I have a friend who has made some really, really, really bad decisions in her life about personal finance, and she recently asked me if I would help her get on a better path. I'm happy to help, although it's a little uncomfortable having her spill all her financial beans to me. But now that we've started talking about where she's at, I'm trying to figure out what to tell her.

There is some rote personal finance advice out there, but now that I'm trying to give advice to a person I actually know, I see that it's more difficult to do. What may be the "right" advice from an objective sense is not necessarily the right advice for everyone-if the person who needs help can not follow through with the advice given, it doesn't matter how good the advice is. So I'm trying to give her advice that I think she can handle, even if it won't necessarily maximize her money in all ways. Better to get straightened out but make a little less than have the perfect plan that won't be followed.

So, here's her situation...

First, she makes less money than she should. She's sort of a shy type who has always sold herself short, and has tended to stay in jobs even when it's clear that her employer was taking advantage her. They knew she'd never quibble on salary and was unlikely to leave. Her timidity hurts her, and she knows it.

Second, she has horrible credit card debt.

Third, she has only lived with her parents. At first this was simply because she was young, but then she was taking care of an ill mother and decided to remain living with her. Her mother unfortunately died recently. She doesn't have enough money to buy the house outright or keep up with payments, even if her siblings were willing to let her stay there. Anyways, she doesn't like the idea of being in the house anymore, but she has never lived on her own. She went to college locally, commuting to school, and thus has never even had an apartment.

Fourth, she has some savings, but has never put anything in a retirement account of any type. So, the savings she has really haven't grown all that much.

I'm starting to wonder if I can save her!

But I'll try. Here's what I'm thinking of suggesting:

First, I'll try to gently tell her to try to move on career-wise. Maybe even see if I know anyone in her industry or related industries that she could talk to. I don't know how much impact I can have on her income, but it is painful to see her so underpaid, especially in that she's so intelligent in so many ways (except financiallly!).

I'm going to do some apartment hunting with her, so I can give her the ins and outs of security deposits, getting utilities started and expected costs, etc. We need to get some ballparks on what it's going to cost to live on her own. (I'm hoping this will open her eyes a bit to how little money she's making, because she'll be paying out a lot more for the first time.)

If it were me, I would probably take the majority of my savings and pay off the big credit card debt. But the reason she has so much debt is that she's always wanted a big safety net, so she actually chose more credit card debt and a larger nest egg, even though on paper that's a losing game, especially with the paltry returns she's made on her savings. So, for her, I am simply going to suggest a plan to pay off the credit card debt over a set period, with the understanding that no new debt can be incurred. I'd like to see it paid off in two years; I have a feeling she'll want three.

I know I can help on the savings end. She has failed to invest out of ignorance and timidity, not out of fear of losing the money. So I just need to instruct her on how to get higher returns without too much risk. I'll get her to put some of her savings in an S&P 500 index fund and to start contributing to her 401(k). I'd like her to be fairly aggressive with the 401(k), but I know she'll fight me. We'll also keep a certain amount in a money market account or CD, so she feels that part of it is totally safe. This is not the way I would do it if it was me in her shoes, but I think this is a conservative way to invest that will bring better returns without freaking her out. I also don't want to get crazy with financial instruments, since she's almost never dealt with them before. Baby steps.

It's weird to offer advice to a specific person I know versus abstract advice for people I don't know, but I'm excited to see if I can help her make some changes for the better. It will be very fulfilling if I can.