Ok, been a member of this community for a couple of years and I need some advice. This is posted on both the Credit card board and the LBYM board. I am posting here because I think this is the best place on the web to get peer input on a situation like this. I have a sister that got married about three years ago, has a two year old and is due to have another baby in a couple weeks. She is about 40. She married a divorcee who had previously filed for bankruptcy. I did not know about the bankruptcy thing before they were married. Anyhow, my sister confided in me this month that they basically are going bankrupt. She had mixed their assets in the belief of wedded togetherness, he had changed and everything would be all right, yadda, yadda, yadda. But, basically they have spent their way into oblivion. Actually my brother-in-law has spent them into oblivion. My sister wants to get financial counseling and my BIL doesn't, says he has learned his lesson and won't make the same mistake again. Well, he is basically a good guy, but he needs to change. The finance issue has their relationship on the rocks, but not over by any means. My sister being 38 weeks pregnant does not make things any easier. I want ot see them stay together and work through the issues. Very frustrating for my sister since when she was single she basically went to the edge of bankruptcy and then backed away from it and saved money to buy a very nice home and car, etc and was debt free except for a mortgage. I live in a different country then my sister's family. Here are my thoughts and I need input to either loosen it up or be more stringent or possibly take a completely different tack. I would give them an unsecured loan (probably $5k or $10k) if they do the following:1) Separate the assets. This is basically so my BIL can prove he is good to his word.2) Get financial counseling. Make a genuine and consistent effort to work through the problems.3) Send me a proposed budget, with income sources and all expenses.4) Commit to regularly read the LBYM board, the Consumer Credit/ Credit Card board, 5) Commit to reading everything I send them on finances. Like I said, I want to help them, I just need to sort out my thinking and emotions also. So, I am open to input.Thanks in advance,Gurupa
I live in a different country then my sister's family. Here are my thoughts and I need input to either loosen it up or be more stringent or possibly take a completely different tack. I would give them an unsecured loan (probably $5k or $10k) if they do the following:1) Separate the assets. This is basically so my BIL can prove he is good to his word.2) Get financial counseling. Make a genuine and consistent effort to work through the problems.3) Send me a proposed budget, with income sources and all expenses.4) Commit to regularly read the LBYM board, the Consumer Credit/ Credit Card board, 5) Commit to reading everything I send them on finances. Like I said, I want to help them, I just need to sort out my thinking and emotions also. So, I am open to input.You won't like my advice, but you did ask for it. :)Where family is concerned, I don't make loans. I make gifts. Sometimes I get a gift in return. If not, I don't make any more gifts to that person. Otherwise, you're putting a lot of strain on your family relationships. If your sister called to tell you about their new car/TV/whatever, would you honestly be able to talk about it without wondering, "Where's my money?"As far as your conditions are concerned - not gonna happen. You're in a different country, and you couldn't monitor them, even if you wanted to. Your BIL is an adult. If he's going to change, it's up to him to make that change. You can't force him, and your sister can't force him. Treating him like a child with a forced reading list won't help. If anything, it will cause resentment, and again strain your relationships.My suggestion: Provide all the emotional support and advice you can. Share your financial knowledge. Pass on LBYM tips. Keep your money until he has clearly changed his ways. Maybe in a year or so, when he has a proven record of improvement, you could offer a loan to accelerate their recovery, without feeling like you have to put conditions on it.Hope this helps. :)
Figure anything you give is a gift, you will never get it back. Figure that to give money will put your sister and BIL in position of being beholden to you for money and this will destroy your relationship. Every time they look at you or think of calling or writing, they will have in their mind that they owe you money. The thought is uncomfortable, so they won't call, write or visit. I wouldn't do it. It is hard not to, but to put them in the position of debtors is worse, for reasons above. Best wishes, Chris
I'm sorry about your sister's situation, Gurupa.I don't think sending them money will help. I think it will only prolong a decision on their part.My brief experience is that people who won't help themselves won't follow advice. They may take your money, but they'll probably resent your conditions, and they'll most likely spend it and be unable to pay you back. You're family, so you won't take their house or their car away, and you won't put bad marks on their credit.I like the advice of bstroh in the previous post. I don't see any way to stop a couple from spending themselves into oblivion. It's a decision on their part, and in my experience someone who contiues to follow a bad decision usually gets mad at people who point out to him or her that it is a bad decision.I know it hurts. My only other suggestion would be to think ahead and be sure the children's welfare is considered. Will they be sure to have shelter, food, attention and protection? Might it get so bad that a family member consider taking custody? (I hope not!) The adults are making the decisions; someone needs to make sure the children are factored in. If, at some point, it becomes necessary for you to provide financial help for the children, make donations of diapers, food & such and not of money. (Again, I hope it doesn't come to that!)Oh, here's a positive idea: perhaps you can send them a book. They would be free to read it or ignore it, but it may help. Perhaps _The Wealthy Barber_, _Personal Finance For Dummies_ or _Get a Financial Life_? Any suggestions from others? (They may take slight offense, but less offense than sending money with very strict strings tied to it, and they won't feel embarassed or intimidated when reading the book; they may when being lectured by a family member.)Good Luck,Jim
Gurupa:I just had to answer your post. Now I just have to ask this: Did your sister know about the previous bankruptcy when she married him? If not, then that tells me that they have a real basic communications problem. Did she get married and then find out there is a problem? Same deal.Another question for you: How would you feel if you gave your sister the loan of 10k and her husband had not changed his way. So he spends your money and they go bankrupt anyway? Can you afford this??? Is this going to take every penny that you have saved up. This is going to sound harsh so please excuse me. I know that you feel badly for the situation that your sister happens to be in at present. The fact that she is very pregnant doesn't help. She certainly does not need the stress. This sounds like they are not communicating very well, and I am not sure that your getting into the mix is a good idea. If he does spend all your money and the situation is not fixed, then you are going to be VERY ANGRY. Taking into account that he all ready has been down this road once, I would not do this. The two of them need to get on the same page and get this straightened. If it takes financial counseling, so be it. If it is bankruptcy, so be it. Lots of people have been on the brink and gotten them selves solvent. But they don't need counseling to do this, they can simply look at their spending habits, learn to differentiate wants from needs, and budget, budget, budget. Not an easy road to take but it can be done. The other thing that bothers me is that your sister just told you about this. Meaning that she didn't know or couldn't deal with it. This is one I would really stay away from. If they want your help, then help with Fool and articles. As to them sending your budgets and things like that, I wouldn't do that either. They are married, they are in this together. You are not. Catleen
I think loaning/giving them money is a mistake. I have had to learn hard financial lessons myself. Being rescued from the consequence of my destructive actions would have actually been harmful. When I woke up to the reality that my total credit card debt was a third of our (new) annual income, it forced me to make the lifestyle changes necessary to correct the situation. Had someone paid it off for me, I would have started charging again. (Why not, I can breathe soooo much easier now!?) Only bearing the heavy load can force change in some people. I have 2-3 more years to go until the cc debt will be paid. After bearing this load, I will never bury myself again.They will resent your mandated "conditions". Until they are committed to a new lifestyle, they will not realize you are trying to be helpful - they will just think you are being controlling. Trust me, I tried that with my little sister and her husband once. (In the days when I had low debt and high income. Gosh, I miss those days.) I even let them move in with us for a while. Oh what a mistake that was. I began resenting them for being slothful and got ticked whenever BIL bought ANOTHER expensive item. We finally had to ask them to move out and our relationship has never been the same since. (Bstroh is right on about this one.)Giving them advice, books, Quicken/MSMoney and cheering them on is the best thing you can do. When your sister is really feeling down, perhaps you can take her out for a special day (get her hair done, manicure and get her a new dress). Peek in their kitchen cabinets and refrigerator when you visit. If things are looking bleak, take her out grocery shopping. Just try to be an encouragement. Do not rob them of the sense of accomplishment that will come from pulling themselves out of the hole.Good luck!
Giving them advice, books, Quicken/MSMoney and cheering them on is the best thing you can do. When your sister is really feeling down, perhaps you can take her out for a special day (get her hair done, manicure and get her a new dress). Peek in their kitchen cabinets and refrigerator when you visit. If things are looking bleak, take her out grocery shopping. Just try to be an encouragement. Do not rob them of the sense of accomplishment that will come from pulling themselves out of the hole.THis is a really good suggestion! My parents had some friends that were totally unable to control thier money, and did this for them all the time. Instead of giving them money, my mom would go groery shopping with one of them and pick up the bill, or for Thanksgiving, we bought them a turkey and all the fixings. Also, we took their kids clothes shopping before the school year, and made sure they had a couple of pairs of jeans, and some shirts that were durable too.
Hey Gurupa!I'm going to speak from the heart with this. Rarely do family and loans mix well. I think you're setting yourself up for some major problems by getting deeply involved with your sister's situation.I definitely think you should offer your advice, counceling, support, etc. to the extent that it's welcomed by them, but as far as handing out loans, you're treading in dangerous waters.From what you've described, it doesn't sound like either of them are very fiscally responsible. By you giving a loan, you may be setting yourself up for some very uncomfortable family relationships going forward. And while you could be in an awkward position as the lender, you're putting them in an awkward position by becoming indebted to you. This could be very dangerous.How do you feel about the possibility of not being repaid? How will you handle it should they become resentful to you later when they owe you money? You're loaning them money with stipulations attached. What if they don't follow them?If you were giving them a gift, that would be a different story, though you'd have to come to terms with the fact that the money may be used the way you see fit. Additionally, if you were giving them money as a gift, you certainly wouldn't be teaching them anything about handling money.So, imo, I don't see that a gift or a loan to a family member in this case is the way to go. The best thing I could see you doing is to help to guide them, teach them to budget, and manage their money--lessons that would serve them well later on in life.Just my thoughts. Good luck to your sister in this matter as well as with the new baby.Tony...but I still am...Off2Aruba
gurupa,I agree in general with the others who have responded to your post, but I'm thinking they don't answer the real question -- perhaps because you haven't asked the real question.Is it financial: how do you help your sister and BIL step back from bankruptcy? Or is it protection: how do you make sure that your BIL changes so that your sister does not have to suffer the consequences of his behavior? Given your ideas, I suspect the real goal is the latter.Unfortunately, the reply is basically the same. You can't protect your sister. She married this man, knowing or not knowing about the bankruptcy. At this point she is well aware of what he is like, and she probably has a pretty good idea of how far she can trust him to handle things financially. If any steps are to be taken (counseling, she takes over finances, asset separation, marital separation, etc.), SHE has to be the one to take them, not you. Perhaps her confiding in you was a way of getting you to take this step for her, I don't know. You can offer support, but as hard as it will be to watch only she can do it.Prayers and best of luck to you and your sister.cleem
Is it financial: how do you help your sister and BIL step back from bankruptcy? Or is it protection: how do you make sure that your BIL changes so that your sister does not have to suffer the consequences of his behavior? Given your ideas, I suspect the real goal is the latter.I suspect yet another motive. I think that you won't feel good about yourself unless you do something subtantial to help out. If that is the case you must do what you must do but remember that the most loving thing that we can do, sometimes, is to allow someone to fail. Without failure there can be no success.Sam
Having been through a similar family situation myself within the last 10 years, I think BigMoneyJim's advice is extremely astute and right on the ball. However, don't expect that your sister and BIL are going to turn around and do an about-face because of your concern and advice. Not knowing anything about your sister, BIL or their marriage, I don't know what to say other than that they got into this situation as adults, whether knowingly or by turning a blind eye to finances as the case may be, and they are the only ones who can get themselves out of it. It may be tempting to cast the BIL as the "bad/irresponsible guy" (and, as far as I know, that may be true or not), but yor sister is also an adult and is responsible for her actions in either not knowing anything about the finances (turning it all over to your BIL) or turning a blind eye until it was too late. I hope this is helpful and not presumptious-these are just my thoughts, things I learned from my own experience. I know how painful it is to stand back and watch someone you are close to and love make a seemingly senseless descent into a painful and difficult situtation--but there is very little that one can do to intervene if the will and personal honesty and insight is not there on the part of your sister and/or BIL. On the issue of books, I have to say that I prefer the book Your Money or Your Life (by Joe Dominguez and Vicki Robin)to all others for basic money issues. Rather than focusing on technical details about types of ivestments or investment strategies, it focuses on what I think is more fundamental: increasing your money consciousness (what they call "valuing your life energy") and coming face to face with your money beliefs/habits/blindnesses and deciding whether they support your overall happiness. And, it is very effective at dealing with the nuts and bolts of keeping tabs on your actual spending and earning habits, month by month. I think for the majority of people (particularly someone has spent themselves into bankrupcy) this is the foundation level of help and analysis that is needed, without which the house of investment strategies described by most other boods will freely topple.Blessings,scshea
gurupa,Whew, you have laid out a plate full, and there have been some great responses. I would have to vote with the majority here. Don't do it. Here's why.By giving them the money you are doing only one thing: Enabling them. Just like people often enable an alcoholic, or a person with a drug proble, or a sexual addiction, to name just a few. Enabling never works in the long run. It is a short term solution that only makes the enabler feel better. In this case the enabler would be you. There are better ways to assist someone than to enable them. In many of the responses you have read some of those ways. If you choose to give a man a fish, he will eat for today. That is enabling. If you choose to teach a man to fish, he will eat for a lifetime. Hard as it is to watch the man remain hungry while learning to fish, you know deep within your heart that his hunger will motivate him to succeed. Do you let him starve while learning to fish? No, as you fish along with him, there may be times that you offer to cook enough fish that you have caught, so that you both can eat, chat, and enjoy the company of each other. Do you fill his freezer full of your fish? No, that would be enabling him, and not a solution at all. Though you would sleep well for a few nights knowing he has eaten, you would also know that with the freezer full, he would not be out honing his own fishing skills to keep that freezer full, let alone to pay you back the fish that you have given to him. I know the analogy is old, but truth is truth. Your sister and brother in law do not need you to enable them. Teach them to fish, and they will learn not only to fill their stomachs, but may just learn to enjoy the beauty around them as they do. pam
Sam:I believe it is called tough love. Very good thought on this matter.Catleen
First, I want to thank everyone for their input, especially those that shared from their personal lives and experiences. My job is helping people, working with others, and basically giving of my resources and myself to benefit others that do not have it as well as many of us do in North America. That is what makes it a bit more complicated when it is a family member because my vocation is helping others. I need to balance that against my emotions and my desire to help. I know better than most that sometimes well-intentioned “help” can be spiritually, emotionally, developmentally, financially, etc harmful in the long run. And that is why I posted here, because I need perspective. My wife also is in on our decision of how best to support my sister's family and she was very impressed with the constructive input of everyone and the understanding attitude of everyone on these boards. I also appreciate it deeply, like I said in my original post, this is the best place I could think of to bring this situation for quality, genuine feedback. The original posts started here for those that want to follow the thread:http://boards.fool.com/Message.asp?mid=13298043 (LBYM)http://boards.fool.com/Message.asp?mid=13298076 (Credit Card)I will list the advice I received on both boards (LBYM and Credit Card):They should not separate their financesI should not give them moneyI should not loan money but give it as a giftLoaning them money strains relationshipsThe sister should keep her own booksThey should open separate savings and checkingThink about the welfare of the kidsSave my gift $$$ for a dire emergencyI am trying to exert too much controlI should send as much as I can as a giftI should pray lotsI should not expect too muchI should not expect anythingThe sister should start a secret savingsI could give to an educational fund for kidsThe BIL is an adult, needs to change for himself The BIL is an adult and needs to act like itI can't do either for himI need to provide emotional support and adviceKeep my gift $$$ until the BIL proves he has changedThe BIL must agree to hand finances over to sisterI should try to exert any controlGive, do not loan moneyPeople need to learn from their own mistakesLet them make their mistakesSister should seek financial & marriage counseling, even if BIL doesn't want itGive gifts to the kids onlyWait till they show progress before giving any $$$Do not give or loan any moneySend books as giftsThey are partners in it together… I am notGive advice, books, software, but not moneyBuy necessities for them as giftsStay completely clearDon't do anything, just back slowly awayGiving $$$ enables the BILGiving $$$ enables the sister to enable the BILSome books that were recommended were (and I think I missed some):Your Money or Your Life (by Joe Dominguez and Vicki Robin)The Wealthy BarberPersonal Finances for DummiesGet a Financial LifeI would like to summarize some of my observations on these posts. It is important to balance justice and mercy, giving other a chance to reform and “enabling” others to do more damage. It is obvious that the overwhelming consensus is that I do not loan them any money. Some people thought it would be OK to give them money with no strings and only one or two people thought I should give them some type of conditions. Again it was overwhelmingly obvious that the board thought I am trying to exert too much control and that would result in some degree of resentment and damaged relationships. I realize that I probably have unrealistic expectations of myself and how helpful I may be (living on a different continent). Another obvious point was they need to solve their problem, either together or separately. No matter how hard I would try, I can't do it for them. They are partners in it, I am not.My course of action will be very different from my original thinking. I will send some books and magazines, be supportive, listening, caring, and give advice when asked. I will save any gift in case the BIL bails out (which it looks like he may do). I will pray lots. I will recommend that my sister get financial counseling whether the BIL wants to or not. I will adjust down my expectations of them and myself. I will not try to exert control over them or the situation. It is tough to have a balanced perspective. You want to save people from hurting themselves, but the way gold gets purified is going through the fire. Thanks again for the feedback from everyone. I hope others find this enlightening. May you have health and prosperity in everything. Gurupa
GurupaYou are a good person. Sam
gurupa,I think that your decision is FABULOUS. I would like to share my own dilemma and my personal decision about what to do.My very best friend since I was six years old is a single mother in the Coast Guard. Heidi's daughter is 7 months old. Being an enlisted person in the military, Heidi receives a very small salary and has trouble making ends meet sometimes. I make fully 3 times as much as she does and I do not have anyone but myself to support. I really want to help her, and for a while I considered sending her money monthly to help out, and I have also considered loans on a couple of occasions.I have decided that I will probably NEVER do either of the above. However I still do plenty to help her out.Heidi doesn't have as much knowledge of basic financial principles as I do, so I share as much information as is appropriate with her. She calls me often for help in these areas, and she has made me executor of her will and guardian of her daughter in case something happens to her, because she trusts that I have the knowledge to help her achieve her objectives, or know contacts who can help.I do not send her money monthly because after reading the Millionaire Next Door and all that book has to say about Economic Outpatient care, I feel it is more likely that I will do more harm than good by raising her monthly income. What happens if someday I CAN'T send her money because of my own illness or loss of job? She AND I have financial problems, and I feel guilt on top of my own stress...and I know she'd feel guilty too.I do not loan her money because loans cause problems among friends, and because she has enough money from her divorce to pay back. This spring I considered a loan, because she needed to pay for a month of child care up front and had a cashflow pinch. Later, when her income tax refund came in, she tried to give me the money back. However, a few days before that she had told me she had no emergency savings, so I told her that I wanted her to keep the money she owed me, but to please put it in an emergency account. She was very concerned that I would need the dough, but when I explained to her that I'd rather have her fund an emergency fund now than call me in six months needing money for a car insurance deductible that she can't afford.To help her out in the long run, I am looking towards her daughter's college education. When I am out of debt, I plan to start putting aside money for her. It's not a heck of a lot, but it's something and it will likely be quite a while before Heidi can start such savings. However, I am not going to make a big deal out of it, and I will encourage Heidi to save for this when she is better able to. I don't want to be Heidi's crutch, I want to help her learn to build a good financial base for her whole life, and I want to teach her little rugrat the same, just as I'll teach my own little rugrats (if i ever have any).You are doing the right thing.d