Partners often get saddled with their partner's financial woes once they're married.
Picture this: Debbie and Shane fall in love, get married, join bank accounts, buy a new home and begin to build a life together.
Love is grand until Debbie finds out Shane is more than $100,000 in debt.
Without prior discussion or consultation with a financial planner or solicitor, Debbie is hit with Shane’s financial baggage to clean up.
To keep up with mortgage repayments, the couple cuts back on their weekly expenditure on food, recreational activities, health, fitness and leisure.
Not only does this put a strain on the bank account but it also causes psychological, emotional and physical stress. They are not looking after their health by eating properly or exercising at the gym like they used to and the issue of money begins to cause arguments.
It consumes their relationship to the point that Debbie and Shane get divorced. Forced to sell the house to divide assets, Shane declares bankruptcy and Debbie is left with the liability.
Although the names have been changed, this scenario is an increasing trend known as sexually transmitted debt (STD). As people struggle to cope with rising living costs and spend outside their means, they bring their financial mess with them into every relationship.
Lifeline coordinator of financial counselling in Maroochydore, Kenneth Campbell, said he had witnessed an increasing number of relationships become victim to financial STDs.
“A typical situation is where people get together and one male or female with a history of bankruptcy bring that into a new relationship,” he said.
“They need to borrow money or take out a loan which is left held with the person with a good credit rating.
It can be harmonious but when they break up, one person gets left holding the loan.”
Shane said debt had become so common that there was an increasing demand for financial counsellors to rush to the aid of those with money problems.
Caloundra Suncorp financial planner Joanne Perriman said young couples had become most susceptible to financial STDs as they were less likely to have learned from past mistakes.
“If you haven’t been burnt before, you’re fairly naive about what can happen,” she said.
Ms Perriman said today’s generation spent more than what they earned despite rising interest rates and housing, petrol, food and living costs. To ensure equality in a relationship, Ms Perriman said it was important for both parties to share the responsibility of finances.
Relationships Australia financial counsellor Fiona Hawkins said rising costs meant people wanted a partner that they could be a team with financially.
“People in debt need to do some financial spring cleaning,” she said.
Ms Hawkins said high property costs and rent on the Coast had hindered locals in their ability to save money. Ms Hawkins found that more single people were after a financially stable partner.
“Where money is already tight, financial compatibility is more of an issue and a lot of times it’s very hard to make the budget balance with cost of housing,” she said.
“Life is becoming very difficult for a single person and that makes it more attractive to team up as a couple and share the burden.”
Ms Hawkins said having children also added to the stress of the situation and it was important to put them first in any problem faced as a couple.
It must be said that young couples were not the only relationships affected by debt.
“It’s hitting people who are in their 50s because their incomes are fixed by that stage and in the past they could afford a better standard of living,” she said.
Whatever the financial situation of a relationship, Ms Hawkins said it was vital to budget, prepare and seek guidance before making any new investment as a couple.
“Talk about things, have good communication, look at your goals,” she said.
With financial debt causing many marriages to fall apart, Ms Hawkins said open and honest communication would prevent heart-ache.
“I think if money is an issue, you need to talk about it and if it is causing an issue look at seeking outside help,” she said.
“Do some preparation beforehand with premarital counselling sessions about goals and ideas to get the best start in life that you possibly can.”
Suncorp’s advice in the prevention of an “STD”:
* Educate yourself on the debt or investments you are signing up for. Some investments today have loans attached (i.e. margin lending etc).
* Take an interest and responsibility in the financial side of the relationship and do not let one partner have all the control.
* Attend meetings. If your partner goes to see the bank/accountant/financial planner you should also attend.
* Check the financial statements you receive in the mail to ensure all looks correct.
* Read all documents before signing and if necessary seek advice from a professional (solicitor/accountant/financial planner).
* Be wary of adding partners to your existing credit cards or loan agreements. Once the relationship has ended it can be hard to have them removed.
* Don’t get a loan for your partner because if things turn sour as the debt collectors will be after you because it’s in your name. If you do break up, transferring the debt may not be possible as they were not eligible for the loan in the first place.
* Don’t open up accounts, such as electricity, phone and internet in your name only because you are liable to foot the bill each month.
* Research has shown it’s generally women who get the “STD”
* Know the financial status/stability of your partner and get an idea of their capacity to service a debt if they have one.
* If you do get into trouble, remember to talk to the institution about it immediately. Most institutions will assist you in trying to avoid defaulting on the repayments.
* Be wary of becoming a guarantor because regardless of your relationship status, if they default on the loan, the debtors will be after you.
* ASIC (Australian Securities Investment Corporation) provide some public advice on the matter if your relationship ends.
* Open an account in your name only and get your pay directed to this account.
* Close any joint accounts as soon as you can – if you have debts that need to be cleared, use this money first to clear them.
* Inform your bank/financial institution that your relationship has ended.
* Make sure they do not have access to your credit cards anymore. If they are a secondary cardholder, cancel that card immediately.
* If you change address, make sure you are still receiving any joint statements until the account has been cleared.
