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Protecting your finances during a break-up

Breaking up with your significant other is a painful process, and most people want to get it over with as soon as possible – even if it means avoiding important discussions about possessions, finances, and joint assets.

But leaving issues unresolved can be a costly mistake – both financially and emotionally, and you might not truly realize the impact until several years down the road. This is especially true if you live together. I know first-hand how hard it can be! But I’ve learned from each experience, and I know to be a lot more cautious in the future.

Even though it sucks to think about the possibility of your relationship falling apart, but it happens sometimes. And in order for each of you to protect your finances during a break-up, you both need to put your differences aside and have a mature discussion.

Here are a few ways you can protect yourself and your finances:

Make a list of joint assets and liabilities

You will need to make copies of any joint bank account statements, Registered Retirement Savings Plan (RRSP) accounts, Tax-Free Savings Accounts (TFSA), and any investments. Don’t forget to include past tax returns, credit card statements, insurance and extended health policies, as well as mortgage payers or rental agreements.

If you have joint savings accounts or assets, talk about how you plan on splitting the money. Then, close the joint accounts as soon as possible. If you don’t already have one, open up a new account in your own name.

If you have joint debt, or if one partner owes the other partner money, you need to start talking about it immediately. Come up with a realistic payment schedule that both of you can agree upon, and don’t forget about any interest or banking fees that might accumulate as a result of holding the debt. The last thing you want to do is have to take (or be taken) to small claims court, garnish wages, fill out the endless amounts of paperwork – it’s a nightmare. I’ve been down that road, and trust me, it’s not fun.

Cancel joint credit cards and keep paying your bills

Make sure all joint loans and credit cards are canceled, and that you have a credit card in your own name only. Regardless of who owes what on your joint accounts, you are both responsible for paying it off. Interest charges can add up fast, so make sure you are both on the same page when it comes to creating a plan to get rid of your joint liabilities as quickly as possible.

Don’t forget to check your Equifax and Transunion credit reports a few months after breaking up to make sure that all of the information the credit bureaus have on you is accurate and up-to-date.

Have cash easily accessible

If you have been able to funnel cash into a savings account or emergency fund over the years, keep it where you can easily access it. You might need it for various expenses such as moving, rental deposits, furniture, and other miscellaneous costs.

If you don’t have cash available to you, consider opening up a low interest line of credit with your bank. It is not ideal, but it’s better than using a credit card, and it could help you out in an emergency situation.

Don’t make any huge financial decisions

Take your time and try not to rush into huge investment decisions or making big purchases right away. Chances are you aren’t thinking with a clear head, and if you don’t have a plan of action, you could end up making a costly mistake.

You need to make logical decisions that will help you reach your financial goals. If you’re unsure of how to handle money, get advice from an expert before going to friends or relatives.

Update your extended benefits, insurance policies and will

If your partner was listed as a dependent and/or beneficiary through your extended health benefits and insurance policies, you should update that information immediately. Contact your HR department as well as your benefits provider to advise them of the changes.

If your partner was listed as your emergency contact, make sure to go through your records and change that information as soon as you can.

Unfortunately, not all relationships last forever. This is especially true for 20-somethings who are still trying to figure out what they want from life. Make sure you’re talking openly about money and goals with your partner, and remember that it’s so important to always keep a sense of financial independence!

What tips do you have for protecting yourself during a break-up?

Talking about money with your partner

Whether it’s planning a vacation, moving in with someone, or simply deciding what to eat for dinner, almost every decision we make in our lives involves money in some way. And how you and your partner communicate about these daily decisions will dictate the strength of your relationship together.

Let’s face it, sitting down and having the “money talk” with your significant other for the first time can be a difficult task – which is probably why the subject is often overlooked by couples until its too late. Because unfortunately, it’s usually a financial crisis that forces couples to finally deal with their finances. And if you are faced a crisis, instead of having a calm discussion about goals and your future together, you will most likely be stressed out, with no financial plan to get you back on your feet.

Here are a few things to consider when you decide to have the money talk with your significant other:

When to bring up money in a relationship

Talking about money will never be the most romantic thing to do in the world, but consider that a recent TD Canada Trust poll revealed that 72% of people would not marry someone who was bad at managing their finances, or if they held excessive debt. The poll, which surveyed British Columbian adults currently, or recently in a committed relationship, found that nearly 40% wouldn’t even date someone who didn’t have their finances under control.

A similar ING Direct survey found that 92% of Canadians believe it’s important to date someone with a similar outlook on money, but only 50% of Canadians said they knew everything about their partner’s finances.

So while you don’t need to bring it up on your third date, you shouldn’t wait until you decide to get married to start talking about money either – because by then, it could be too late. You might be compatible in many ways, but if you’re not on the same page financially, it could lead to a relationship disaster. Starting to discuss big picture personal finance goals should happen as soon as you’re in a serious relationship and you start to see a future together.

Luckily, Nic knew I was a personal finance blogger right from the beginning, so there was no need to tiptoe around the subject of money. While he will never be as detailed or obsessed with money management as I am (not that I’d ever want him to!), he does have the basics down – like spend less than you make, and not carrying a balance on a credit card. And most of the time, he’s even more frugal than me!

Observe their spending habits

You can tell a lot about a person by how they manage their day-to-day finances. Do they dine out a lot? Are they constantly complaining about being broke? Do they know how much money is in their bank account? Do they not care about the price of the things that they buy?

You might love your partner, but if he’s a spender, and you’re a saver, will you be able to come to a compromise?  Openly discussing money with your partner is the best way to prevent future arguments. Talk about your spending and savings habits, and what your financial goals are for the future.

I’ve been both the spender and the saver in relationships before, and it can be tough when you and your partner have opposing views on money. It’s frustrating! And it always leads to arguments. But now that I’ve turned my finances around from the disaster it once was, I know that there’s no way I could ever be in a relationship with someone who is bad with money. I need my goals, and hopes and dreams to align with theirs, and if they don’t care about saving for retirement (or saving in general, and living a debt-free life), I can’t stand still and wait for them.

Be honest about your debt and past mistakes

When you enter into a new relationship with someone, chances are you will have to deal with debt at some point. You or your partner may have student loans, a line of credit, maxed out credit cards, or even a mortgage. If you are planning a future together, you both need to disclose exactly what kind of debt obligation you have, because that can greatly impact your household budget, as well as your future financial goals.

Consider your personal finance goals

You will most likely never have every personal finance goal in common with your partner, but it’s important to find some common ground and go from there. Take the time to talk to each other and consider your short-term goals – like saving to buy a flat-screen TV, or that trip to Hawaii, as well as your long-term goals – like buying a home together, paying off your student loans, and what kind of retirement lifestyle you want to have.

Be honest with yourself; if you don’t see your goals lining up with theirs, it’s important to be voice your concerns now – rather than 10 years down the road.

The end of summer is near

Well, I am squeezing one last trip out of the summer – this coming long weekend, I am headed to Tofino! I haven’t been there in a few years, so I’m really looking forward to it – even if we’re only going to be spending one night camping We also plan on heading down to Victoria to spend a night in the city. It will probably be my last time home until Christmas.

It won’t be a cheap vacation – trips to the island never are. But, we will be staying with relatives one night in Nanaimo, camping in Tofino, and then staying at my parents house in Victoria for the other night, so at least our accommodation expenses will be kept to a minimum.

Here’s the breakdown I’m expecting:

Travel expenses:
$76 ferry & 2 passengers (one way)
$60 gas

$25 food & miscellaneous
$10 camping fee

$100 Wild Play ($48.15 x2)
$100 miscellaneous

TOTAL: $371

Wild Play is a high ropes course that we will be doing with Cupcakes and Cash. I budgeted paying for Nic too, since it was my idea. I did it last summer, and it was a blast, so I’m really excited to attempt it again. Other than that, we have a few meals planned with my friends, and a bunch of wandering around the city. Fingers crossed for good weather!

After this trip, I’m kind of excited for my travel schedule to calm down a bit, and to just settle into a more normal routine – with much less spending. To be honest, I expected the summer to be really laid back and inexpensive, but it ended up kind of being the opposite.

Thankfully, the next trip planned isn’t until the end of September for the Financial Blogger Conference in Chicago. I finally booked my flight for $515, which in my opinion, is a pretty decent price. But, it’s still expensive. There were roundtrip tickets for about $375, but all of the flight times were ridiculous and inconvenient. At least the hotel room was cheap – only $82/night, and right at the convention centre. And I can write all of the expenses off because it’s related to my freelance business.

Also, I’m already taking 2 vacation days for the Chicago trip, but part of me wants to take another day off. That way, I can spend an extra day in the city (I only have one full day to explore the city as it is). Because, really, when am I ever going to go back to Chicago?

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