Shared ideas on money essential - she must get fit or you will get fat

YOU have a problem on your hands if you’ve chosen a partner with a totally different value set to yours on money, writes Scott Pape

A married couple looking slightly concerned as they inspect bills and discuss their home finances

QUESTION: I AM 29 and earning six figures, with $160,000 invested (including super). I live with my girlfriend, who is a similar age, has five-plus years of study left, no money, a big HECS debt and no career plans. This means the chance to invest together, travel or live elsewhere isn’t possible for a long time. I don’t want money to become an issue that divides us or harbours tension, but I feel it could happen. How would you navigate this situation?

Thomas

 

ANSWER: It’s too late! You already have a problem on your hands. You’ve chosen a partner with a totally different value set to yours. (See, money isn’t really about dollars; it’s a real world example of what you value in life, and savings is an act of maturity about the future.) Here’s the thing: money is the number one reason relationships break down. So, all jokes aside, this is important. Your situation is similar to when a fat and a skinny person shack up (and you’re the skinny one). One of two things generally happens: either she gets fit, or you get fat. Over to you.

 

HOW CAN I ESCAPE A PAYDAY LENDER?

Q: I’ve got myself in debt with a payday lender. I want to settle the loan so I’ve offered the collections agency a lump sum, but they are rejecting it. What can I do?

Kirsten

 

A: I want you to do three things. First, get the facts. Make sure all your dealings with the debt collector are in writing from now on. Ask them to provide proof that they have the authority to act on your debt, how old the debt is, and the amount they’re chasing is correct (often they add all sorts of illegal trumped-up charges). Second, chillax. When it comes to chasing a debt like a payday loan, the collections company has as much chance of collecting the debt as James Hird has of getting another coaching gig — and they know it. All they have is bulldust, bluster and harassing phone calls. Third, learn from it. They’ve likely bought your debt from the payday lender for cents on the dollar. They can’t seize any of your assets, and if you’ve had to resort to payday loans chances are your credit history is already shot. You should repay the amount you borrowed, via a shrewdly negotiated, heavily discounted, one-off lump sum payment. That’s the right thing to do — but you should use this process as a lesson to never, ever get in this situation again.

 

HOW TO STOP GOING AROUND IN CIRCLES

Q: My husband and I earn a combined $160,000 a year. Sadly, we’ve played the debt consolidation game for many years and have ended up going round in circles. We rent at present, but intend on being renter/investors. But before that we need to pay off $3600 on Visa, $8000 MasterCard, $28,000 personal loan and $35,000 on two car loan. How can we use our incomes to pay off our debts? I feel we are just scratching the surface.

Helen

 

A: Debt consolidation looks sexy on paper, and even better on a whiteboard in a finance broker’s office. But it rarely works. The reason you’re broke has little to do with the amount of interest you’re paying, and everything to do with your pattern of spending more than you earn. The first step is to stop looking around for the financial equivalent of the grapefruit juice diet. If you genuinely want to change your family’s financial future, take a good hard look at yourself in the mirror. You’re taking home about $2000 a week after tax. You could be debt free in 12 months so long as you commit to knocking over your debts (cards, personal loan) like a domino, smallest to largest. Then sell your cars, pay out the loans, and get a sensible, unsexy, third-hand Toyota.

 

NOT EVERYONE WANTS TO DRIVE A TOYOTA

Q: Has it crossed your mind that not everyone wants to drive a bloody Toyota or work until they’re 100? Also, if you’re so successful, how come you can’t afford a pair of socks?

Blair

A: Yes, I understand most people want to drive around in a Mercedes and retire at 55. Then again, most people won’t. I’m the advice in the middle.

Consider moving from renting to buying a home if you can afford it.

 

WHERE DO I GO FROM HERE?

Q: I live in Melbourne with my wife and five-month-old child. I have a $175k salary (with $100k in bonuses every year rolling in), $220k in a high-interest savings account, no pets. The lowlights are we only have one salary coming in for the next five years, renting at $3k per month and total debts (car and credit card) of $20k. Should I buy somewhere for us to live ASAP? If not, what should I do with my savings?

Paul

 

A: Yes, you should buy a home. You can afford it, and it’s the most rewarding purchase you’ll ever make. In preparation, you should eliminate your $20,000 car and credit card debt, save $25,000 into a Mojo account, and start salary-sacrificing into a low-cost super fund (and also top up your wife’s super while she’s out of the workforce). Stop second-guessing yourself — you’re doing well! Your biggest risk is that you are doing nothing.

 

DIY SUPER IN A DEAD PARTNERSHIP

Q: My partner and I set up a SMSF a year ago, and I have $120,000 invested. In the event that our relationship does not continue, what would you suggest I do? Opt out of the SMSF into an industry fund, or set up my own SMSF and start investing in shares?

Wendy

 

A: It sounds like you’re ditching him — no one asks that question unless they’ve already made the decision. Short term you could continue with the SMSF and still be completely independent — you already have separate account balances. But long term it might be easier to roll over to a low-cost industry fund.

Barefootinvestor.com

Originally published as Shared ideas on money essential - she must get fit or you will get fat