I’m talking about a lot of debt. Like, $40,000+ in student loans, or thousands of dollars in credit card debt – without a solid plan to get themselves out. Or what if you’re a saver, and they’re a spender?
It’s obvious that the financial habits of your significant other can play a huge role in defining what kind of life you would have with that person – both short-term and long-term. But are poor financials a big enough reason to eliminate someone as a potential mate? According to a new survey by Match.com, almost half of Canadians would not date someone who is in debt. At all. That’s huge.
Now, I usually don’t write about press releases or surveys that I get sent, but I thought this one was fun, and also pretty interesting. Here are a few more results:
- 57% of singles have stopped dating because of their own lack of money.
- 50% of singles have stopped dating someone else because of a partner’s lack of money.
- 75% of singles would not borrow money from a partner
- 42% of singles say they have lent money to a partner in the past
Related: Could you ever marry for money?
I’ve dated guys in the past with wildly different financial histories and ways of managing money. One was extremely frugal, to the point where it was sometimes frustrating. One was incredibly bad with his money, and didn’t seem to think it was an issue. One had a weakness for expensive cars. One had more money than he knew what to do with.
I think that I could date someone with a moderate amount debt, as long as they had a reasonable plan in place to get themselves out of debt.
But there are definitely big differences in the type of debt that someone has.
For example, maybe you’d date someone that had $12,000 in credit card debt, but had a plan to be debt-free within a year.
But would you date someone that had just $5,000 in credit card debt (and was currently sinking further into debt), but had no plan (and no means) to pay it off? Maybe. Maybe not.
Would you date someone with $100,000 in student loans, knowing that their debt would likely have a significant effect on the timing of buying a house, getting married, having children, travel, etc?
When I was $20,000+ in the hole, I hope nobody would have dismissed me as a potential match just because of my financial situation. I knew my debt was a burden, but I had a plan to get myself out of that mess. And it definitely would have been nice if I had found the courage to confide in my partner at the time about my debt (and the serious stress I had because of it). But instead, I hid it because I was ashamed. However, if I had $200,000 in debt, maybe that’d be a different story. I would never want my debt to hold someone else back from achieving their goals in life.
And it’s not just being in debt as a potential factor in determining whether someone is (financially) compatible. Debt is just part of it. I think it’s important to have open discussions about money, debt, and goals on a regular basis – and if that doesn’t happen, regardless of the person’s financial situation – in my opinion, the relationship is likely doomed from the start.
Could you date someone who has debt?
Our original plan was to live in Stuttgart for 6 months, spend all of August traveling, and head back to Vancouver for the beginning of September. But now it looks like we be staying for good, and never coming home.
We will actually be extending our stay in Stuttgart an extra 3.5 months until mid December. :)
So right now, the plan for us is to still travel together for 3 weeks in August. Then, he will go back to Stuttgart. I will continue to Ireland, Scotland, and Iceland by myself. At that point, my travel plans become unclear. My original plan was to go from Iceland to Vancouver and spend 2 weeks there, before hopping over to Toronto for CPFC12. Then I’d head back to Stuttgart again. But, it’s not a very economical way of doing things. I did a bunch of research into flights, and basically I’d save about $800-900 in airfare if I just went back to Stuttgart for the 2 weeks in between Iceland and CPFC12, then fly to Toronto for a week. That makes the most sense.
However, there are things I need to take care of in Vancouver. So I’m going to figure out if I can get everything done via phone or here in Stuttgart, and if so – then I’ll skip out on Vancouver and save a huge chunk of money by just going to Toronto for a week.
While I would have liked to go home permanently in September and potentially look for more work opportunities, I’m content with staying here in Europe (after the initial shock of Nic asking if we could stay). I’m making enough money to support my lifestyle, pay the mortgage, and save some money. Granted, I’m not saving as much as I would like, but it’s less than 4 months more, so I know it’s doable.
It feels so indulgent to extend our stay, and I do feel guilty… but over my lifetime, an extra 3.5 months isn’t a lot. And I know I’d regret not staying. Plus, it’s going to benefit Nic’s career in the long run, and that’s what’s important now. I can work from anywhere. A few things have come up, and he can’t start the last semester of his masters program until January, so it doesn’t make sense for him to go back to Vancouver and try to find work for just a few months, when he has a good job at an architecture firm here.
I’m happy about this decision, and while I do miss home, I’m excited for what we have in store for the rest of the year. And we will definitely be slowing down our travel schedule through the fall, but we’ll still be doing a lot of exploring. Germany has so much to offer that we haven’t seen yet – Frankfurt, Hanover, Cologne, and probably Munich again (hopefully for Oktoberfest!!!). But, we also have two big trips planned – Turkey/Bulgaria in October for my birthday, as well as Budapest at some point. :)
If you’ve ever been in the position where a friend or family member has asked to borrow money, you know how difficult it can be to say no. You want to help them out because you love them … but money has a funny way of putting a strain (or even potentially destroying) strong relationships. Gifting money is one way of avoiding a potentially complicated situation, but if you don’t have any money to give, what do you do?
I’ve been in this situation before, and it’s really stressful. When I was in my early 20’s, I had a maxed out credit card and no savings, but someone I cared about needed my help. He was sick and couldn’t work when he was in and out of the hospital. He couldn’t pay for his bills, rent, or his medicine. So over the span of just under a year, I loaned him thousands of dollars out of my line of credit, with his promise that he would give every penny back to me. Ha!
There are plenty of other ways you can help somebody out financially, without handing over money. But when it’s somebody you care about, there are times where you might find yourself saying yes (like I did). Whether it’s a loan of $20 or $20,000, your ideal situation would probably involve recuperating all of the money you lent. Unfortunately, it doesn’t always work that way.
However, if you’ve weighed the pros and cons, and you still feel like loaning money is what you want to do, here are a few suggestions to help you protect yourself as best you can:
Loan or gift?
The most logical thing to do is not to loan the money – but to gift it – instead. For smaller loans, sometimes gifting the money is the easiest thing to do. You don’t have to worry about monitoring repayment schedules, what to do about late payments, or any hard feelings if the borrower can’t come through on paying you back.
If you decide that you will loan the money, you must still assume that you’re not going to be paid back. Many personal loans are never repaid, and you will be disappointed and resentful if you keep expecting money that will never be returned.
Don’t loan money you can’t afford to lose
Life can be unpredictable, especially for those who aren’t financially able to stand on their own two feet. Even the most responsible person can end up defaulting on a loan, so don’t lend any money you can’t afford to lose. This includes money from your Emergency Fund. You never know when you’ll need the money, and if it’s not there when you need it the most, not only will you feel resentment towards the borrower, but you might end up needing to borrow money yourself!
It’s also important to note that if you have any credit card or high interest consumer debt, or if you have to use credit to loan the money, you cannot afford to help out.
Get it in writing
Don’t make a verbal agreement. Make sure you put down in writing all of the fine print regarding the loan. Then have both parties sign and date it. Include the amount of the loan, interest rate (if applicable), repayment schedule, consequences for late payments, and potential collateral should the borrower end up defaulting on the loan. Try to be as specific as possible; you never know when it will come in handy down the road if something needs to be clarified.
Negotiating the nitty gritty payment details might cause some heated arguments and disagreements – after all, money is a sensitive topic. Consider bringing in a neutral third party to act as a mediator.
It can cause a lot of resentment and anger if you loan somebody money for a specific reason (like paying for tuition or the heating bill), only to see them spend it on something else instead. So if somebody has asked you for a loan for late bills, rent, or anything with a specific recipient, and you’re concerned the borrower might end up spending the money on something else, tell them you will only loan them the money if you can pay directly to where the money is owed.
Think twice about co-signing a loan
If you’ve refused a request to borrow money, and they’ve asked you to co-sign a loan for them instead, think really carefully about your decision. It might seem like a good idea, but once you’ve co-signed for a loan, you’re legally responsible for that debt. If something goes wrong and the borrower can’t – or decides not to – make payments, you’ll be stuck with the entire debt.
If you haven’t already been in the situation where you’ve been asked for money, chances are, you eventually will be. Deciding how you will handle the situation before it arises will ensure that you are less likely to be pressured into loaning money that you can’t afford, or don’t want to give. My relationship quickly deteriorated with the person I loaned money to. Once he was back on his feet, he started making small payments. However, that only lasted a few months before the payments stopped – not because he couldn’t afford them, but because he didn’t feel like making them anymore. I eventually sued him (and won) in small claims court, but to this date, I’ve recovered less than half of what he owed me. It’s something I hope to never go through again, and that’s one learning experience I’ll never forget.
I still lend money occasionally, but in much smaller amounts (usually never over $100), and I never expect to get my money back (although it’s great when I do). This leaves me with no room for resentment or anger, and our friendship stays in tact.
So if you do decide to loan money to a loved one, remember that no matter how agreeable the borrower is to your rules and terms of payments, or how enthusiastic they are about paying you back, you might not end up with the happy ending you want. Hope for the best – but make sure to plan for the worst.