Debt and relationships – this ship is sinking

Which of the following two scenarios seem more realistic to you?

Guy meets Girl. Guy likes Girl and buys her presents. Girl really likes presents and falls in love with Guy. Guy asks Girl to marry him. Girl says YES. They both live happily ever after. The end.

Or

Guy meets Girl. Guy is already in debt from four years at college. Girl is in debt too from four years of shopping. Guy tries to impress Girl by bringing her for nice dinners on his nearly maxed out credit card. Girl is suitably impressed. Guy can only keep this up for so long before his bank manager starts joining them on dinner dates. Guy gets a couple more credit cards and the relationship continues. Girl happy with all the nice new shiny stuff that Guy has bought her. Guy really likes girl and asks Girl to marry him. Girl says yes once she sees the nice ring. Girl plans a nice wedding, ‘That’s another $20,000 thanks honey’. Ok so far so good. Guy gets a promotion – more spending follows, the house, the SUV, the golf clubs, the joint gym membership, the dinners out, the nice holidays.

Things are good…for a while. Then Guy gets worried. His loan application is rejected. He takes stock of his debt and realises that he owes far more money than he thought. Guy tries to talk to Girl. Girl is not listening as she has become accustomed to the nice shiny things. Guy is determined to stop spending and control his finances. Girl not happy, thinks that Guy no longer loves her. Guy thinks girl is being selfish. Interest rates rise on the mortgage. Guy and Girl in even more financial difficulty. Not a nice situation. Guy and Girl fighting a lot now. Guy can’t take it and leaves. They both do not live happily ever after. The end

Before I have the women’s lib organisation firing like a million emails at me let me explain that the examples above are tongue in cheek. They serve a purpose of outlining the fact that relationships are expensive and can ultimately lead to a lot of debt. The roles could have been reversed Girl meets Guy or even Guy meets Guy. The point is not so much of the make up of the relationship but the fact that money is often a factor in a relationship that is not considered important until it is too late.

So what is it about money that makes it such a dirty word when it comes to relationships? The lack of communication and understanding around money in relationships can be the Achilles heel that causes a lot of relationships to end. Money in itself is nothing but pieces of paper and numbers on a screen but it’s the meaning that people assign to money that causes the real problems.

Different backgrounds

If the relationship is made up of two people from different socio-economic backgrounds then straightaway there will be a conflict in attitudes towards money. Someone from a middle class background will have a different attitude from someone from a working class background. It is this difference in attitude that can cause problems in the future. I’m not saying that these relationships can’t work what I am saying is that this difference in attitudes towards money in all relationships needs to be understood and appreciated so that it can be removed as a road block to a happy long term relationship.

Different financial educations

This is related to different backgrounds but does not necessarily always apply to people from different socio-economic backgrounds. Financial education can vary between people from the same socio-economic background. The level of financial education largely depends on their parents attitudes towards money. Some people (not many!) have an aversion to debt while others have no problem embracing debt. This in turn can lead to conflict.

Debt in relationships

Debt in a relationship is a strange thing. When a couple first get together they each bring their own financial baggage with them. The financial baggage usually comprises of debts and an attitude towards money. Now when people first meet they are unlikely to begin discussing how much in debt they are in. On the contrary people usually try to project how successful they are and that they are in some way financially secure. It is not until later in the relationship does it come out that Guy has $50,000 in student debt and has creditors chasing him.

If the dominant attitude in a relationship towards debt is relaxed then it is likely that this spells trouble down the line. So what if we live pay check to pay check? Relationships can be tough enough without having the unrelenting pressure of having to go to a job you hate to pay off debt you got into as a result of a relationship that you are beginning to dislike …and the spiral continues.

Social pressures to conform

Once in a relationship the tendency is to socialise with other couples. Your single friends don’t want to be reminded that they not in a relationship or simply don’t want to see you two cooing like babies! Get a room!!! Anyway the point is when you socialise with other couples a certain type of weird competition forms – which couple is the best? I’ve witnessed this first hand and it’s bizarre!

Picture the scene. Guy and Girl are out for dinner with two friends Paul and Cindy. The conversation turns to travel and holidays and it suddenly becomes a case of one-upmanship between the couples. As a result Guy and Girl come away from the dinner feeling deflated. They silent vow that the next dinner date with that couple they will outshine them whatever way they can.

Now I know to the casual observer the above scenario seems unrealistic but I’ve witnessed events like this happen first hand. I’m sure if you think about it you too have probably witnessed similar events. Adults acting like kids in the playground. Oh I’ve got the latest BMW which is way better than the latest Mercedes or whatever.

This social pressure can cause some couples to take leave of their senses and start accumulating ridiculous amounts of debt. For what? To look good? Well in truth a lot of the time these couples end up looking stupid as their cars are repossessed and they struggle with their mortgage payments.

Don’t get me wrong. I do have sympathy with the couples who find themselves in such situations. As with any situation where there is a lot of debt involved there is always a positive way out.

How to get that positive outcome and make the relationship last

Assuming that the underlying problems in a relationship are caused by debt then there are a few simple but highly effective steps that can be taken to rectify things.

1. First off there needs to be acknowledgement that it is the financial strains that are causing the problems not something else.

2. Get a complete picture of all the outstanding debts – every last one. This will allow you to know exactly what you are facing. Don’t hide bills away. This exercise needs to be carried out with 100% honesty.

3. Look at all the options available. This will involve researching every possible option open to you from debt consolidation to remortgaging to bankruptcy. No option should be off limits.

4. Reduce the number of options to the ones that you have agreement on – both parties need to be happy and prepared to go along with it.

5. Decide on the best option and make a join commitment that whatever it takes that you will see this out until the debt situation is more manageable.

6. Set a timeframe – there is not point in saying “someday” make it “TODAY”.

7. Take action. Assign tasks and follow through on them. There is no point in just paying lip service to the need to change. You need to actually go out and do something or not do something like not going out for an expensive meal.

8. Keep track of your progress. Follow up on the debt daily, weekly and monthly. Whatever it takes.

9. Continue to support each other in the process. Stop playing the blame game as there is absolutely nothing and I mean nothing to be gained by fighting. The debt will still be there at the end of the fight and you will only feel worse as you have fought and yet the debt is still there. Use that energy to get yourself to take action.

10. Once you have reached your target agree a common debt strategy that you are both comfortable with long-term.

Now it’s obvious from the list above that it is aimed at people who have been in a long term relationship and share financial commitments. I mean if you just met someone you’re not going to be talking debt management in relationships from the word go. However, while this may be true it is always worthwhile laying down a few financial markers once the relationship starts to get anyway serious. This could be simply a case of letting the other person know what your attitude towards money is and finding out what there attitude is. In the long run this could save you a lot of time, energy and in particular money.

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