Rebuilding finances after partners gambling addiction

Amanda* was left with hardly a cent to her name, and substantial debts, because of her ex-partner’s gambling addiction. She was in her early 20s during the mid-1990s, when she and her ex started a relationship.

The complete article, with full story of Amanda’s situation can be viewed on the ABC News website.

Her disciplined savings regime, combined with the banking industry’s more relaxed policies around home loans at the time, meant Amanda was able to buy her first property in 2002 for $152,000.

“It was in the inner-north [Brisbane] suburb of Kelvin Grove and it had two bedrooms,” she said.

“No balcony, no air conditioning, dirty carpet and it was cockroach-infested, but I could walk to work and it was mine.”

Amanda describes picking up the keys for that home as one of her fondest memories.

“I was so proud of myself and I remember having my sister and her husband over for dinner — a roast pork in the middle of a Brisbane summer,” she said.

“We had the front door propped open, everyone had sweat dripping off their faces and we were sitting on the floor because I had no furniture, but I just felt over the moon.”

The director of financial advisory firm On Your Own Two Feet, Helen Baker, says while Amanda’s financial recovery is commendable, she was also fortunate to get into the housing market before prices took off.

“Back then, properties were almost doubling in price over a short period of time and the banks at that time were even lending at 110 per cent of the value of the property,” she said.

“The cost of housing has increased significantly since then and along with that, has been the amount of money you need for a deposit and the issues with banks and how much they’re allowed to loan.”

However, she says the advice Amanda was given and her strict approach to saving will always serve people well.

“Selling the car is a good one, because if you add up the cost of using public transport and ride-sharing or hiring a car some weekends, that could actually work out cheaper than paying for registration, insurance, petrol and maintenance on a vehicle,” she said.

Have an open mind about your own definition of wealth

A few years after buying her unit, Amanda used the equity in that home to buy a second property.

“I was totally nervous about going into that kind of debt after what I’d been through, but I kept thinking of that motto — fortune favours the brave.”

Amanda made her third property investment just after the global financial crisis in 2009, and has added a further two investment properties to her portfolio in recent years.

Ms Baker says although the Australian property market is now much tougher to break into, there are other ways to reach financial goals.

“Investing in managed funds or in companies can offer good returns, but people tend to get spooked by the movement in the market and consider it too risky,” she said.

A managed fund is a type of managed investment scheme where your money is pooled together with other investors and a manager buys and sells shares or other assets on your behalf.

For those not keen on picking stocks, others start with exchange traded funds (ETFs), which usually track a market index (for example, the ASX 200 share index).

She says even with interest rates at historic lows, some savings accounts are offering reasonable rates of return, and there are other alternatives as well.

“Commodities, like gold or silver, can be popular with people who tend to be more risk-averse,” Ms Baker said.

“But it can also be as simple as just saving money on tax — being smart with those strategies and getting an instant saving,” she said.

Moneycare’s Kristen Hartnett says it is also important to have an open mind about the definition of wealth and that constant comparisons to people who are better off are not helpful.

She says people often have fixed ideas about home ownership, whereas sometimes they would have a better lifestyle renting instead.

“It’s actually valuing all aspects of life, not just home ownership for example, and making life rich and meaningful with the things that are important in the here and now,” Ms Hartnett said.

“People are fabulously resilient — in my work I’m always impressed by people having a belief in their own ability to get through and keep focused on the things they can do.”

As for her ex, Amanda says she believes he did get help for his gambling addiction.

“He tried to contact me years later and apologise for things — I guess that was part of his 12-step process — but I just couldn’t go through with having that conversation,” she said.

“You know, I could’ve gone for half of his superannuation when we split, but I chose not to do that and it’s always felt like the right decision because I didn’t want to be taking from his future family — I just didn’t have that in me.”

Put things in place to safeguard your financial future

Financial adviser Helen Baker says once a person is back on their feet after a financial wipe-out, it is essential they safe-guard their future.

“I recommend having what I call the five foundations in place,” she said.

“The first one is having an emergency fund in case you lose your job, or you have a big expense to cover — which you don’t want to borrow money for — and usually I would suggest that’s the equivalent of three months’ salary.

“The second is a spending and investment plan, so working out how much money you want to save for whatever reason, and deciding which areas you’re willing to sacrifice spending in order to put that money away.”

She also advises to sort out private health and personal income protection insurance policies; ensure superannuation is consolidated in a suitable fund that maximises returns and; for wills to be up to date.

Amanda’s advice to anyone going through a similar situation is to remain focused on the goal and be confident that you can climb back out of the hole.

“You’ve just got to be bloody-minded about it and realise that the only person you can truly count on is yourself, so the buck literally has to stop with you,” she said.

“If you don’t think you can do it, just have a crack — set up an online savings account and put $50 a week or a month into it.

“It’s a slow drip effect where it really does build up over time and suddenly you find you’ve got money behind you.”

Ms Hartnett says taking ownership of personal financial affairs remains the wisest investment anyone can make.

“One of the takeaways for all of us who are in partnerships, is for us to be actively involved and having conversations about where the money is going — take an active interest in that,” she said.

* Real name has not been used for privacy.