Can you stop a money train wreck?

By Liz Pulliam Weston

Intervention has long been a popular technique for urging addicts and alcoholics to seek treatment.

Typically, the targeted one is confronted by a roomful of family members, colleagues and friends who recount the addict's bad behavior and try to break through his or her denial about the problem. Chastened, the addict may agree to enter rehab.

Could similar techniques work on those who've mismanaged their financial lives? Could confrontation succeed with friends or relatives who run up big debts, fail to save and constantly ask for handouts?

Probably not, say experts in money and psychology.

Certainly not, say people who've tried it:

• "Absolute train wreck," pronounced Your Money poster "pondhopper," of a confrontation with an overspending sister-in-law, done "with the blessing of the rest of the family." When it went badly, pondhopper wrote, those same family members chastised pondhopper for interfering.

• "It just resulted in a bunch of excuses and even in some lying," wrote poster "dark phoenix" after confronting a sister. "Nowadays I just send her good articles or relay information and hope she reads them."

• Poster "Mikey02" said his repeated attempts to advise his overspending mother had an effect, but not the one he wanted. "She would avoid me and only talk to my wife because she knew the wife wouldn't bring it up," Mikey02 wrote. "Lately I have just felt like giving up, but I am so afraid they are going to come to me looking for money one of these days."

Those on the other side of the confrontation seem to be equally cynical about the encounters. Poster "LadyFrog" said her father-in-law, with whom she and her husband are temporarily living, intercepted one of her husband's bills and proceeded to yell at him about his irresponsibility. The dressing down, which started at the husband's workplace and continued later at home, wasn't justified, LadyFrog wrote."We got confronted over a bill that we were actively paying down, we had already changed our spending habits so that we could save more, we had a fund started to replace our car that was about to die and had paid off our two other cards," LadyFrog wrote.

The confrontation, and her father-in-law's continuing lectures about their finances and her husband's career, have soured them both. Her husband "no longer wants to have a relationship with his father after we leave. And he is willing to no longer have contact with his mother if (it) comes down to that."

Don't try this at home

Experts on money and psychology say they aren't surprised these showdowns went so badly.

"It puts the adult who is managing finances poorly in a childlike position, which nobody likes," said Thayer Willis, a therapist and the author of the book "Navigating the Dark Side of Wealth." Successful interventions with addicts are usually rehearsed and conducted by professionals, Willis noted. They're designed to help the person overcome denial and give up the substance that's causing the trouble.

Financial interventions, by contrast, are usually conducted by amateurs on impulse. And giving up money isn't an option.

"Financial mismanagement is more like an eating disorder," Willis said. "We have to have a relationship with food, and we have to have a relationship with money."

And instead of breaking through someone's denial, face-offs over money often just lead to resentment.

"There will be a lot of resistance," agreed Victoria Collins, a financial planner with a doctorate in psychology. People confronted this way are likely to think "it's their own business what they do with their lives and their money."

That's certainly the reaction pondhopper got after confronting the sister-in-law.

"She had the kids 'city camping' in the living room (with) no heat, no electricity, no money for landlord," pondhopper wrote. "We had bailed her out several times before . . . and so no one told us what was going on until (they were) in dire straits and then we were asked if we could do something as the little one needed meds and food would be nice too. We said we would but not until she faced the situation."

Pondhopper wanted the sister-in-law to hand over the financial reins, agree to a budget and let pondhopper handle the bills until she was back on her feet.

"We were told to get stuffed," pondhopper wrote.

Before you interfere

Does all this mean you can't advise friends or family who are going off the financial rails? No, but you want to be pretty careful how you go about it.

Decide if it really is your business. The angry target of your intervention may tell you it's not, and he or she is probably right, unless:

• You'll feel obligated to bail out the person eventually.

• He or she clearly expects a bailout.

If neither is the case, your path is clear: MYOB. (You can casually offer help, such as "You know, I've had some success dealing with credit card debt, and I'd be happy to share some tips if you're ever interested.")

If you'd feel responsible for the other person, though, explore that a bit.

Continued: Set your boundaries

Like Mikey02, poster "reluctant buyer" is worried her parents will come knocking on her door now that she's discovered they have nothing saved for retirement and have drained the equity in their home.

"Every time that I (bring up) wanting them to prepare themselves better, they say something like 'Don't worry, there won't be anything left,'" reluctant buyer wrote, as if she were inquiring about an inheritance. Her reply: "Well, I'm not buying a large enough house for you to live with me."

The in-laws of "Zen2112" have been more direct. In their mid-50s and still living paycheck to paycheck, the in-laws "make comments like, 'you'll take care of us in our old age,'" Zen2112 wrote. She and her husband worry that "they will force (us) to make the choice between them or our paying for college for our kids" -- a goal the couple have "scrimped, saved and penny pinched" to achieve.

If you feel like you're going to be on the hook, first read "Should you bail out spendthrift parents?" and "Survive the parent/kid squeeze." That will give you a clearer idea of the issues so that you can:

Set your own boundaries. Obligations can bring resentments, particularly if you're worried that your relative's neediness will wreck your finances, too.

Fight the fear by deciding in advance what kind of help you're willing to offer and how much. Setting your own boundaries can help you be calmer about the situation. Then read "How to say no to anything -- or anyone" for tips on how to stick to those boundaries despite counterarguments, pleas and whining.Locate a professional to help, or at least a neutral third party. Let's face it, your relatives and friends don't want to hear you tell them how to run their lives. So find a financial planner, legitimate credit counselor, mortgage counselor or bankruptcy attorney who can dispense the information they need without judgment, power struggles or years of dysfunctional history tainting the message.

The Garrett Planning Network offers referrals to fee-only financial planners who charge by the hour. You can find legitimate credit and housing counselors through the National Foundation for Credit Counseling. Your local bar association offers referrals to bankruptcy attorneys.

Have a conversation rather than a confrontation. Once you are clear on your obligations, have set your boundaries and have found someone to help, be on the lookout for a time when everyone's relaxed and feeling good.

Start off the conversation by sharing your own experience, financial planner Collins said, or mention something that's been in the news.

If you're concerned about a family member's ability to pay the mortgage, for example, you could say that you've been reading about how many people are finding help through certified housing counselors and that you have contact information if they'd like it.

Or if it's your parents' retirement savings that have you worried, mention that you've been reviewing your own financial plan and have found someone who might be able to help them with theirs.

If you think your relatives or friends are expecting help you can't or won't give, you may want to mention that now, in the most neutral way you can possibly deliver the information. Use the technique from "How to say no to anything -- or anyone" of asking how you can help them help themselves.

Once you've had this conversation, it's time to drop the topic. What the other person does next is up to him or her.

As poster "NB2" put it: "Sometimes they have to hit bottom a few times before they learn and decide for themselves to make changes. I've had to watch several relatives become frustrated trying to talk sense into another family member who will not listen and does not want the advice. Hopefully, they will decide to change on their own one day."Liz Pulliam Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "Your Credit Score: Your Money & What's at Stake." Weston’s award-winning columns appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Updated June 2, 2009