Personal Improvement

Financial Intervention: What to Do When Things Are Dire

Updated on April 24, 2020 Updated on April 24, 2020
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When a loved one has an addiction, family and friends sometimes stage an intervention to confront that person and convince them to seek help. We usually associate an intervention with a drug or alcohol problem, but people can destroy their lives through their spending habits too. A financial intervention is one way to help.

The DSM (Diagnostic and Statistics Manual of Mental Disorders) is the guide used to assess and diagnose mental disorders.

The guide is updated periodically, but the current edition, the DSM-5, does not list compulsive shopping or spending as mental disorders.

It was under consideration for inclusion but not listed as an addictive disorder or an impulse control disorder.

Just because compulsive spending isn’t in the DSM-5 doesn’t mean that it isn’t a genuine affliction, there is even a formal term for it.

Oniomania is the medical term for people who have an uncontrollable and compulsive desire to shop.

Oniomania comes from the Greek onios, which means “for sale,” and mania, which means “insanity.”

And just because this particular addiction or compulsion doesn’t involve drugs or alcohol doesn’t mean it isn’t a destructive behavior. A shopping addiction can destroy someone’s life, family, and health just as a substance addiction can.

It’s painful to watch a family member or close friend sink themselves into credit card debt, deplete their retirement funds, lose their home, or lose their family because of destructive financial behavior.

If you want to help, here is how to have a financial intervention.

What Is a Financial Intervention?

An intervention is a gathering during which family members and perhaps close friends try to convince someone to get professional help for harmful behavior, spending money in this case.

The people in the room tell the person they have a problem. It’s something the person is probably acutely aware of and they offer whatever support they can.

Signs of Uncontrollable Spending

How much spending is overspending? Money is a taboo subject in the United States. It can be hard to know if someone is spending so much money, it’s negatively impacting their personal finances.

Do you know how much money your closest friend or your brother makes? Do you know if their investments are successful?

You probably don’t know any of those things, so you have to look for signs someone has a problem that requires outside help. Here are some signs to look out for:

  • Closets full of clothes, many with tags still on and possibly in the wrong size
  • A tendency to go shopping when feeling strong emotions (e.g., after a fight or a bad day at work)
  • Always looking for the perfect item, buying it, and then deciding it wasn’t perfect and re-starting the cycle
  • Several multiples of the same item
  • Purchasing things they have no use for because they were on sale
  • A wallet full of credit cards
  • Attempting to hide purchases
  • Hiding credit card statements

how to pay off credit card debt

Individually, most of these things don’t necessarily indicate a shopping addiction, but taken together; they’re a pretty good indicator there’s a problem.

Why Stage an Intervention?

The reasons for staging a financial intervention are no different than staging one for a drug addict or alcoholic. Their behavior is destroying their life and probably their family too.

The secrecy of a troubled spender can be particularly destructive to a relationship.

They’re hiding credit card bills, taking out loans without a partner’s knowledge, perhaps going so far as to sign their name to loan documents, and lying to cover it all up. Not a recipe for a happy relationship.

The spender doesn’t only need financial advice; he or she has ceased being able to make healthy financial decisions.

When to Stage an Intervention

A 25-year-old with $5,000 in credit card debt doesn’t need an intervention. It’s terrible, but smart budgeting is a sufficient combative strategy. It’s also unlikely to be a psychological problem.

An intervention is appropriate when the spender is seemingly unable to stop the harmful behavior, and it’s hurting not only themselves but others who care about them.

Who to Involve in an Intervention

Even more than substances, there’s shame around a spending problem. Whether we like it or not, money and buying things are a marker of success in our society.

And wanting to portray an image of success may be part of the reason a person develops a spending problem.

Because of this shame, the fewer people involved in a financial intervention, the better. It should be limited to a person’s closest family members or friends if there is no close family nearby.

It’s also better to have fewer people, so the person doesn’t feel overwhelmed.

But you probably shouldn’t do an intervention completely alone. One on one might allow the person to dismiss your concerns. If their behavior was so bad, why isn’t anyone else complaining?

You’re just exaggerating. And you need allies to help not only exert the pressure the person needs to feel, but so they know they have a lot of support to fix the problem.

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How to Stage a Financial Intervention

Deciding to stage an intervention is nothing to take lightly. You and the person involved may fall out over this.

It doesn’t mean it’s the wrong thing to do, but doing the right thing sometimes has negative consequences for us no matter how carefully we go about it.

Confirm Your Suspicions

Even if the person you’re concerned about ticks all of the boxes of someone with a shopping addiction, if you don’t know for sure, you have to do some digging.

Talk to other friends and loved ones about the afflicted to find out if your suspicions are correct. Maybe they have some large trust fund they were too embarrassed to mention. Perhaps they are a successful drug dealer.

need help paying bills financial intervention

Make sure your help is needed before you offer it.

Recruit Allies

Not everyone you ask will want to be involved, and that’s okay. It’s their decision. But do be careful who you ask.

Not only because finances are so personal, but because someone could go to the person the intervention is being arranged for and tell them what’s happening.

The people included should be those who the subject trusts, respects, and will likely listen to their advice. Each person should write what is known as an impact letter.

The letter should be short, to the point, and express how much they care for the person, how the spending has affected the letter writer, and implore them to get help.

Enlist Professional Assistance

Your budget is balanced, and you have a nice retirement fund. Good for you. But budgeting alone is not going to solve this. You’re also probably not a psychologist or psychiatrist.

A layperson lacks the psychological component to deal with the kind of spending required for an intervention.

You can put a band-aid on it, but to solve the problem, the spender has to deal with the reasons why they engage in this kind of destructive behavior.

An excellent resource is Debtors Anonymous. There are local chapters across the country, and they can help you find the appropriate medical professional who deals with spending addiction.

You might also consider lining up a financial advisor. We don’t find them necessary for managing finances in general, but when someone has a spending addiction, an advisor might be required to sort out the financial mess.

Choose a Spokesperson

A single person should do most of the talking. If there is a professional addiction specialist involved, they can be the spokesperson.

The speaker should tell the person why everyone is there, let him or her know there is no judgment, and everyone in attendance will do what they can to support them.

Each person reads their impact letter. After the readings, the spokesperson explains how the group is prepared to help. First, no one will go on, enabling the person to continue making bad financial decisions.

It can mean things like taking their credit cards away, refusing to loan them money, taking their name off bank accounts, or putting a freeze on other accessible financial accounts.

Secondly, inform the person outside help has been set up (if there’s not a professional at the meeting) to address the problem.

Ideally, the first meeting with the person providing psychological or financial help should be as soon as possible, preferably the same day you hold the intervention.

Addiction is not only for bad people. It's a universal disease.

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Come Prepared

If there is a close family member or friend who can provide hard data, use it. Seeing the numbers involved will be a wake-up call.

Not opening bills and ignoring phone calls hides a lot. The person likely doesn’t even know exactly how much debt they have.

Expect Resistance

Think of how you would feel in this situation. The people you love telling you you have a problem. Your first reaction probably wouldn’t be gratitude. The person will likely be defensive and may even storm away.

They may never speak to you again. They may refuse to admit they have a problem.

There can be a lot of fallout from staging any kind of intervention, and it may mean the end of your relationship with the person.

The person may initially refuse help but later realize they need it, so don’t lose hope if they reject your first offer.

The Long Haul

The intervention is only the first step in getting help for this person. It’s a long road. He or she will need a lot of support going forward. You have to commit to this and stand by them as they make their way out of the mess.

The spender may relapse the same way a substance abuser might. They will try your patience and compassion. But if you were close enough to them to start the process, you’re close enough to help them see it through.

Candice Elliott - Senior Editor
Candice Elliott is a substantial contributor to Listen Money Matters. She has been a personal finance writer since 2013 and has written extensively on student loan debt, investing, and credit. She has successfully navigated these areas in her own life and knows how to help others do the same. Candice has answered thousands of questions from the LMM community and spent countless hours doing research for hundreds of personal finance articles. She happily calls New Orleans, Louisiana home-the most fun city in the world.
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