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How to cure sexually transmitted debt (STD)
01 July 2013
SEPARATED for some years from my ex, I was on good terms with him.
We’d ironed out the anger in the early years, mostly for the sake of our two girls. Then, when I was in my early forties, he came to me with a proposal to set up our own hotel.
I trusted him – and we’d both wanted to own a hotel since we were young. Carried away by the dream, I jumped in heart-first – only to end up not in hospitality but in the murky world of sexually transmitted debt.
I’d given up my job and, against all advice, invested everything I had in the venture. Not for a moment did I think about the worst-case scenario.
And then, like many women, when that happened, I walked away from the mess rather than fight and distress the kids.
I learnt about prevention the hard way. Twenty-one years later, things are better and, even though I’m living proof we often can’t be told, I’ve made speaking about STD a priority in my job working with women and finance.
If I asked you, “Have you ever found yourself in financial difficulty because of a relationship or considered a prenup as part of your relationship strategy?”, I can guess what you’d say: “How boring and unromantic. And none of your business.”
You wouldn’t be alone.
But ask people if they’ve ever suffered an STD and in my experience, around a fifth of those in the room are brave enough to raise their hands. It’s a serious topic with devastating effects, especially on older women.
Why the focus on women? With lower levels of superannuation – an important topic in itself – women in relationship bust-ups are often in a more financially vulnerable position than men.
Take my friend, whose husband recently left her. She’s 70 and counting her blessings because she gets to keep the family home, while he walks away with the super, the investments and – get this – into his new partner’s home. Alarm bells went off for me.
How could my friend maintain that big ol’ house with no cash? By getting into debt…
Meanwhile, her ex is cosying up with his new lady friend and the STD continues untreated.
Australian Bureau of Statistics figures show that in 2011, divorces dropped by 1305 compared to the previous census.
The highest percentage of divorces granted occurs in the 41-to-44 age group, but among over-50s the divorce rate has doubled – and the increase is led by women.
The potential rise in STD for women, because they don’t want to upset the new person in their life with discussions about money, is having alarming consequences.
How can I reduce my STD risk?
No matter your age or stage in life, if you’ve moved out of a relationship and the home you once shared, ensure the utilities are terminated because if your name is on the bills, you’ll be paying them.
If the utility accounts are in your name and they’re not paid, even if you do eventually settle them, the default will go on your credit report as a black mark against you. That’s STD.
Fifty-eight per cent of utility bills (gas, electricity, water) are in the woman’s name, discovered a study by Veda Advantage, an Australian supplier of credit references, credit reports and Australian company reports.
Whether you’re 20 or 60, if your name’s on a loan as the guarantor, or you take out a contract or loan for a mobile phone or car for your partner, or you’re co-borrowing and your partner defaults (stops paying the loan or paying you for a loan in your name), then the financial institution will chase you for the payments.
You don’t owe half the loan you’re liable for the lot.
Yes – it’s an STD. Men account for 55 per cent of loan defaults, a five-year study of defaulters has found. If you have a mortgage or loan with your partner and it all goes to pot, advise the bank and make sure redraw facilities are cancelled and any further financial decisions require joint signature. This will help prevent further infection.
If you have joint accounts, monitor them and close them down if you split up. Ensure your income and any personal savings are in a separate account. Get legal advice about existing wills or powers of attorney.
Preventing STD: What to look for
What do we look for in a partner? Someone who cares for us, washboard abs, a sense of humour, job stability, the ability to discuss the important things, including finances…
If you care for one another, you’ll both want to know everything’s OK. You need to talk about your attitudes to spending and saving.
If one thinks it’s fine to spend $1000 without mentioning it and the other wouldn’t consider going over $100, there could be problems ahead, especially if you have a joint account.
• Work out what bills, living expenses, etc. should be covered as a couple.
• Keep your own account into which your income and personal savings go.
• Monitor joint accounts, especially loans and mortgages with redraw facilities.
• Read everything before you sign.
• Don’t become a secondary holder on anything to do with credit. If the primary holder defaults, you’ll be up for the debt.
• If you’ve authorised someone else to use your credit card, you’re liable for what’s
spent – even if you didn’t spend it.
• Remaining objective can be hard. If the decision is a big one, get advice from a third party such as an accountant.
If you want to finance your partner’s life because you want them to do the things you like but they don’t always have the cash, then discuss the idea first.
For your sake and theirs, be clear about whether it’s a gift or a loan, or if it should happen at all.
Larke Riemer is the Director of Westpac Women’s Markets.
*If you’re in financial difficulties, seek advice from a legal or financial professional.