue with financial management; they could do without feeling someone else is controlling them.

And finally, give them confidence that you will be there to support him with whatever help he needs, as long as he is acting in a responsible manner.