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Today, 02 December 2008

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Yesterday, 01 December 2008

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The term "living in sin" was a favourite euphemism used by our more pious citizens, to describe the practise of cohabitation of males and females out of wedlock. We have come a long way since Queen Victoria decreed that it was unacceptable for a woman to sit on a chair that had been used by a male (it had to cool down first).

We can now expose our underwear as a fashion statement, men can stay at home and raise the kids and women can become presidents. We have witnessed many social taboos fade over the years and couples living together have largely been accepted without judgement. Not only has it become acceptable, but many people consider it a sensible thing to do.

When you play the dating game you are often not exposed to the truth about your partner's habits or his or her financial situation. Only when you live with someone and start sharing the financial and household responsibilities, do you get a true reflection of their financial and emotional intelligence.

The 'Friendly Bank'

You may find that their champagne and caviar tastes are being funded with other people’s money, namely the 'Friendly Bank'. Perhaps you will discover that your charming prince or princess turns into a sloth when you move in.

Coming to terms with the fact that you can no longer live with an incompatible partner is child’s play when compared to the task of disentangling badly planned finances. The process can turn a perfectly civil couple into raging and destructive adversaries.

The way to stop the money wars when a live in relationship ends, (or begins for that matter), is a little bit of planning.

Before you move in

It is vital to discuss how the finances will be dealt with before you move in. Agreeing on a plan could take a while so set aside a specific time to do this. The first step is to agree on who is going to be responsible for the lease. It is my firm belief that only one name goes on the lease because it leaves no doubt as to who is responsible.

If you part ways there are only two choices: he leaves or you leave. If both names are on the lease, then an argument could ensue over who has the right to stay. If your name is on the lease, make sure that you can afford the payments on your own or there is another bedroom to rent to cover the payments. It’s bad enough enduring a break up, but being left with an over-head you cannot afford adds to the stress.

If you are buying a house together, then there must be careful consideration of the legalities. Do not fool around with verbal agreements; a lawyer should be used to drawing up an agreement between you and your partner detailing the rights of both parties. Both names should go on the bond registration document and the bond and you should pay equal payments into the bond.

If your partner already owns the home you move into, then the rent you pay should be accrued to you if you decide to leave. Many women fall into the trap of paying for the groceries, phone bill and electricity and her partner pays off the bond. If the house belongs to him, he is paying towards an asset and she has nothing to show for her expenditure.

There is a document called a 'co habitation agreement' that you can get drawn up by a lawyer stipulating what you are entitled to in a live-in relationship. This can be amended each year as assets accumulate.

In South Africa a woman does not have any rights what so ever if she is not married. Many are under the illusion that if they have lived with a man for five years, they become his common law wife — but there is no such thing.

How to split expenses

Once you have taken care of the home issues you will need to discuss how the expenses will be divided. Your incomes will probably not be uniform so it is not reasonable to split the expenses down the middle. Expenses should be proportionate to income earned.

There are definitely economies when two people live together and if you move into his home your contribution will save him money so he should not whinge about paying a little more than you. Watch out for glibly taking on variable expenses — limits need to be set. If you take on the grocery bill and he has his extended family over for dinner every weekend, you can kiss your savings goodbye.

Entertainment

These costs should be shared but if you want to throw a sushi party for a dozen friends then you should foot the bill, likewise with his rugby buddies on a Saturday. Set yourself a weekly budget and stick to it.

Transport

If you share a vehicle, then it should be made clear form the outset that the person who owns it is the person who keeps it in a break up. The other partner should contribute to maintenance and petrol

Furniture

If you are moving in to a new home together and furniture needs to be purchased, you should decide who is going to buy what. If you buy the fridge and he buys the microwave it is easier to spit up possessions if you decide to part. There is nothing worse than bickering over who gets the toaster and who gets the kettle. Keep your receipts in case things turn nasty.

Savings and investments

This can be a contentious issue. If you have a partner who is a spendthrift and you are saver, the lines need to be drawn. If he runs out of cash in the middle of the month, tough luck; it's videos and pizza instead of dinner and movies. Never support someone’s bad money management habits, no matter how they beg and plead.

Assuming you have taken care of your own financial needs, you can then look at how the plan will interface with your partner's plan (which may be non existent). Here are some important tips.

• Never sign surety on a debt that he wants to incur; you could end up paying for his car and his new girlfriend if he defaults on the loan.
  
• In fact never sign anything that you are not sure of. Tell him you love him dearly but it is your social responsibility to keep your lawyer happy too. Always get a second opinion from a trusted person (not his best buddy).
• If he weasels out of paying his share of the bill when you are out with friends, chances are he is a close relation of Mr Scrooge. You will not change this trait, move on.
• If there are strange men in dark shades following him, they could be debt collectors. If you get calls from his creditors (because he named you as a reference) be warned, he could be a credit junkie.
• Keep separate check accounts, especially if you both work. The same applies with credit cards. Both partners should have a retirement plan. Insurance company statistics show that very few people have saved sufficient funds for retirement. One pension is not usually sufficient to support two people in retirement.
• If your partner is a business owner, make sure that you do not sign surety for the company debt. If his business goes south, you could be paying the bills long after he has left.
• Money arguments will not go away on their own — you have to learn the ways of successful money managers and practice until all your differences are resolved. When you achieve financial harmony, your attentions can then turn to more simple matters, like how the country should be governed.