Advice on helping somebody into the YNAB world (and world of budgeting)

Came back to the top to write how sorry I am about how long this turned out. I was not expecting this, so buckle up, and thanks if you make it through.

Hello, YNAB community. I'm currently starting to help my mother-in-law with starting on YNAB. As of yesterday, she opened up to myself and my wife about her finances, and wants to improve their situation. We love her and her husband very much, and this was exciting for us.

We knew she struggles with technology and habit building consistently, but one thing we weren't expecting was the mentality shift of what is a need and what isn't. Between her and her husband, they have about $15,000 in student loans, $140,000 in a mortgage, and $114,892 in credit card debt.

The banks and so many financial advisors that they've spread themselves very thin over keep giving her advice about refinancing, and she's been doing that for years. She's very excited about this upcoming refinance because her car loan is going to be "gone," her clothes credit card payments are going to be "gone," and she and her husband will receive $4,000, which they're getting in cash, and as a result, are taking an entire month off of work because the $4,000 will "pay for it." On top of that, during that month, they are going on a 3 week vacation to Hawaii, which before we started setting up YNAB, she said was "paid for," but upon digging further, I learned that that only meant that the tickets had already been bought, a car rental had already been bought, and all of that is on a brand new credit card, and is getting refinanced into their mortgage.

I don't know how they got into this situation really, because I assumed that with a low credit score, the system would start yelling STOP at some point, and not allow them to go into further debt. They make approximately $40,000 total, not monthly in the months of June, July, and August, and then make about $7,000 from September to May, total, not monthly.

We were setting up categories, looking at debts of nearly $270,000 of two people in their late 50s, with only $400 in their checking account, and when we were finished setting up the needs section, the monthly needs were nearly $4,200. I tried everything I could think of, but a $200 monthly clothes budget wouldn't change, a $500 monthly "home improvements" budget wouldn't change, and a $300 sewing materials budget wouldn't change. She is a full on compulsive shopper, and if she sees something in a store that she likes (or more often, what a friend would like), she just instantly buys it. Her husband invests thousands of dollars into things he thinks are going to be huge, like the return of CRT televisions, which they have a bedroom, stacked floor to ceiling, of 76 CRT televisions, all with shattered glass and broken components. Many broken cars outside, snowplows, piles of scrap metal, and just piles and piles of all sorts of things. He's also renting out 8 domain names for his books about aliens being proven by the book of Genesis, but those don't amount to too much.

The reason why we want to help them so much is that much of their spending is very generous, to people who don't necessarily want it. That clothes budget is primarily from thrift stores, where she thinks she's getting a huge deal, but is actually spending $200 a month giving clothes to people that don't want them, and putting it all on a card.

There's a ton more stuff I left out because I did not realize how massive of a post this was going to be. If you make it through it, thanks for reading, and if you have any ideas at all, please, let us know. We are desperate to share what we've learned with her, and we don't know how.

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  • My advice is to not get involved in the personal finances of family and friends. This is an impossible situation and the only way they can get out of it is if they actually want to change.

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    • nolesrule I normally wouldn't, and my wife and I have set up very specific boundaries around it. We're not going to financially assist, except to purchase YNAB for them, and we're only going to do that if they make it through the free trial using it to near perfection. If we look and nothing has been entered the whole time, we're closing up shop until they ask us again, and then we can start from scratch.

      I agree with you though, in 99% of situations, money + family = bad idea.

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  • I'd just focus on building the habit of tracking spending, which may open eyes about behavior better than anything else you can say. 

    Luckily, they seem to be starting in the low months, so if they can develop good habits before the summer hits, I can see that being a boost. That's not something you tell them, though. It can just give you hope.

    Another idea is to maybe not use the idea of a budget - I've found that the word has so much baggage. Rather, say YNAB is the "plan for the money you have now."

    Teach them the YNAB method and the software interface. Emphasize the importance of cleaning things up weekly, at a minimum. Any decisions have to be theirs. 

    But yeah, good luck. You can give them the tools to see how their financial behavior truly impacts their lives. Beyond that is more iffy, though I don't know your relationship. Maybe it would be a good learning experience. Most don't seem to be.

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  • Gosh, I just want to say that I've been in the same place as you with my parents (who sound very similar to your in-laws!). Despite our best intentions and offering tons of support—including being the sanctioned budget enforcers—the reality is that the habits and expectations folks create around money aren't easily changed. Often, it takes a catastrophic event like a terminal illness or bankruptcy to change a person's behaviors—both of which occurred before my mother changed her behavior. And, even then, she kept up her spending habits in slightly different ways, always pushing the boundaries of available credit.

    I just want to acknowledge how difficult and draining this situation is—for both you and your in-laws.

    My two cents from experience? You can't make someone do something they don't want to do and they'll need to get there themselves. It's awesome you've offered the tool and your support. Now, remember to give everyone a lot of grace and let go of your own expectations for them. You don't want this to ruin what sounds like a lovely relationship.

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