How to help my sister - any advice welcome!

moneysavingmonkey85

Hi all,

I'm 25, and my younger sister (22) is beginning to have a lightbulb moment, but I wondered how best to help her without sounding bossy or judgemental.

We didn't have too much financial education from home, and I did a lot of growing up at uni, and she only left home about a year ago. We are also having a tricky time otherwise as our mum is very ill, but I want to help make her money worries a little better.

She has confided that she owes a total of £7k, including a few catalogues, and quite a bit for a car loan. She has quite a good job, and shares her rented flat to split the bills. She tends to get sofas etc on credit as she says this is 'normal'.

As it stands she was refused a consolidation loan (as she had no guarantor), and has borrowed £2k from her flat mate, and plans to pay back 100 a month to him, but I'm not sure if they drew up a contract or anything official.

I'm not in a position to help much with cash, but I want to be supportive in some way, so any tips for how to approach it are much appreciated!!

Monkey xx

[Deleted User]

depending on her income/outgoings a 7k debt might not be the end of the world,try and get her to concentrate on paying off the most expensive debt first and not taking any new debt on till shes paid off the existing debts,other than that I dont really see what you can do?

podperson

The problem is that it doesn't sound like she thinks she has a problem at the moment. Depending on her income perhaps she can manage 7k of debt (although sounds like if she is having to consolidate that might not be the case). Perhaps if you mentioned something about how helpful budgeting has been for you since you left home and if she needed any help with anything like that you'd be happy to give her a hand. That way even if she isn't ready to face up to things straight away then she will hopefully remember that she can turn to you if she does need to.

nancyo

7k isn't that much of a problem especially if it includes a bit of a car loan - my car loan alone is more than 7k and I dont consider myself to being in debt, although that is the only loan I have. If she has a good job surely she can pay this all off within a few years especially if she shares bills. She will just need to live quietly for a while.

moneysavingmonkey85

Thanks guys, its nice to have different opinions, you may be right, it may not be 'problem' debt, I'm a bit of a worrier. I think she is coming to visit soon, so hopefully if she brings some paperwork we can do a budget together.

If she can learn to live a little more 'quietly' it will be fine - I'm not sure if she'll like the idea of that - she's very spontaneous - tattoos, new hairdos, expensive pets etc, lol, but either way I'll just try to 'be there'.

Thanks again to all, I love this site

MFWannabe

Hi
As others have said it depends if your sister see's her debts as a problem and if they have become a problem.
If she is just meeting minimum payments on cards and is reguarly using them or an overdraft to live from month to month then the debt has become a problem. If she has borrowed 2k from her flatmate and been refused a consolidation loan then it looks like they have become a problem. Sit her down and ask her if she feels the debts are a problem and ask her for the full amount of debt. If she says Yes then say: Ok; would you like me to help you to put a budget together to get these debts pais off. Therefore offering help and not forcing her to do anything

traycee

Something that helped with my lightbulb moment was calculating the REAL TOTAL COST of things purchased on credit.

For example if you already have a balance on your CC and you buy something else on your CC it may be months, even years, before you are able to pay off the new item. All the time that it is outstanding you are paying interest to the cc company.

For Example a dress that seems a bargin when reduced from £60 to £30 may not be such a bargin after been on your card at 30% APR per year so £9 a year in interest for 5 years = £45

So now that £30 dress really cost you £75 (you get the idea working out the REAL COST can be pretty scary).

Also I worked out how many months of the year I worked for the loan companies and CC companies. By totalling all the monthly interest I paid (work out all that you paid in the last 12 months or x last months by 12 for quick look)

Once I realised that out of my annual salary I was working for 4 months a year to pay interest and charges before even repaying any debt :eek: it made my decision to face upto my debts soo much easier.

Might work for your sister to.