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?

She needs to go to a debt charity and get it sorted out. You helping her short term will not help in the long term as you probably instinctively know anyway. This happened with a close relative of mine and I wouldn't have paid even if I had the means to do so (which I didn't). She is now sorted and has hopefully learnt her lesson.

She sounds lovely and you and your DH sound lovely.
Maybe when things settle down she and your daughter could go charity shop shopping. I got my DD into it when she was about 12 and wanted to go out and buy things but didnt have much money. Now she is at uni, her charity shopping skills are very useful to her.

I've only got to this point in the comments.
Debt consolidation is absolutely the way to go, and I was going to suggest (since you seemed determined to help her yourself), that you arrange for her to pay you back a manageable sum each month.

Don’t bail her out. She needs to seek professional debt advice and psychological help to get herself out of this. Nothing else will work and you certainly can’t. You’ll lose all the money and ypur relationship with her if you try.

Edit: Phone crashed & comment posted to wrong thread, can’t delete.

https://capuk.org/get-help/cap-debt-help

Refer her to CAP who can help her get a repayment plan together.

In the meantime, she needs to do the following:

1. Sell anything to generate extra cash to pay towards instalments
2. Cut up her cards
3. Move credit card debts to a 0% cars
4. Stop all expenditure apart from basics & bills

If you pay off her debt and she returns to her old habits, it will cause a lot of resentment. The best thing to do is to sign post her to CAP and help her follow the above steps but not pay off anything.

I'm probably going to be told this is a stupid suggestion but it worked for me as I have / had spending addiction tendencies. I actually set up a shop on ebay and buy stock to sell on, which means I get to indulge my.urge to splurge and I keep some stock for myself if it's not selling. It's usually beauty products and samples so things I would use myself.

I either make a small profit or stay cost neutral. Don't know if this would work in sister's situation but the urge to spend ne er goes away IMO it just needs to be sated in a different way.

You need to do this @mummytoonetryingfortwo as insurance for both her and yourself, on the off chance this doesn't pan out as you hope. It also protects her from herself as the problem that caused this isn't going to be an immediate fix.

While you seem to have identified the source, I think you should also look through her credit card and bank statements. You say the bulk of this has been since Christmas, well a look through the statements should show you if this is indeed the case of if in fact your SIL isn't entirely clear about the scale of the problem.

Flippin eck, some of the posts on here are batshit…..grooming?! Wtf? 😬🤣

OP, if you want to help and your DH is on board (with the moving in bit) then it might be the help she needs. I would make sure you have a plan though as you don’t want her to keep up racking debt and/or be living with you forever.

Personally, I would expect complete transparency, like you would a child, and check their online banking and credit card transactions daily. They could also look into some online support for their issues.

That is what will happen. Any bailing out needs to be on the condition of her accessing support. I personally wouldn’t even consider clearing them off without evidenced commitment from her to curb habits. As an example:

Go to GP and access support.
For every month she doesn’t spent and pays off debts without building up more you will match what she clears.

If you just clear them you may as well just hand her the cash and tell her to forth and shop.

I agree with this. Don't pay off the debt OP, I have seen it with a family member who is still doing it in his 30's and he ends up crying and begging most months when he has spent it all again. On the other hand I have a friend who didn't get any help to pay her debts, she sorted a payment plan and although it's taken a good few years she is now almost debt free and saved a deposit for a mortgage.

She's 23 with almost £14500 of debt, what on earth has she spent it on? If most of it has gone on a large purchase such as a car or she's paid for improvements to a house she owns, then fair enough. But if this huge sum of money has just been frittered away on luxury or non-essential items then I'm afraid I wouldn't be bailing her out. She's an adult now and she needs to start managing her income responsibly. I would be asking her to consider what triggers her to spend money she doesn't have. Then work out a repayment plan with her to clear the debt over a period of time. Alternatively, she can get free debt advice from excellent organisations such as Payplan.

^ this is great

OP - sounds like you have got it in hand, but to give a different perspective to almost everyone else: clearing the debts might be a step worth considering (and she pays you and your DH back)

I got into a similar mess at same age, same reasons: working in London on a v v low salary and a bit of clothing/nights outs etc (nothing crazy), but got into debt and couldn’t keep up

My older sister cleared them, then I paid her back over 2 very frugal years - which taught me to live within my means forevermore (she made it clear not repaying was not an option!)

I still shop a bit for dopamine: but charity shop/supermarket mainly : this was over 20 years ago

Therapy and getting away from a negative family have been part of my story too: what you are doing for your younger SIL is great. We all make mistakes, this is how we grow and having a supportive family is something we all deserve x

OP, you are obviously a very caring and kind person - please don’t be taken advantage of here. Unfortunately I speak from first hand experience, I paid off a family members large amount of debt after ridiculous spending that she had nothing to show for. She was also telling me that she was suicidal. Less than 6 months later, she was in double the amount of the original debt I had paid off, and came back asking for more help. I felt utterly stupid and still do to this day. I’d never help anyone again unfortunately, however I’ve thought about this since my experience what I would do if someone else ever asked me again. I would sit down and do a spreadsheet together, in/out. I’d also learn her better budgeting etc. maybe draw a set amount of cash at the start of each month and put in labelled envelopes what she has to spend, petrol/food shopping/personal etc only use the cash.. totally ignore the bank account and when the cash runs out, there’s no more until next payday. Wishing you both the best xx

CAP (Christians against poverty) is another good charity that may be able to help. As well as helping people get debt-free, they run courses on how to manage your money.

https://capuk.org/get-help

Do not pay her debt. She will immediately get into more debt. Refer her to Stepchange.

Yes, we’re sitting with these ideas at the moment. She’s really reluctant for us to pay them off, but I hate the thought of this looming over her

I don't know a DMP is the best option here. She has the potential to earn well soon and free accommodation. It's not worth wrecking her credit rating longer term for something she has the means to address.

Different if her earnings are unlikely to increase but this situation is different.

Plus if she intends to work in finance then certain roles won't be open if she's had a debt management plan.

The OP is being sensible with a middle path.

If all due respect, and I know you’ll trying to be kind, but she needs to face the hit to learn. She’s £14000 in debt! Thats huge, especially as she lives at home and has £1000 disposable income per month. If you allow £500 ‘living money’ per month, then she’ll be able to clear it in around three years, and if that’s what it takes, then that what it takes.

Invite your husband to consider any differences in how their parents have supported their sons compared to how they have supported their daughter..

Did they fund more years of medical school etc? Did they require the boys to pay rent? How have family connections helped them?

Maybe her brothers have an obligation to step up here and help her...

I might be reading too much between the lines... and sometimes equal is not equitable...

Christians against poverty is a good debt advice organisation

https://m.youtube.com/watch?v=1VgMbYujjS8&pp=ygUXaGFiaXQgY2hhbmdlIG1lZGl0YXRpb24%3D

She needs medical help; you can pay but she will get in debt again. Don’t enable her.

Sharing a meditation for habit changing above from the Mindful movement. Maybe hypnosis will help?

Your Sil is lucky to have you .

I’ll just bet she’s reluctant 🤣