Love. With the fresh start of new year upon us and Valentine's Day a month away it's natural to have romance on the brain. At risk of bursting your bubble, after the past two years of economic angst, we suggest you pause to see if your sweetie is in the red or in the black when it comes to their finances. While this may not sound romantic, it’s very practical. Money is routinely cited as one of the top causes of fights in marriage and one of the top causes of divorce. Here are five questions you can use to find out if you are dating a (financial) deadbeat:
1. Does your sweetie always insist on picking up the check at a big dinner and/or throw down his or her credit card without even looking at the bill? While this could be a sign of innate generosity – it could also be a red flag for someone who is trying to show off and is doing so by living beyond their means thanks to the “friendly” help of credit cards. The unfortunate reality is that over 2/3rd of Americans routinely live beyond their means – not because they want to make bad financial decisions but because they often don’t really understand personal finance and are too embarrassed to ask.
2. Does your sweetie have a large but sparsely furnished apartment / home? While it’s possible that your sweetie is just waiting for his or her “personal design sensibility” to present itself… more likely than not it’s a red financial flag that you’ve got a case of what’s called down in Texas “Big Hat, No Cattle.” A phrase made popular in the wonderful book THE MILLIONAIRE NEXT DOOR, it highlights a sad but true phenomenon. In our modern credit driven society, the guy with the big house or flashy car OR the gal with the four-digit handbag and the three-digit stilettos may well be presenting an exterior image that bears no resemblance to their true economic reality.
3. Does your sweetie avoid answering calls on his or her phone? It’s possible it’s just mom checking in to see how the day is going… but then again, it’s also possible that it’s bill collectors calling to find out when your sweetie is going to make good on that car payment, mortgage, credit card or other outstanding debts.
4. Does your sweetie lease his or her car? Think about it, what’s the sales pitch for leasing – it’s “hey you can get more car for less money than if you buy outright?” Sound too good to be true? There can be some very special circumstances when leasing does make sense – but generally, as legendary financial guru Dave Ramsey says, it should be called “fleecing” not leasing. Leasing a car can be a classic red financial flag that someone is living beyond their means.
5. Does your sweetie ask you to co-sign or buy things in your name, promising to pay you back? Why would a financially responsible person ever ask their significant other to do this? If so, something sure smells fishy and it’s likely not the dinner you cooked last night. If this is your situation, you want to ask your sweetie to show you his or her credit report and his credit score. A grown person should be able to meet their financial needs on their own! This may be the clearest sign of all that it’s time to evacuate the relationship.
Having your eyes wide open when it comes to understanding your mates financial situation puts you in the drivers seat to decide whether the financial challenges that may be present are ones you are willing to work through together!