12/09/2016 10:29 AM AEST | Updated 12/09/2016 10:29 AM AEST

How To Avoid Sexually Transmitted Debt

It's a thing, and you don't want it.

Stephen Swintek
'Is it just me... or is there three of us in this relationship?'

In the first flushes of love, you're hardly likely to ask your new partner for a peek at their bank statements or if they have a damaging relationship with their credit card(s).

But at the risk of sounding like a Debbie Downer, it might not be a bad idea to have some kind of financial conversation earlier rather than later. After all, if the relationship goes from strength to strength, you may look at combining your finances at some point later down the line, and you don't want to end up staring down the barrel at a truckload of debt you had no part in accumulating.

In other words... sexually transmitted debt.


"One of the things that we do encourage our clients to do is make sure you have an agreement before [things get too serious], especially if you are going into a relationship where one person has more money, more income, or less debt than the other," Jenny Brown of JBS Financial Strategists told The Huffington Post Australia.

"You don't know, once you start living with somebody, six months you are considered to be de facto. If you're involved with the wrong sort of person who is listening to the wrong sorts of people... let's just say it's possible to take your partner for half of what they've got."

It might sound like something that would never happen to you, but as Brown points out, the problem with money and relationships is even the most financially savvy people can ignore their doubts or concerns in favour of love.

"What happens is emotions come first and the head doesn't rule," Brown said. "The number of conversations I've had with people, saying, 'you've got to be careful. Be really mindful of what you're doing here, make sure you have an agreement'."

Getty Images/iStockphoto
While you might not feel like having a 'Financial Conversation' during the early days of a relationship, you should definitely do so prior to moving in together.

Of course, no one wants to imagine their new romance is going to end in tears, but Brown said a 'just in case' agreement could turn out to be a lifesaver if things do happen to turn sour.

"Binding financial agreements do stack up," Brown said. "I would advise both parties seek independent advice and get it done properly.

"Like going into any business relationship, you should always go in with the view, 'how do I unwind this if it all goes to crap?'

"I know you won't want to consider it, but you do really do need to go down the path to say, 'what if it doesn't turn out all rosy? If it doesn't work out, how do you unwind it?'"

When approaching a financial discussion in a relationship, Brown says openness and transparency are of utmost importance.

"If you are the person bringing the debt into the relationship, be prepared to wear it. Own it. Be proactive about sorting it out. Melanie Schilling

"You need to make sure there is are no secrets," she said. "If someone isn't prepared to talk about what they've got in an open transparent and sensible way, you have to ask, 'what are they hiding?'

"It's the same when a client comes in and is not prepared to put the facts on the table. It makes you think 'why don't they want to talk to us about it? Why don't they want to talk openly in front of their spouse?'

"To make sure you have a good working relationship, you do need that transparency."

Which brings us to the next point. If you happen to be the one who is up to your eyeballs in debt, you need to 'fess op.

"If someone has come out of relationship with someone else, maybe it's a divorce situation, and they have come out with lots of debt, it's pretty unavoidable that they will bring that baggage with them into their next relationship," psychologist and relationship expert Melanie Schilling told The Huffington Post Australia.

Jose Luis Pelaez Inc
Let's talk about debt.

"And because money equals power in a lot of situations, entering into a relationship with a negative money status can erode some of [that person's] power in that relationship. Whether that's reality or not -- it's a common perception, and it can become a self-fulfilling prophecy.

"If you are the person bringing the debt into the relationship, be prepared to wear it. Own it. Be proactive about sorting it out.

"You don't want to be a burden financially. Take responsibility for that situation."

Adds Brown: "Looks it's very embarrassing for a lot of people. If they have massive debts, it's a matter of sitting down and being honest. Don't get me wrong, it's a hard thing to do.

But in the same breath the first step to understanding anything is admitting and owning up to the current situation. Once you do that, then a plan can be put in place to get yourself out of it. You need to want to do it. It's just like losing weight, you need to go right, 'OK, this is where we're at. This is the plan going forward'."

Some people might say that's being pessimistic and 'why plan for your divorce when you're on your first date?' but it really is about self respect and being savvy.

As for the person who is in the financial clear: if you're unsure about your partner's situation, both Brown and Schilling urge you to consider some type of self-protective action.

"This is where it becomes about self-preservation and being wise with your financial situation," Schilling said.

"Have a conversation with a lawyer or an accountant, seek advice -- proper professional advice -- in order to protect yourself in that relationship.

"Some people might say that's being pessimistic and 'why plan for your divorce when you're on your first date?' but it really is about self respect and being savvy.

"Regardless of the outcome of that relationship, you want to make sure you're going to be okay. For some people, it means keeping their own personal bank account as well as the joint account. For others it might mean never joining finances.

"As long as it's something you have talked about agreed upon and works well for you, that's great."

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Be careful what you sign.

On a final note, Brown also urges everyone in a relationship (or otherwise) to avoid signing anything they're not sure about.

"Be really careful about who you go guarantor for," Brown said. "This goes for parents with their kids, it goes for one person in a couple to the other person, it goes for friends. You have to be really careful.

"If you are guarantor, your assets are on the line. Whether it's a car loan, a home loan, whatever.

"I had a client who went guarantor for a car loan for one of his mates. They were in their very early 20s, and the guy that went guarantor is a sensible sort of person who is sensible with money, and he went guarantor without even thinking.

Never sign anything you don't understand and don't go guarantor, ever, without understanding exactly what the ramifications are and without getting advice.Jenny Brown

"Years down the track his mate reneged on the loan, and this guy had a the sheriff's office knocking on his door saying, 'you owe $40,000'. Because you went guarantor when you were in your early twenties.

"So my advice would be never sign anything you don't understand and don't go guarantor ever without understanding exactly what the ramifications are and without getting advice.

"That example I gave before was between two mates, but it could easily be partners, siblings, anything. It's so easy to do, especially one partner comes home and says 'oh darling can you sign this?' and they do, not knowing what it's about. You are responsible. And that happens a lot."