To decline to help my sister financially? Long.....

[Earlybird]

Youngest sister and her dh have been living beyond their means for years now. They have a very good income (almost £100k between them), but live pay period to pay period.

A few years ago, they were in a real bind that was avoided by using a small inheritance to bail themselves out. Another time, they were in crisis mode with credit card debt (think around £30k), but used money from sale of Mum's house (after her death) to stay afloat.

Rather than learn a lesson from those financial crisis, they still seem unable to deny themselves anything. They've bought expensive German cars, art, jewelry, motorcycles, designer clothes/handbags, had cosmetic surgery, taken first class holidays, etc. They also bought a nice home in the most expensive part of the city which they have completely gutted/rebuilt, and extended (twice!).

He lost his job a year ago. They cut back their spending, but used the balance of the inheritance money to live. He has now found another job - but at half his previous salary. They are now dipping into savings to meet their obligations each month, but this strategy cannot be sustained as they will have exhausted their nest egg in another 2-3 years.

The mortgage is their biggest problem - takes her entire income to pay it each month. They made a half-hearted attempt to sell the house a year ago, but had little interest as it is a quirky house (with the extensions they did), and priced too high.

Long way of saying: they are speeding toward a financial brick wall, but seem to have their heads in the sand. It will be awful when they finally 'crash'. They will be desperate, and will inevitably turn to me and our other sister for help (we both live modestly, and have savings).

We are worried, and don't know what to do. We've spoken to her about our concerns, and she listens, but then just carries on. Any thoughts/advice would be appreciated.

[Snog]

If they earn £100k pa between them even though dh has taken a 50% pay cut they will be able to look after themselves.
If they lose their house presumably there will still be equity and if not then this income is plenty to fund a rented house.

Don't make your dis-s worries yours OP.

[Hassled]

Yes, you do need to spell it out now, before the crisis actually happens. You are not financially able to help her when she runs out of money so please do not ask - that sort of thing.

And when the crisis does happen, you and frugal sister could help her DCs with clothes and contributions towards school trips, half-decent presents etc - so targetted help that only the DCs will benefit from, rather than help your sister will fritter away. If you wanted to, obviously.

[LilyVonSchtupp]

Sorry but I don't really understand the problem. They have savings that will see them through the next two to three years? That's more secure than about 90% of the population. I really wouldn't give their money 'worries' another thought.

[Cahooots]

Whatever you do you must never lend her money. At the moment you find her behaviour irresponsible and silly but at leat you have a normal'ish sisterly relationship with her. If you ever lend her a money, you will not get it back, you will end up with an awful relationship and you will be in no position to offer her any emotional support she may need.
My DH has lent his useless DB and DSIL money on numerous occasions. They promise to pay us back and never do. It is horrible, we can afford to loose the money but it has tainted all of our relationships. In my eyes they have 'stolen' money off my DC and I am annoyed my DH has allowed it to happen. I am polite and friendly to them, mainly for my DMil sake but i think they are dishonest thieves .
There are a million similar stories on MoneySavingExpert
Continue to tell her what you think but try and distance yourself from the situation. Perhaps you could tell her about the MoneySavingExpert site, some of the stories that reformed big spenders tell are amazing.

[pigletmania]

I would refuse. They made teir bed, now they have to lie in it IMO. Tat money you havr is for your family. You have savings as you were modest with your money

[DontmindifIdo]

It's not yoru problem, don't give her any money, as a loan or by buying an asset. It's not your problem, and you know that it will only delay the inevitable, not stop it, she won't stop spending until she has to stop, and you giving her money will just mean she doesn't have to.

I would say you sit down with the other siblings and agree none of you will bale her out. She will not change until she's lost everything, and if that everything includes your money, it will go too and you won't get it back.

I agree that you should make sure she knows this isn't going to happen too - so far something has always turned up, and she might secretly think it will again. And it might, from her DH's side of the family, but there's no reason for you and your siblings to lose your savings/financial security in order to stop her having to be a grown up.

[pootlebug]

What everyone else said. And I wouldn't be buying any assets from her either - if she has an asset she can sell she can sell it on the open market via ebay / auction / whatever route. If you and your other sister buy it you are too likely to be guilt tripped into paying more than market value for it (because she will almost certainly think it is worth more than it is), then selling something you never really wanted anyway at a loss.

I agree that spelling out clearly now that in no circumstances will you or other sister give or lend any money in the future is a good idea - so if at the back of her mind that is her get-out clause, she'll have to rethink. Sadly I think you're right and she won't modify her behaviour until forced to.

[Blu]

Tie your savings up in a long term scheme where you cannot get it out. While she seems hell bent on spending every penny that comes her way, including your money, given half a chance, you seem very over involved. She has a DH, he is the person she is now front line family with. If they, adults with the ability to earn good money, get themselves into predictable difficulty, what does it have to do with you?

Why would you even need to ask if you should help your sister to squander even more money at the expense of your Own family and children?

[Earlybird]

Thanks for advice.

At this point, frugal sister and I are not involved other than as listeners - and we are horrified at what seems inevitable.

Spending sister lives 3 hours away by car, so most contact is by phone (and that is only 2-3 times per month). Most every conversation is mainly about what she has been doing (naturally), which almost always involves spending on non-essentials followed by some sort of lament about how money is in short supply.

Her attempts to 'cut back' involve saving 10's of £, not hundreds or thousands (which is what is needed). While it is a start, it is a drop in the bucket. Shopping at Tesco instead of Waitrose and M&S is not going to salvage the situation.

[BranchingOut]

I don't know if this work, can you in some way get her interested in savings as a hobby? If she is acquisitive and competitive by nature it may have some mileage.

Maybe the idea of 'X many TESCO value products = money she can spend on a pair of shoes' will have some appeal?

Point her towards Money Savings Expert or maybe the money-saving threads on here.

The main thing you could do for her would be to help her take a more realistic approach to selling her house. Press her to get it re-valued in time for the spring market.

[GrendelsMum]

Why not go onto the debt forums of MoneySavingExpert and take a look around, and maybe ask for their advice?

I can pretty much guarantee that the people there - many of whom have been in the same situation as your sister - will tell you that you should not bail her out. She needs to realise that she has a problem and work to fix it herself.

I'm afraid that my BF's husband got into debt - again, a man on a very high salary, taking endless holidays, etc. Her family bailed him out. He's now in debt again...

[ENormaSnob]

You would be stupid (and unfair to your own dc) bailing out your feckless sister.

In fact, you would only be delaying the inevitable by giving her money.

Why should your dc suffer because your arse of a sister can't pull her head from her rectum long enough to sort herself out. This is entirely hers and her dh's making. Leave them to it.

[whatsforyou]

It doesn't sound like she wants to save money as that would require a life style change and I think she has got a bit too comfy with her extravagant ways.

If you lend give, because you won't get it back her the money you won't be helping her out a hole, you will be enabling her to maintain a better lifestyle than you have for a little bit longer. As some one else said you will just be delaying the inevitable.

How would you feel if you handed over your savings and a month later she booked another holiday because of the stress?

[blackeyedsusan]

if you do not need your inheritance for a feww years, you could put some of it in a bond that you can not access for a couple of years. make sure you have enough for emergencies though.

keep strong with your frugal sister and plan what to do/say when the inevitable happens.

[Earlybird]

Enormasnob - I agree with you completely.

What is most difficult is to know that she and her dc will suffer, but it is a situation entirely of her own making. She has had many opportunities to make changes, and has not done so. It's infuriating, bewildering and very sad.

[DontmindifIdo]

I assume in order to help her out, she's going to need £20 - 30k? It doesn't sound like a few hundred. Let's put this in to perspective - that would be enough for your DCs to leave uni debt free. That would be enough to pay for the deposit on a flat. That would be enough for the most fabulous wedding.

If you give it to your sister, what will happen? Do you think she'll stop spending and suddenly start living within her means? Or do you think she'll be thankful, clear her debts, then book another holiday she 'needs', replace some furniture she 'has to get rid of', pick up some new clothes 'she just has to have'... in 12 -24 months you'll be in the same situation, she'll be in a mess financially, but will have had a great couple of years, and when your DCs start uni/ are planning their weddings/ are saving for their first home, you will know you could have helped them but you let your Sister squander money you would have otherwise have given to them. And when you see them struggling, you will hate that she has taken that from them.

I agree with blackeyedsusan - if you can live without this money (which if you give it to her, you'll never see again) put it in an account you can't touch for 2 years so for the next 2 years you can't make a stupid decision help her.

[DontmindifIdo]

Actually, as well, has she actually asked you or your other sister for help or are you just watching this slow motion car wreck and thinking you must get involved? Because if she hasn't asked, doing nothing is the best option.

[bringbacksideburns]

The best thing you can do is nothing, seriously.

Unless you bale them out yet again and say goodbye forever to your Savings. Eventually it will catch up with them and then they will learn. It is not your responsibility and you have tried to talk to her to no avail.
Don't be a Safety net.

[Earlybird]

Once again, thanks for perspective and advice.

So far, frugal sister and I are doing nothing - other than expressing our concern, and worrying about spending sister. We hope she will recognise they are headed for disaster and change her ways, but it seems unlikely at this point.

It is like watching someone drive full speed toward a brick wall - and hoping they will brake or veer off course.

[MadBusLady]

It's hard to know what you could say, isn't it. She's just living a whole lifestyle bracket above where she should be. £100k just doesn't buy you those kinds of things. It sounds like it should, but it doesn't. Until she grasps that she won't change.

[FunBagFreddie]

I think you need to let her get on with it, and if the worst happens it's up to her to deal with it.

Some people only seem to be able to learn the hard way. If that's what it takes, it will be good for her in the long run.

[expatinscotland]

If she asks, say no.

[NotQuintAtAllOhNo]

Luckily, crashing to the brick wall in her case will not kill her, it will merely be uncomfortable until they have sold some assets. Dont worry, it is her choice.

But I agree you need to spell it out to her, that she will not be bailed out, as you and your other sister are saving for your childrens education future, and wont see funds that are earmarked the children flitted away on repaying aunties debts.

[DontmindifIdo]

It's hard when you can see someone is being self distructive, but you can't fix this. You really will just have to sit back and wait for the fall out.

It's going to be messy, but it's also going to be the only way she learns. Best it happens now when she's got time to hit rock bottom and then rebuild in time for retirement, than be facing poverty in her old age. (From what I've seen, poverty when you're young enough to work and have hope of improvement looks much easier to cope with than poverty post retirement)

[cozietoesie]

I'm more jaundiced than you, DontmindifIdo. My own experience is that people rarely pick themselves up - they just range farther and farther in looking for easy solutions to their problems/more mugs to fleece. The OP's sister and her husband may be an exception of course.