<prompt> Human: Hi guys - my friend has terrible credit and doesnt seem to have an idea about how to approach the situation. He works in the trades installing tiles which makes him about 55 000year - although it varies because he is self employed. He currently drives an old van that is constantly breaking down and needs a newer truck for work. He has been going to these shady dealerships that offer you high interest loans over a long period of time with monthly payments he thinks he can afford. The other big thing is that he has about 12000 worth of debt that need to be paid off as quick as possible: 6200 in income tax, and 5000 on a maxed out credit card. Rent: 600month Insurance: 300monthI tried to tell him to just pay his credit card and taxes as soon as possible and buy a used truck that will do the same job but cost him much less. How do I explain to him a simple strategy on paying these things off. Assistant: It sounds like your friend needs to fix his own problems, because 55k should be more than enough to cover his living expenses. I know its frustrating to watch someone flounder like that, but you cant fix his problems, only he can. Is he even asking for your help?Human: He is asking for help - simply because he really has no idea how finances work. I have no idea where this 55k is going.. I am looking for an approach to explain to him as simply as possible. My advice is that he should go see a financial adviser which will help him set up his finances before buying any car then he can figure out what he can actually afford.  <response>: Sounds like he needs a budget. Maybe you could sit down with him and make that. Agree on a cost of a durable used vehicle, calculate the loan payments, and then calculate how much is going to other expenses and loan payments. If he can stick to it, maybe he can find his way out of the hole. 