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?

Sadly, I think they do. My husband is slowly working on it, but it’s a tough road. My mum has her flaws, but I’m so grateful she wasn’t like his mum.

Just to clarify the debt limit for a DRO is £30k. There are other limitations as well though so best to speak to Citizens Advice or another debt charity (look on the money helper website).
I'd also consider approaching the credit card providers themselves...they are bound by the consumer duty and shouldn't be automatically going for the debt recovery option and instead signposting to help (for debt advice and addiction).

Excellent! Speaking to both of you simultaneously is a good first step out of the furtive/reactive/childish behavior.

I agree with you that getting away from her parents smothering and judgmental little world will be good for her.

Good luck!

See I disagree with a lot of comments. I think it’s a big step admitting what debt you’re in. You could pay it off for her. The she pays you back so she’s doesn’t get stuck just paying just the interest. Not everything has to be a harsh lesson

She needs to go on stepchange.
They will close all her accounts, reduce het monthly payments and pay a minimum to creditors and she wont be able to gwt credit for a few years. Hopefully by then she will have learned to live within her means.
It may seem drastic. But my DP went on it and his credit started to return in about 3 years. In 5 years all markers are off her file.
You can still rent and have a bank account too.

as Others have pointed out you have to anchor the help in tangible changes to behaviour.

getting her to You guys in London is good but also a bit of personal responsibility sitting with her to deal with the cards and consolidating payment.

if you spend on anything it’s getting her to a therapist to deal with her behaviour and triggers

Thank you. I’m off to get some of her favourite bits in, because no matter what I view her as one of my little sisters and I want her to know she has a safe place with us, always.

Get her to go through her last three months of accounts with you. .. line by line..

Get her to understand what she can afford to spend. .. she should also be speaking to her parents, if she is not able to pay for her masters, she should set out the costs including living costs and work out where this should come from.

Do not take any steps until she agrees to work out how much she can afford to spend and what she should be spending it on... and agrees to full transparency of all of her income and outgoings with a view that you coach her in how to manage her spending.

Well good you can see that, but until she can it’s pointless bailing her out. You can’t control her or make her “see sense”.

You are very young too. You need that money for yourself - for a mortgage, a pension so you don’t have to work full-time until you are nearly 70!

giving her 10k plus, will not teach her any lessons.

yes she is ashamed and worried. That is not an issue, as means she is aware of her debt and that it is not good. If every time she gets bailed out when says can’t cope, not teaching resilience and independent. As your SIL she has a husband - so it is both of their issue,

how would you feel if you gave her 12k and she then went on a 2 week luxury holiday with it? Or carried on spending on things not needed?

she will soon finish her masters and can work a graduate job. Then she can start paying off her debt herself, it is not a long term problem.

charities are there to help her, but if she is not prepared to help herself …

You could suggest Christians Against Poverty - it’s not religious but really great help with sorting out the financial mess. capuk.org

Honestly, I think you are a fantastic sister in law. I was a terrible mess (slightly different kind) at 21/22 and had no one to turn to. I had judgemental parents and never learnt to ask for help - something i still struggle with.

I think you need to come up with a plan together so she is committing as well. Possibly matching but also maybe going through spending with you at agreed periods. It will really help her in her future relationships as well because many relationships founder on the inability to discuss money.

She is bringing paperwork etc with her. So it must be a start, that she is able to face up to it.

Yes CAP is a good call.

she needs someone independent of family to go through her finances and he,p her prioritise which debt she oats off first etc,

if she wants to keep buying nice things - giving her a lot of money may be an even bigger temptation from spending what she can’t afford.

“she’s amazing with her niece and regularly will spend a weekend with us to see her, we’re due twins in the winter”

OP, do you live in a mansion? You have a DD and are expecting two more babies. If you move your SIL in with you in London, what do you think will happen next? Even if you get her a job, she’s not going to be able to afford London rents on her own. Your children will get bigger, will have more stuff, take up up more space, need bedrooms - and the £10,000 that you are so cheerfully going to give to your SIL (and it will be a gift) you will end up begrudging as your DC need more things. How exactly do you propose to move your SIL out, having once moved her in? She will meet people - so she brings home some dubious type: will that be what you want in your home and around your children? Or something happens and you have a row - what then, because I doubt you’d want to throw her out into the street, but it might become jolly uncomfortable living with her. OP, in the nicest possible way, you’re clearly a very kind person but you’re also still very young and a bit naïve. The whole paying off your SIL’s debt (but keeping it from your DH), and moving her in with you, just screams disaster waiting to happen.

This 100%

This is not the way to help her and it will end up impacting your relationship negatively.

You can help her in many ways, without clearing her debt and allowing her to remain unaccountable for her behaviour.

By clearing her debts you’re giving her a licence to spend. She’ll get a surge of endorphins at being debt free and will immediately start spending, only to find herself back in the same position very soon.

Don’t do it.

She does need to get help. I have been in her position (late diagnosed ADHD and impulse control issues a factor), she will do it again without support.

As a middle ground, how about you help her to transfer the outstanding debts to ones than incur as little interest as possible, and cover those repayments until she has finished her degree and for three months after (to allow her time to find a job).

If she has support in place and has got a handle on things at that point, maybe have a discussion about helping her out further if she needs it and you still want to.

We will be fine in terms of housing, honestly. We have a plan for when the twins are a year old and in their own rooms, which isn’t for another 18 months or so. We will probably move out of the city then, we’ve been aggressively overpaying our mortgage to build equity in our current home. We’ve both discussed her living with us in the past and and are happy for us to do so. It just rests on the conversation we have when she arrives this afternoon

Just to add she is incredibly lucky to have you.

Getting into difficulties like this can either be a lesson you never want to repeat, or the path to lifelong problems.
You making it all go away is the worst thing you can do. My parents did yhis for my sibling over and over and they are now 40+ with a ridulous amount of debt and parents have just bailed them out once again for mortgage arrears, despite sibling going on 3 long haul holidays last year.
Step change will sort the payments out and make them affordable for her, paying a small amount to each creditor deprnding on her affordabiliyy. They will also close her credit accounts.
Consolidating the debt into another loan or paying it off for her will mean she can just repeat this cycle again and likely hide it from you the next time as she will not be able to tell you she has spent your money.
Living with you could be beneficial, but if you pay her debts off too you are enabling an addict and then leaving them open to be able to do it again.
The debts need to be managed by a debt management plan. It is the only way to break the cycle.

Thank you 🩷 she’s about ten minutes away now, I’m dreading this chat but I’m just hoping my husband keeps a level head

The road to hell is paved with good intentions.

Same. Friends brother was bankrolled so many times his parents paid for his divorce then his child support it was a shit show.

I haven't read all the posts.

Paying off your SIL's debts really won't teach her how to budget and if she's likely to continue once you have done so it's probably going to effect your relationship too. Helping to plan for her to pay off the debt herself would be a better way to teach her and will hopefully make her think about why/is it worth running up such high debt in the future.

If you feel having her move in with you is the way forward you both need to remember why you've chosen that path, she's not there to lead an easy life, it's on the terms of working to pay off those debts, you never truly know a person until you've lived with them.

If you still want to pay off the debt for her you have to make a decision as to whether you can take the hit if you lose up to14k of your savings if she decides not to pay you back.

Don't bail her out. Help her work out a payment plan. Cut up her credit cards.