The wife has a 30 something relative who has been left in the lurch and has to face taking on all the household bills and remaining debts. With no savings and about £12k in various debts she is struggling. We have spent time with her and I do believe she's willing and really trying to get on top of the situation. She has a secure job and free child care for her two young but one of the most obvious issues is that there is nothing other than an envelop to record and keep an accurate picture of what is going on. I'd sort her a spreadsheet but she only has a phone so something app based is what is needed. Everything I've seen seems to start from a neutral position and is aimed at saving/investments.
Anyone got any suggestions?
Create a spreadsheet in Google Docs and share it with her then she can access/update it on her phone (she may need to install Google Drive to do this).
YNAB is good, works on phone but needs a subscription. Their site / method / advice is good though, and would work just with cash and paper envelopes. Need a solid budget to ensure they can cover everything day to day, cover the stuff that's less than weekly/monthly, and see what is left to put towards paying off the debt.
When you say 'various debts', what do you mean? Credit cards, overdrafts, store cards? There are various apps that use Open Banking (currently what I work in for a major, some might say nationwide, building society) for tracking what you have in current accounts and credit cards, but they'll only work if the company holding the debt is signed up to Open Banking. Most major retail financial services are.
Here's such an app:
https://www.moneydashboard.com/
Plus, depending on who her main current account is with, she may be able to add and see her other accounts/cards through her 'main' online banking. NatWest do this, I can check which others do too.
First thing, are they paying interest on said debts? At £12k that could be a couple of hundred quid every month just to stand still.
How much of it can be moved to a 0% credit card?
Thanks people. Credit cards, overdrafts, store cards and some pay day loans I suspect. I've asked her to get all the info together so that a really accurate picture and priorities can be set. Doubt that she has a good enough credit rating to move to a 0% card but we can explore. I like the open banking link idea but I suspect that there will still need to be manual input. Its difficult balance for us to prevent the support becoming too involved and taking responsibility away from her.
As someone who has been down the debt rabbit hole and successfully dug myself back out again I would strongly recommend you get her a debt mentor that she can contact easily. This can be family, a friend or a charity. If she has got herself into trouble with money, even if it's not her fault (your OP seems to point to a partner leaving and the resultant financial hit to a household budget) then she will need to be able to see the way out. First step is as you have said you're doing: looking at the full current situation and being honest about it. Look at it with every option in the table, including bankruptcy. You then need to work though all the options logically and without prejudice. The main topics to cover are:
How much debt it there currently.
Can it be rearranged to incur less interest or spread the payments over a longer term if required.
How much of the household budget goes to servicing that debt.
Can savings be made on household expenditure.
Can the debt be serviced without it growing every month.
Is the length of time to clear the debt realistic.
Depending upon her credit score/history you then need to look at the options to consolidate debts to decrease the interest portion, this is key. If she sees her payments of eg £500 going out very month but the total owed only goes down by £75 then it's easy to give up. Don't forget she can always contact the companies she has debts with and work with them to formalise a repayment plan, they would much rather get back 80% of their loans than lose them all to a bankruptcy!
My personal route out was to cut out all excessive expenditures bar one bit of luxury (at the time a LoveFilm subscription). I then took out a loan at a reasonable APR over 7 years to make the repayments easily achievable on my then wage but that allowed me to make unlimited overpayments. A charity helped me set up a spreadsheet that I could use to see where my payments were going (capital repayment or interest) and to see what effect overpayments had. It was a real eye-opener how even an extra £10-20 each month made a difference, especially at the beginning. As an example I owed £40k and was repaying it at just over £600 pcm. By making overpayments whenever I could I paid it off in just over 5 years saving nearly £2k in interest.
Setting her up with an app will only be part of the picture, you need to clearly understand the situation too. This may well be very easy to go through and come out of it with a plan that she can stick to, in which case you're halfway there. If she cannot see where the issues lie then it's a lot tougher.
Lots of free advice and help is available for her if she needs it. The Money Saving Expert website is a very good place to start.
tbh if it's a complete riot, probably best just getting as low a % loan as she can and pay everything off and just live with the loan repayments for howeever long as is required.*
* assuming she is sensible enough not to just go and rack up the cards again. which is a danger.
