My sister in law is in severe financial trouble, how do I stop her spending?

[mummytoonetryingfortwo]

My sister in law has revealed to me last night that she’s in real difficulties and has asked me for help. She’s 23.

She works 25 hours a week for £12.60 an hour, so brings in £1,200 a month. She is studying for her masters, so cannot work more.

She has told me that she has nearly £5,000 in credit card debt, £1,500 in Klarna debt and, I believe, a personal loan around £7,500. She also has an interest free overdraft of £500.

She is spending the majority of her wages to pay off her debts, meaning she’s living in her overdraft. She just cannot stop herself spending. She’s almost addicted to it. She wants new things all the time, it spirals, and she gets into this mess. She’s now told me she’s felt suicidal over these debts.

I am able to clear these debts. I want to, but I want to do it on the condition that she breaks her spending habits and starts to get herself sorted. What can I do to help her on this path? What tactics can I use?

Don't bail her out. Get her to consolidate all debts into one and pay it off in a chunk she can afford. Cut up credit cards and use a card that has a set amount added to it per month for daily expenditure.

She does need help for any addiction. Help her research local groups and offer to take her along.

Does she have any big items she bought but doesn't need or want that she can now sell?

Yes, a movie night is in order. My DD is so excited to have her auntie here, so at least that’s easier on me!😂 I’m about to have a nice, long lukewarm bath while DD gets auntie to do her best Taylor Swift impression 🤣

That’s like because she has also extracted financial support from her brothers already.

Me too, not quite to this level of debt, but to be honest I don’t think it seems THAT bad if she’s about to embark on a career in London. She’s doing a masters which is presumably only a year and then could be earning well enough to pay it off quite easily. Not saying it’s the “right” thing to do, but I know several people who have consciously racked up debts on luxury holidays in the knowledge that in 2 years they’ll be bringing in 6 figures and can clear it then.

She hasn’t!!! Please read my updates

What a mess.

She's only 23. She has to learn to fix things for herself. The last thing she needs is someone doing it for her. Think of her, not about how awful YOU feel (about her, or yourself, or your in-laws etc).

I would be giving her emotional support (within boundaries) and informational resources. I would NOT be giving practical or financial help and I definitely would be 100% open with my DH about his sister. It's the most loving thing you could do for both of them.

Finally, the last thing you want to do is get between a child and her parents. Voice of experience here.

So she has four problems:

1. the existing debt which is making her life very difficult
2. the fact she doesn't earn enough to keep herself
3. she was over-spending when she felt down
4. her family are very judgemental

I think I would definitely pay off her existing debt if I thought there was a way she wouldn't go into debt again. I wouldn't tell anyone in her family what I'd done and I know she wouldn't, either.

How will she make ends meet if she doesn't have any debt? Does she live with her parents? I don't think I'd want her to move in with me - it would change the whole dynamic of your marriage - but I would certainly pay her extra for babysitting.

If she could come to me with a realistic budget for how she'd manage without debts, I'd pay them off and would be glad to.

This is all very admirable @mummytoonetryingfortwo but you are colluding with her in this secret. This doesn’t address the issue.

By all means clear the debt… but that isn’t going to sort the addiction and if she genuinely can’t stop spending she will be back in debt only now she’s spent your money as well as hers.

I’d help on the condition she seeks help from the appropriate services.

JUST READ THE UPDATE

Sorry but this is all ridiculous. MIL made a comment about her daughter’s cheap ASOS dress at Christmas and this triggered her daughter to spend £15,000 on clothes?

And this is all a cry for help as she’s desperate to win her mother’s affection and respect by wearing designer jeans and jumpers?

Is your SIL the girl from Confessions of a Shopaholic? She has sold you a right designer yarn.

Then she needs counselling not her debts clearing.

offer to pay for counselling and support her through an addiction therapy not pay off her debts

she needs a hard learn

You and your DH sound wonderful OP and I really hope your SIL gets her shit together and finds her happy place as nobody should be treated like that by their own mother. Good luck!

It sounds a bit of a stretch to blame this entirely on your MIL’s jibes to her daughter. She’s 23 and you seem to be looking at her as though she is much younger. You’ve clearly made up your mind and I commend you for being so kind and generous but I think this will end in tears for you.

The worst thing you can do is bail her out. She’s an addict and needs professional help. If you clear her debts, she will carry on spending, no matter what she says now.

Please do make sure she approaches a debt charity - they will help her consolidate the debt and freeze the interest payments.

I would tell her to contact the debt charity Stepchange.

They can arrange a debt management plan. She will pay them an affordable amount every month, and they will distribute it between her creditors. They can help her apply for breathing space, and likely get the interest frozen.

If she goes ahead with the DMP, she will not be able to use credit cards, and will need to learn to budget better so she can live within her means.

This will take a massive amount of pressure and stress off her, and you won't have to bail her out. That's the solution I'd go for.

I have adhd and have been bankrupt twice. I am horrific with money and my mum and dad have bailed me out several times BUT I have always repaid every penny to them when they have helped me. I too was in debt from a young age and the fear and anxiety of never having enough to live on due to debt was debilitating. I would help her on the condition she pays you back, closes her accounts and gets some help. If not she will be in the same position again very soon. Step change were extremely helpful and for a time I was able to manage the debt. This may be an option if you are able to keep on top of her accounts etc but puts a lot of responsibility on your shoulders. Good luck and she is very lucky to have such a caring and understanding SIL

Look into a trust deed you only pay a percentage back and the rest of the debt is wiped creditors are not allowed to contact you. I done mine over 3 years and started again. It does really affect your credit file though. I've never had any debt since I definitely learned from my mistake

As someone who has been in this position when I was about 20-21, don't just simply bail her out.

At the same time, she is probably under a lot of stress in this situation. When you know your income doesn't cover your outgoings, it is a really horrible place to be (whether thats through your own fault or not).

Sit down with her and go through everything. Ask her to be honest and ask to see all letters / emails / texts from her debtors. Write everything down.

Contact Stepchange. They will help her.

She will have a tough six years ahead whilst her credit rating takes a bashing and it takes that long for a default to clear. She won't be able to borrow.

I was very fortunate that someone helped me. My outgoings on debt went from over £1.5k a month to about £500. They can get rid of some interest (which she would end paying a lot more of if she does nothing), BUT even though Stepchange arrange for payments to the debtors at an affordable level, the debts will be marked as "defaulted" on her credit report.

It will take a bit of time but the fact her credit rating will be low for some time, also means it is hard for her to credit and therefore curb her spending.

I don't think you should clear the debt or at least not now. Instead help her to work with the various debtors to agree a payment plan and work a plan to pay it off. At least see her show commitment to the repayment for a while which will include her cutting down on her need to spend.

And she needs to get to the root cause of the issue, just laying off her dent does not resolve the underlying issue and she will rack up the debt again with time.

She should work with organizations like StepChange for guidance on how to negotiate with the debtors to hopefully reach a repayment plan but this means cutting off all available debt so she doesn't continue to spend and increase the debt. If she didn't agree then she isn't ready for help.

I’d counsel caution on getting her to do something that will trash her credit rating quite honestly- given she’s temporarily moving into your home! The last thing you want is to prevent her being able to move back out again due to poor credit

It's your money op and if you want to help your SIL that's OK. She does need to pay you back. I assume you are in a profession and can afford it? You pay, you say.
Can she commute to finish her masters? If she's at a certain private university they will not want to lose her. If she defers is it a whole load of cash again? It should not be too many lectures to finish then she can start work fully in September.

My daughter is deferring in September because she's exhausted.
There's so much pressure on young people. She's 22.

Fwiw I had a shopping addiction. I have so many designer clothes, bags, shoes, jewellery. My late mother was a bully along with two of my siblings. She was also a Mrs Bucket. A total snob and nothing I did was good enough. She told me I was a nice woman the week before she died. I had nursed her. She had never told me she loved me. I won a place at Oxford and went on to be a CEO in my industry. Was she proud of me? Probably but not to my face.

Addictive behaviour pops up in other areas if you're not vigilant. Don't let your SIL drink too much. I had a alcohol dependency but therapy helped solve that.

You're doing a kind thing but do it only once. My BFF can't keep a pound in her pocket and we all brace ourselves for the latest financial mess.

It never ceases to amaze me how people on here think that a GP can help with something like this 😄

Do not do it.

She will simply run it up again. Its tempting to think you can help & make a problem go away but you actually can't by paying it off.

If she’s thousands in debt with a shopping addiction then to be honest, moving her to London with no rent to pay and all the wonderful expensive London temptations and lifestyle at her fingertips… will likely be more of a hindrance than a help.
That you already have one child and are currently pregnant would be even more reason not to move someone, even a relative, into your home at this time. No matter how well you think you know someone, it’s a whole different ballgame when you’re sharing a living space. Her issues will not go away overnight, especially if she’s not seeking treatment, they may well worsen. She may also not have shared the full extent of her situation with you and it’ll be your door that bailiffs will be knocking on.