Updated: Oct 19, 2018
WHAT IS IT? AND SIX TIPS ON HOW TO PROTECT YOURSELF FROM GETTING ONE!
There is this little-known term that floats around the world of debt - and it’s absolutely a real thing! Even the banks talk about it. So what is it? Well, it’s an STD – and no, that’s not a sexually transmitted disease - in this particular case – although the effects could be as nasty; in the world of debt, STD is sexually transmitted DEBT!
What, I hear you say? You can’t catch debt, don’t be ridiculous!
Well, actually, yes, you can, and here’s how.
STD is when someone inherits their partner’s debt - and this can happen in a number of different ways;
- You and your partner may take on a joint debt or financial commitment together – a loan, a mortgage, even putting both names on a utility bill. Your partner stops paying – guess who becomes responsible for the repayments? – Yep honey, you just got an STD!
- Your partners’ credit rating is a bit shady and they can’t get finance for that car they ‘really really need’. That’s OK, you love them SO much; you are supportive, understanding and your credit rating is in much better shape than their’s, why not get the finance in YOUR name! It’s just a name, right? THEY will still make the payments right! What could go wrong? Hmmm, well just remember, if something DOES go wrong – YOU end up with responsibility for the debt and an STD.
- Your partner takes care of all the finances at home. You give them money each month to go towards your share of the bills and carry on blissfully, happily knowing they are doing all-of-that ‘boring bill paying stuff’. Fast forward six months later, your relationship breaks down, your partner moves out and you find out that instead of going on bills and rent, your hard earned cash went towards your partner’s rather extravagant spending habit – the bills and rent haven’t been paid and someone needs to foot the bill! Ouch – you just got yourself an STD.
So, now we know some of the ways you could catch an STD, let’s look at how you can pop on the financial latex and protect yourself from getting one of these nasty little blighters?
Here are a few tips to help.
Get good, independent financial advice before you sign ANYTHING with or for your partner. That’s loans, rental agreements, mortgages, phone plans, utilities, - make sure you know what would happen if one of you stops paying; what are the risks, the implications, and the terms? – check it out!!!
Communicate!! Be financially open and honest with your partner from the get go! It’s not the most exciting conversation to have, and it can be quite confronting – but if you care about this person and you want to invest in your relationship long-term – commit to this! According to Relationships Australia, Financial Stress is the Number 1 cause of relationship breakdown, so transparency and honesty are incredibly important. It isn’t a time to judge or reprimand, it’s just an opportunity to build trust. Trust me!
Protect your passwords and accounts. Yes, the point above says that trust and transparency are key – and they are, but also be savvy! Don’t give out your credit card numbers, passwords, and logins to your accounts unless you are ABSOLUTELY sure you can trust the person you are giving them to.
Keep something for yourself. Lots of financial experts talk about the benefits of having both joint accounts and separate accounts. That way, you know that you have something that is “just yours”!
If you do set up a joint account or a joint credit card, set a limit for transactions that either of you can make solo. Make sure that any transactions over this amount require a signature or authority from BOTH parties.
Schedule in a regular “Financial Date Night.” The Barefoot Investor, Scott Pape, sees this as essential for the financial and long-term harmony of any relationship. Make sure that both of you are across ALL of the finances, with both partners having and giving visibility to all the accounts/loans/credit cards in their name.
If you have inherited an STD, or are struggling with debt distress, we can help! At Debt Angel Solutions, we know that financial problems are not something people choose. We come from a place of compassion and understanding, never judgement. If you would like to find out more about our services and see if they are right for you, please go to www.debtangelsolutions.com