Many South Africans are deeply in debt. How many have told their partners about their crippling credit issues?
A US News and World Report found 1 in 3 couples deal with financial infidelity in the US. In South Africa – where the debt-to-income ratio for Q1 2022 reached a record high of 150% for +R20 000 income earners – could this be even higher? Money talk is tough.
Many simply avoid it and keep their debt secrets hidden from their partner but the fallout can be immense. The best way to avoid it is to play open cards, however hard this might be.
A 2018 study found 76% of married couples who experienced financial infidelity said it negatively impacted their relationship; for 10%, it resulted in divorce. Ayanda Ndimande, Business Development Manager of Retail Credit at Sanlam, says, “If ever there was a passion killer in a relationship, it is a shortage of money. So, it’s imperative to have an open discussion with your partner to have a full view of what you will both bring to the relationship financially, to build wealth together.”
“Consider consolidating your debt and getting rid of it soonest – or at least have a contract that each of you will pay off your outstanding debt within a stipulated time. Tools like the Sanlam Credit dashboard can be hugely beneficial, allowing you to do a free credit score check, track changes to your score, and engage with credit management coaches in real time.”
Here, Ndimande, and clinical psychologist and CEO at Psych Consultancy Nozibusiso Nyawose, share how to have those difficult conversations around debt:
How to reveal a nasty little debt secret:
Nyawose says, “The first step is to acknowledge the problem and establish accountability for how it arose. Then focus on how to ‘fix’ it. A healthy relationship should not include judgement on the debt, but rather, look at ways to resolve it. Financial transparency is crucial as it allows partners to plan for the future and share responsibilities.” A financial adviser can play a pivotal role in facilitating these tough talks.
If you’re already in a relationship and discover your partner has a lot of debt, how can you support them?
Nyawose says, “Support your partner by being mindful of words that can emotionally break them or make them feel shame and guilt. Reframe the conversation from constantly reminding your partner of the debt. However, take steps to get professional financial assistance together, and teach one another to communicate effectively when it comes to making money decisions.”
Is my credit score affected by my partner’s score?
Ndimande says that if you’re married in community of property, then you’re both liable for one partner’s debt. For example, if one partner’s credit score is good and the other’s is not, this could impact your application to qualify for a home loan if you’re seeking to buy a joint property.
How should a couple tackle debt?
Ndimande says, “Start by sitting down and doing a consolidated budget showing income versus expenses. If outflow exceeds inflow, consider talking to a credit management coach or financial planner to help you consolidate your debt into a more affordable option and release cash flow.
“Pay off the biggest debt first, then use what you save to pay off the smaller ones. Being in control of your debt and showing good payment behaviour (no skipped instalments) will automatically improve your credit score. It’s critical to stick to whatever strategy you decide on as a couple and do a monthly budget check to see how you track.” In essence, control your spending before your spending controls you.
She adds, “You can also introduce a little bit of healthy competition to lighten things up. If both partners are in debt, compete to see who can pay off their debt the fastest, within a designated time frame. Reward small wins along the way with date nights, etc. – obviously no expensive gifts or treats on credit though!”
Money often equals power in a relationship. If one person is financially fit and the other is not, how do you avoid an unhealthy power dynamic?
“Unhealthy power dynamics are a leading cause of break-ups in relationships. Financial strain can contribute to hostility and high levels of dissatisfaction. However, relationships are built on many things besides money. Both individuals must come to an understanding regarding household contributions. Be honest about what you can – and are willing to – contribute. This will avoid unrealistic expectations,” says Nyawose.
Can financial advisers help couples looking to walk a financial journey together?
Ndimande says, “Yes. An adviser will look at your financial portfolios and explain options that may work well for you both. For example, life cover is important to cover any outstanding debt in case of one partner being rendered disabled or passing away. Financial advisers can also help you navigate tools like the Sanlam Credit Dashboard, which gives a quick update on your credit position and how you’re tracking to improve your score. They’ll use this to give insight into how to better your joint financial position, holistically.”
Most importantly, an adviser can help give you the financial confidence to trust each other, have honest conversations and set shared goals to work toward.
BUSINESS REPORT