Taking control of a family member's finance

mrk76

Not too sure if this is the right place for this post, so apologies if I've got it wrong!

I'll keep this as short as possible, but just to provide some background: I have a sister, in her late 30's, who has a track record of spending beyond her means, and amounting unmanageable debts accross credit cards and loans.

In the past she's had CCJ issued against her, but unfortunately she still seems able to get her hands on credit cards. Additionally, my parents, now both retired pensioners, have come to her rescue and bailed her out (I think this is part of the problem - she's never had to take responsibility for her debt).

Predictably, she's followed the same pattern and recently revealed she's sinking under a debt of 15k. My parents don't have the means to help her (although I know they'd both sell body-parts to get her out of trouble!). She's agreed to let me help - but I think I need to take a fairly tough line. I'm thinking I need to do the following:

1. Obviously asses the full scope of her debts, work out some sort of consolidation, negotiation with lenders, and repayment plan.
2. Take control of her bank account, so that I can monitor exactly what she's spending on, or have her salary transferred to an account under mine or another family members control.
3. Find some way to stop her from being able to apply for credit (unless sanctioned by myself or other family member).

So I really need advice on the above points. I'm sure they sound harsh - but we're out of ideas about how to control her spending!

Many thanks.

Tixy

Hi

Sounds like a tough situation. Ideally at 30 it would be better if you could help her help herself (if you see what I mean). This may not be right in your situation but just a note of caution if you take all control from her 1 she still won't learn and 2 she may start getting payday loans etc.

Couple of tips
First point work out a realistic budget with her that both you and she agree she can stick to - probably suggest using this which will also show her debts and how much she has free to pay towards them - http://www.makesenseofcards.com/soacalc.html
Personally I would stay away from debt consolidation as this doesn't address the issue of her overspending. If she cannot meet her minimum payments then talking to a charity about a debt mangement plan might be a good idea.
If she does a DMP she will get defaults etc and ruin her credit rating for a while but the plus side is she won't be able to get more credit. Plus she will have to learn to stick to a budget and the charity will help her with this. This may be easier to take from a stranger rather than from her big brother.
With a DMP as she pays the provider you'll know she is sticking to the agreement, wheras if you make individual agreements with creditors you won't know if she gets behind.

Finally - don't get any joint finances with her, don't think a joint account will help so you can both access it as what will actually happen is that you will be financially linked and her poor rating willl affect yours.

Good luck

annie-c

At 30++++, your sister is an adult (and has been so for a long time) and the notion that she could gain control of her finances as a consequence of you taking control away from her, seems very odd to me.

Could you direct her to this site so she could start to take control for herself? Lots of people here will have similar stories, lots of people older than 30 have recovered from great big messes bigger than £15K.

Signing away her salary to you would be a huge step and is not a usual hing to do. As to signing her ability to gain credit - that is not something I have ever heard of?

Is she struggling with addiction or mental illness or something for you to be suggesting such extreme action?

Your talk of taking a 'tough line' and 'sanction' sounds a bit extreme to me. Also, I would be concerned at the idea of consolidation, which usually is an expensive and unnecessary route to clearing debt.

Your sister is nearly 40? It is really kind of you to be concerned for her but perhaps she needs support to find her own way at this stage in her life, unless ther is an underlying problem that you ahven't mentioned yet?

January20

You said she never had to take responsibility for her debts. How will taking complete control of her finances help her learn to manage better? Are you planning to pay all her bills and her debts for her? Are you planning to give her pocket money out of her salary every month? Are you planning to control every penny she spends and tell her what to do with her money, what she can buy and what she can't, if she can go out or if she can't?

I know you want to help her but I am frightened by what you want to do. It's so controlling. She is not a child. She is an adult. She can do whatever she wants. And if you convince her to allow you to do what you want to do, eventually she will probably end up resenting you, rebelling against you, getting credit from somewhere (could be somewhere dodgy) and you risk destroying your relationship with her.

Assessing her debt, who her creditors are and what the monthly repayments are, is a great plan.
Going through the figure with her so she can see what she spends her money on and whether she has any money to "play" would be very useful.
Speaking to her creditors - yes - but they will want her to confirm she has given you the authority.
You could direct her to this site, encourage to use a spending diary so she sees where her money goes, write a diary here if she is really committed, get her to write her SOA so people can give her advice and ideas, help her to identify why she can't budget and she keeps getting herself in debt, use some of the tools on this site like the demotivator tool, etc.

Pollycat

You can take steps to get her out of this particular debt problem but until she addresses the root cause of why she can't manage her money and learns how to live within her means it's more than likely that you'll be back in the same position in a few years time.
What plans do you have to educate her about money to avoid that scenario?

I think you have a very difficult job ahead of you, so good luck with sorting it out.

DVardysShadow

mrk76 wrote: »

So I really need advice on the above points. I'm sure they sound harsh - but we're out of ideas about how to control her spending!

Many thanks.

Dare I say it? To you. control seems to be such a natural course of action, that I wonder if it is part of the problem. As I see it, control has nothing to offer as a solution - it only keeps the debt issue at bay while you exercise control.

Sister must choose for herself whether to do anything about it - and parents should butt out and leave her to it.

mrk76

Thanks for all your advice. I understand that the idea of tacking complete control of my sisters finances probably sounds over-the-top (and I'm her younger brother, by the way) but that's one of the reasons I posted on here.

The important point to note here is my parents: There is absolutely no chance they'll 'butt out' of her problems, they care about her too much, and she isn't afraid to go to them for help (she already has). They're already considering sacrificing part of their pension income to help her - thus the intervention, and 'tough line' from me.

I'm all for someone learning from their mistakes - but when all evidence of previous mistakes points to the fact that they won't learn, then what do you do?

I think I ultimately thought that if she could be initially restricted in some way, then she'd eventually adjust to it and learn to live within a certain budget - as you've all pointed out, I think it's going to be difficult to find a solution.

gfplux

I have some experience of "helping" someone control their finances. After TWO years of help "we" still do not fully understand that if you have an income of £100 a month then that is all you should spend.

You appear to have two problems to deal with.

1) Paying down the present debt
and
2) getting someone who has overspent their income for 10 or more years.

You may find solving 2) more difficult than 1)

I hesitate to say it but 2) is similar to an addiction.
Good Luck

January20

mrk76 wrote: »

Thanks for all your advice. I understand that the idea of tacking complete control of my sisters finances probably sounds over-the-top (and I'm her younger brother, by the way) but that's one of the reasons I posted on here.

The important point to note here is my parents: There is absolutely no chance they'll 'butt out' of her problems, they care about her too much, and she isn't afraid to go to them for help (she already has). They're already considering sacrificing part of their pension income to help her - thus the intervention, and 'tough line' from me.

I'm all for someone learning from their mistakes - but when all evidence of previous mistakes points to the fact that they won't learn, then what do you do?

I think I ultimately thought that if she could be initially restricted in some way, then she'd eventually adjust to it and learn to live within a certain budget - as you've all pointed out, I think it's going to be difficult to find a solution.

I think you will have to accept that you cannot change other people's behaviour. You cannot tell your parents what to do. You cannot tell your sister what to do either. They are all adults, equipped with free will. You may not want your parents to help her, you may recognise that it's not in their best interest but what can you do? Realistically? Nothing. Their money, their choice.

Your sister may need to hit rock bottom, with nowhere to turn to, no-one to help her out, in order to face her situation and do something about her spending behaviour.

Your parents may have your sister's best interests at heart, but I actually think they are making the problem worse. She behaves in a reckless way for whatever reason, they bail her out and what has she learned? Has she learned from her mistakes? Has she learned she has made mistakes? No! Of course not, because she has been given a clean slate, no consequences. So, she goes and does it again, and the circle begins again.

Believe me, learning through the pain of repaying one's debt is the best way to learn!

Thrifty_Pixie

mrk76 wrote: »

Thanks for all your advice. I understand that the idea of tacking complete control of my sisters finances probably sounds over-the-top (and I'm her younger brother, by the way) but that's one of the reasons I posted on here.

The important point to note here is my parents: There is absolutely no chance they'll 'butt out' of her problems, they care about her too much, and she isn't afraid to go to them for help (she already has). They're already considering sacrificing part of their pension income to help her - thus the intervention, and 'tough line' from me.

I'm all for someone learning from their mistakes - but when all evidence of previous mistakes points to the fact that they won't learn, then what do you do?

I think I ultimately thought that if she could be initially restricted in some way, then she'd eventually adjust to it and learn to live within a certain budget - as you've all pointed out, I think it's going to be difficult to find a solution.

In my opinion the first and most important thing you have to do is to stop your parents from doing this, otherwise you will all end up back in this situation again in a few years time, but this time your parents will be up that particular creek along with your sister and sharing a broken paddle.

What they don't seem to understand is that they are doing her a disservice by mollycoddling her every time. What on earth is she going to do when they're no longer around?

She needs a wake-up call NOW. And the only way she's going to get that is if your parents stop babying her.

They need to back off.

She needs to realise '!!!!!! I'm actually a grown-up who has to help themselves?'

THEN you sit down with her and can help her call the CCS or whoever and work through a payment plan with her. BUT SHE HAS TO DO IT HERSELF.

Help? Sure! But not do it for her. That's what exacerbated the situation to this stage.

If this sounds harsh, it is. But it's meant well

wynnvegas

It's a horrible situation and I fully empathise. I read the first few replies and disagreed with almost the entire sentiment as getting down on you is no good whatsoever but, on second reading and in light of my experience, the replies you have received are all very wise.

My brother has taken advantage of people his entire life. Most of the time, this has come at the expense of my mum. He has walked away from any type of financial concern relatively worry free as he has convinced her to guarantee all his idiotic projects / training courses etc. I would agree that you need to speak to your parents and try to convince them not to help your sister as they are only enabling the continuation of this type of reckless behaviour. If they won't listen then I'm afraid you can only step away at that point and let them make the mistake. I'm at that stage with my mum now (the most recently guaranteed £5,500 worth of debt has come due) and she still won't make him take responsibility for what he has done.

However, with reference to your sister, there's a middle ground of managing certain aspects of her money. My mum was in around £9,000 of debt via store cards, credit cards, overdraft and catalogues. I had made the mistake a couple of times in my teens of clearing her debt and then taking the money back over a period to avoid any interest charges. On the third occasion, I took control of her money management and let her understand (through an SOA) exactly how much money she had left in each month once all the bills were paid. She then managed that on a weekly basis and, through a few balance transfers and a lot of effort, she cleared that £9,000 in less than 20 months. My part included setting her up a bank account that fitted her needs, changing her pre-paid gas and electrcity meters to monthly direct debits, sorting out her various insurances to claim cashback and save a good bit of money over what was already being spent. I also do a grocery runaronud every week which helps her out a wee bit so that she doesn't need to be tempted by the supermarkets. She had gotten to a stage where she had £250 or so a month spare and had managed to save and buy herself a new washing machine, fridge freezer and 50" plasma TV.

I wish you luck as, even after all that, my brother coming home to stay with her and taking advantage in the way that he has subsequently ruined her finances again. She's off this week to take out a new £5,500 bank loan to pay off a £5,500 loan (which doubles to £11,000 if not paid by 01/07/10). I've had to step away and leave her to it. There's only so much you can do.

Cheers,

Billy