Are you guilty of financial infidelity?

Kartik Khot*, a 28-year-old married employee of a brokerage firm, had come to me to seek advice on how he could possibly overcome an outstanding debt of Rs 7 lakh.

Before coming to me Kartik had tapped and exhausted all sources of borrowing: banks, overdraft on credit cards, loan from friends.

Despite his best efforts the debt pile went on spiralling. Finally, he decided to seek financial counselling and on their advice paid his outstanding debt with help from his wife.

In this case Kartik had unwittingly committed financial infidelity. For, his wife of two years, Gauri*, had no inkling that her husband's finances were in a mess.

Click NEXT to read how it all began for Kartik.

* Names changed on request to protect privacy

The author is a certified financial planner. She can be reached at dhanplanner@rediffmail.com

Soon after completing his masters in economics from Mumbai University Kartik got an impressive job offer from a Mumbai-based brokerage firm as an economist. After a year into his job he began speculating in the stock market.

Nothing wrong with that except he took personal loan from a bank and began betting big in search of huge profits.

"A lot of my colleagues at this brokerage house were doing it: trading in stocks, commodities and futures & options. The money some of them were making was too big to ignore," he confided in me.

Unfortunately, his bets misfired and he ended up borrowing more money on his credit cards and friends to make good his losses and repaying his personal loan's monthly installments.

Now as he had incurred huge losses on both fronts, he would borrow from one friend and pay the bank. Then borrow from another friend and pay the first friend. Like a Ponzi scheme that busts one day Kartik's underhand deals too surfaced one day.

Unfortunately, by the time this happened the vicious cycle of borrowing from one entity to pay others, his total debt had snowballed to Rs 7 lakh.

To make matters worse, Kartik would never discuss financial issues with his wife Gauri. She was completely ignorant about these happenings.

The problem came to light only when Kartik's friends sensed that there was some problem and decided to confront him. After understanding the situation his friend decided to involve Kartik's family.

Kartik was guilty of financial infidelity?

He kept his wife in the dark about his mounting debt. He reasoned that he wanted to keep his wife away from his worries. Interestingly, this seemed like a mistake bigger than borrowing money secretly to pay off his debts.

Gauri says she would have made sure that her husband would not have run such huge amount of debts had she know about his stock market losses.

"I would have sold off my gold and other jewellery to pay off his debt but I had no knowledge of what was happening behind my back," she said.

Fortunately, even after their marriage teetering on the edge of separation for a while because Kartik's financial infidelity, the couple has successfully repaid the debt with help from Gauri's parents and Gauri herself disposing off her gold jewellery.

"Thankfully, gold prices were touching the sky every other day and I could resort to the jewellery my parents gave me on my marriage," says a relaxed Gauri now that Kartik's debt is behind their back now.

"The fact that we don't have a kid now also helped," Gauri says.

However, not everybody's so lucky.

Friends of Yamish Bhatt* could still not believe that the former died of a heart attack at the age of 35 this June.

A self-employed businessman engaged in trading cotton textiles Yamish collapsed after coming home mid June. His wife Nidhi* and 12-year old son Haresh* rushed him to a nearby hospital where he breathed his last a few hours later.

He had suffered acute myocardial infarction, a medical term commonly used to describe heart attacks, the doctor who attended to Yamish told Nidhi.

With no family support, unlike the Khots, the tragic incident has left the family at the mercy of gods and rude collectors now.

Sometime in July Nidhi started receiving phone calls from a couple of banks with regards to repayment of Yamish's credit card dues.

Apparently, her husband had run an overdraft on his eight credit cards to the tune of Rs 6 lakh. Like Kartik, Yamish too would pay off one card by borrowing on the other and so forth finally getting mired into a debt trap and the consequent stress.

I wonder how he could own eight credit cards. He was self-employed with erratic monthly earnings. It seems the banks were only too willing to issue credit cards to him," said a forlorn Nidhi, who I happen to be my relative.

When she skimmed through her husband's various credit card statements Nidhi found out he would make a minimum payment required by the bank from the other card and carry forward the loan amount.

Despite Nidhi's repeated pleas and submitting her husband's death certificate, she still receives phone calls from the banks that issued credit cards for repayment. She feels that had Yamish confided in her, she would have kept tabs on the cards he had and could have stopped him from running such a huge bill.

Alas!

While these are just few of the examples I have encountered, I am sure many of you might have a similar story to tell about your friends or family or even self.

These examples can go on. But the fact remains that very few couples/partners discuss monetary issues or maintain transparency in money matters. It is especially true for individuals who have businesses and do not discuss financial matters with their spouses/partners, sometimes with tragic consequences as Nidhi can vouch.

Apart from what you have read here, financial infidelity also includes splurging or unnecessary shopping or even not discussing day-to-day financial matters with your spouse/partner.

Many times if one of the spouse/partner or a family member is spendthrift, the other spouse or family member will not disclose the exact financial status. This can eventually lead to fights and problems in the family at times leading to divorce.

In simple terms financial infidelity can be termed as financial secrets that individuals keep away from their better halves/partners. Be it mounting debt or splurging or overdraft on credit cards.

No one would want to be in Nidhi's or Gauri's shoes. Not only does the debt become big if you follow what Kartik and Yamish did but it also leads to problem in meeting day-to-day expenses.

In fact discussing these problems with family members always help.

If you are getting sucked into a debt trap then the best way is to inform your family. Together you can always find ways to solve the problem. Aren't two heads better than one?

There are ways to tackle such problems and discussing with the family member or spouse is the hardest as well as easiest way out of the problem.

In most scenario individuals do not like to discuss financial matters with their better half. This can lead to not only failure to tackle financial problems in real time, but also emotional trauma in case of untimely death or illness of an earning member of a family when the other half has no clue about the investments and insurance policies of that member.

How to know if you are guilty of financial infidelity.

Listed below is a checklist.

If you fall under any of the category then you know you are guilty of financial infidelity and should strive to solve it at the earliest:

• You don't discuss finances with your spouse/partner
• You are a compulsive gambler or indulge in speculative investments without the consent of your spouse/partner
• You own numerous credit cards about which the spouse/partner does not know
• Your spouse/partner does not know about the number of bank accounts you have
• You cover up losses by borrowing or not informing about losses just so that you do not get the 'I told you so' look
• You splurge and don't informing your spouse/partner while the spouse/partner is working hard to meet the goals you have set together

The list can go on, but the above-mentioned pointers can just about help you to check your financial loyalty towards your spouse/partner. Even if you tick on one of these then you know you are guilty and need to rectify the problem as soon as possible.

Transparency in any kind of relationship is very important. Admitting your guilt is never easy but when it comes to money you will reap maximum returns by being transparent and true to yourself and your partner.