I have a sister who is terrible with money. She has been this way all her life. She is almost 40 and has very large student loans and credit card debt. She has recently gone on disability for a medical condition, so her income has dropped.
On the positive side, she is married and her husband works at a modest stable job. They have a small house with an affordable mortgage and they get along well. They don't have outrageous spending patterns, but consistently have credit card debt, spend beyond their means (imo), and do not plan for emergencies at all. Her husband is not a saver either and neither of them are handy at all.
In the past, I've given my sister several thousand dollars a few times to help her along when she was in financial trouble. I'm helping her now to deal with creditors and insurers, but I'm really really frustrated with the denial she lives in which has become so apparent now that I'm more involved in the details. Before when I knew less she always gave me reasons why she was in difficulty that I could somewhat accept. Now she has similar justifications, but I can clearly see they are part of a pattern of denial and/or just not grasping reality.
As an example, she is eligible for a disability tax credit. She has just found out she is getting $5000 back. Unfortunately, she has plans to use part of this money to go on a vacation with her husband because "they need it" because of the stress and they can get a great package deal.
I know this trip will be over $1000 dollars and I know they just went away in March. I know this is something they cannot afford and could not afford in March, yet, to listen to my sister, it is portrayed as a need and not a want.
At the same time as she has these plans, I know they have student loan and consumer debt, have a leaking toilet and a crumbling deck, no emergency fund, she is on disability and who knows when she will be able to return to work - it may not be for a lengthy period and she has not yet qualified for long-term disability.
When I look at the overall financial situation, it is apparent to me that my sister may be better off declaring bankruptcy if her medical condition persists. This would result in a discharge of her student loans and consumer debt which I cannot see her be able to pay off. It would not affect her husband's credit and they could keep their home.
My sister refused this suggestion outright. I can really understand this and certainly don't think it is good to take this step if you can manage another way. The problem is I can see it going that direction anyway, and without a little planning which would cost them nothing, they could lose the house. Her rationale for not do this planning is that she will find a way and her credit cards have been her emergency fund and this would be cut off for at least seven years. This could affect their (oh so unrealistic) dream of buying a vacation place.
I don't even know how to respond anymore. Mostly I just commiserate with her on her difficulties because she doesn't welcome any other kind of feedback - she comes back with a lot of weird (to me) justifications based on emotions and not logic. She is a kind and generous person and I love her, and her medical condition is real and currently debilitating, but I think she prefers denial to reality and there is this subtext that I can help her as long as I don't pop any bubbles. I think it is also hard for her because we are doing well financially and I've always been the responsible one.
If she were my child I would definitely barge in and get the necessary repairs done on the house because I am the parent (no matter how old they are) and it would cause more stress for me to think of this situation continuing. We have talked about doing this for them. This would require me flying there with my husband to sort everything out. What stops us? The knowledge that they would take a vacation under these circumstances kind of takes away the thought that this is the right step and it might be wasted effort and we might be perceived as overbearing. We want to help, but perpetuating the fantasy seems like it would not solve anything.
So, mostly this is venting I guess. I know others here have had some similar experiences. I don't have any great ideas for how to handle this differently except to come to acceptance myself and then maybe go out and fix the house anyway by explaining that we have some extra money and they can pay us back one day, and talk to her husband about the bankruptcy option.
If anyone else has better ideas I'd like to hear them.