I've only just discovered this thread, and so much of it rings true. So many of us have faced similar situations with friends and relations. I have a personal example that has not (yet) dragged into drugs and questions of mental sanity.
I have a friend, who is still employed, who projects an image of stability and responsibility. However, he is financially incompetent (but not at the same stage right now -- but has been in the past). Over the years, he's faced situations in which his excessive spending, max'd out credit cards, failure to file taxes and pleas for money have burned numerous bridges. Every time we think the behavior is under control something new and inappropriate comes up, often previously undisclosed (There is a lot of baggage behind the spending, the lying about the age, efforts to keep up appearances, etc). Similar to ivinsfin's friend, he is 67, but has no net worth, an aging car but a job that will yield a pension (that won't meet his spending level).
Giving money was that -- he burned through many friends over the decades through that process. After giving him money, I told him not to ever ask again, but if he was about to lose his apartment and had no job he could move into the spare room. Eventually, after blowing through a 300K+/yr job with no progress financially and no new job, he got to that point of desperation and had to move in. Eventually, he got a new job and was able to move out. We thought that was the bottom but it hasn't really ended as the behaviors tend to repeat themselves over time, but with perhaps less dramatic swings.
The remaining long term friends are either very FI or were never borrowed from (or exposed to the mess that is his finances).
I wish this story had a happy ending, but it is an ongoing saga.
