Scott Pape: What to do when your partner carries too much debt

FIND out all you can about your partner’s finances before you embark on a life together, writes Barefoot Investor.

You’re allowed to be judgmental when choosing a life partner.

MANDY ASKS: First-time caller, long-time listener.

In May I was all set to be married to what I thought was a lovely gentleman.

I always had a sneaking suspicion that he carried a reasonable amount of debt (due to his lavish spending), but I finally pried it out of him: he owes $107,000 on credit cards!

What should he do? What should I do? Can a leopard change their financial spots? I am 39 and was hoping to have a child ASAP!

BAREFOOT REPLIES: Greetings, and welcome to the Jerry Springer section of my weekly Q&As.

Read more: Wealth needs to be maintained and backed up by a bigger purpose in life

Actually, my first thought when I read your question was that you may have been a contestant on Married at First Sight.

And I had the same reaction that my wife has when she watches that show (mumbling and shaking the head). Anyway, thank god you found this out before walking down the aisle.

Your discovery is a game-changer, for a few reasons:

First, because there’s something off about a bloke who only admits to his fiancee that he’s got $107,000 in credit card debt when he’s pushed.

That’s not normal. What other questions should you be pressing him on?

Second, because you’re planning on having children with this guy, you need him to be a good provider. That’s not being sexist, it’s being a realist.

You’re probably going to take time out of the workforce to raise children, so you need to be able to rely on him to provide. Unless he’s earning very good dough, he won’t be able to.

Finally, because he’s a financial loser. That’s not very nice to say, and very judgmental.

However, there are two instances when you’re allowed to be judgmental: when you’re watching reality TV, and when you’re choosing a life partner.

COVERING HEALTH

EMMA ASKS: I am 28 years old, earning $55k, and curious whether I should get private health insurance.

I injured my ankle and had surgery through the public system after waiting a year.

Even if I had bought insurance immediately after I hurt myself, there would still have been a year’s wait because my injury was “pre-existing”.

So should I just continue to set aside some savings to cover my accident-prone tendencies, or should I take the plunge and get private health insurance before I turn 31?

BAREFOOT REPLIES: I wouldn’t bother.

You’re earning below the threshold for the Medicare surcharge slug, and you’re below the age of the lifetime health cover loading slug.

Besides, you already have health cover — it’s called Medicare — and it’s one of the best healthcare systems in the world.

My advice would be to do two things: take out a membership with Ambulance Victoria ($44.90 a year), and keep saving up your Mojo.

A LOVING MOTHER

LOUISE ASKS: I have a 17-year-old son working as a first-year apprentice and living at home.

I have tried so hard to teach him about money and saving — I even set up his accounts “Barefoot style”. But I am at a loss.

He has the potential to save so much while living at home, but he blows every cent when he gets it!

What are your thoughts on charging rent, and is it right to take rent only to give it back later when he moves out? How can I teach him to save?

BAREFOOT REPLIES: You sound like a loving mum. Actually, you sound like my mum. And you know what?

When I was just a little older than your son, my mum loved me so much that she kicked me out of home (to university) and threatened to change the locks if I ever came back for an extended stay. I went on to receive first-class honours in Home Economics 101.

Give it a go. It’ll be good for both of you.

HATE THE GAME

JASON WRITES: I always read your column and generally agree with your comments, but I strongly disagree with the thrust of your article on 29 January on “How to Retire Comfortably”.

I do not dispute your arithmetic, just the logic that a couple need only get to the very bottom rung of the assets ladder (paid-off home plus $250,000 in super), and then rely on a taxpayer-funded pension for the rest of their lives.

The reasoning is inherently flawed.

I believe people should be encouraged to provide for themselves and strive to live comfortably with NO government assistance. To me, your book seems to lower the standard of human endeavour and will only result in more and more taxpayer money being spent on welfare in future. The age pension is supposed to be a safety net for those who cannot fund their own retirement — not a guarantee to be factored into retirement plans.

BAREFOOT REPLIES: Don’t hate the player, hate the game.

The fact is that 80 per cent of Australians retirees receive either a full or part-age pension. And let me raise your blood pressure a little higher: that figure is unlikely to reduce over the next 40 years, according to estimates from Treasury Intergenerational Report.

Having said that, I agree with you that being self-funded is the best way forward.

That’s why I spend every other page of my book doing all I can to help people become financially independent. If they follow the “Barefoot Steps” a little earlier in life, they’ll be comfortably self-funded when retirement day comes.

Read more Barefoot: 

Scott Pape on why he rarely tells people to sell family homes

What Amazon means for Australia

Scott Morrison and the house that debt built

Why Apple wants older workers

The Barefoot Investor holds an Australian Financial Services Licence (302081).

This is general advice only. It should not replace individual, independent, personal financial advice.