Gambling addiction can potentially be a huge financial burden for families. (ABC News: Mark Slade)
Gambling addiction can have catastrophic consequences, for not only the person in the grip of it but their families and loved ones as well.
Apart from the emotional cost for all involved, there is often also a huge financial burden to contend with once the extent of the problem has come to light.
As part of the ABC’s personal finance project we’ve investigated the impact of gambling addiction and how you can rebuild following a financial wipeout.
Amanda didn’t take an active role in managing finances
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.
His work in the military meant they needed to establish themselves as a de facto couple, so she could access benefits like subsidised rent payments, when his work required him to be away from their home.
“Initially we had separate bank accounts and then when we were applying for the de facto status, we merged our money, credit cards and everything,” she said.
Amanda admits she did not take an active role in managing the household finances.
“Back then there was no banking app or anything, so you waited until the statement came in the mail and because he was always home before me, he got hold of the statements before I could ever see them,” she said.
It started it off with weird phone calls and visits
Amanda said she was naive for believing her partner’s explanation of why their account balance was so low. (ABC News: Mark Slade)
At the time, Amanda was working in an administrative role in the resources sector during the day, while also holding down a hospitality job on some nights and weekends.
A couple of years into their relationship, her partner took up an opportunity to spend six months working overseas in a prestigious role that would help boost his career prospects.
But, while he was away, some strange things started happening.
“I got a weird phone call from somebody looking for him and they wouldn’t give me any details about who they were,” she said.
“And then I had somebody quite fierce-looking come to the house, trying to track him down, and they also wouldn’t tell me anything.
“When I would tell him about these strange calls and visits, he made out that he had no idea what it was about.
“But it turned out these people were debt collectors.”
Her partner was reluctant to address their money problems
While he was away, Amanda opened a bank statement, and was shocked to see how low their account balances were.
“This is how naive I was — he told me that it was because he was still being paid in Australian dollars, but purchasing things in English pounds, and the exchange rate was a killer.”
Amanda said her ex-partner was reluctant to address their money problems. (ABC News: Mark Slade)
Around that time Amanda realised there were cash advances being taken on their credit card.
“I went to pay for something and it was declined so I physically had to go into a bank and they told me I was overdrawn on the credit card and was being charged a 24 per cent interest rate, and honestly, I didn’t even know what that meant.”
Amanda says when her partner came home from his overseas posting, he was reluctant to address their money problems, but assured her things would improve.
She was still working two jobs and says her partner would regularly go out with his friends for company, in the afternoons and evenings.
It was when some of those friends were joking about how he would always end up on the poker machines at the pub or RSL, that the penny dropped for Amanda.
“I have thought about this so many times, but I really think when we would go to the pub together, and he’d put $20 through the pokies, he must’ve been working really hard to hold himself in check while he was with me, and just let himself loose when he wasn’t,” she said.
“I think that’s how he got away with it for so long … it was just a slow erosion of trust and I just honestly felt so stupid for not seeing it.”
‘I had a credit card debt of about $6,000’
Financial counsellor Kristen Hartnett, who is a regional manager of the Salvation Army’s Moneycare program in northern NSW, says Amanda’s reaction is not unusual.
“You can’t see it and it’s not always easy to find because the person with the addiction will do all they can to hide it and they’ll do that very well,” she said.
“They often have good intent to get that money back without their loved ones noticing, so they will work very hard to conceal the addiction.”
Amanda said she had to attend counselling sessions, to try to work out a financial resolution. (ABC News: Mark Slade)
Amanda and her ex split up in 2001 and she estimates about $40,000 was unaccounted for over the course of the six-year relationship.
She says the military had a role in their official separation, requiring the couple to attend counselling sessions, to try to work out a resolution to their personal and financial woes.
“I can remember we were outside a Relationships Australia office after a particularly bad mediation session, and I said to him ‘I hate you for what you’ve done to me, you have set me back so much and now I don’t trust anybody,'” she said.
“I was on the bones of my arse — I had a credit card debt of about $6,000,” she said.
“I was getting paid about $27,000 a year and I remember thinking to myself — ‘I don’t want to be in my 60s or even my 40s living like this.'”
Steps to take when rebuilding after a financial wipe-out
Ms Hartnett says the best thing for anyone in a similar situation to Amanda is to speak up.
“There are free services, such as financial counsellors to go and have a chat to and all it will cost you is your time,” she said.
“We also know that conversations help — so if there is still any money owing to banks, electricity companies, etcetera, it’s trying to work out a realistic plan with them.
“Ring and ask for the hardship department in any of those organisations and discuss your repayment options,” she said.
Ms Hartnett says there can often be a great deal of shame or embarrassment in seeking help, but the Salvation Army offers unconditional support in helping people get back on their feet.
Ms Hartnett recommends seeking help and advice from financial counsellors. (Pexels: @rawpixel.com)
“We would sit down and work through the skillset they’ve got and if they are re-entering the work force, there are programs to assist with that process,” she said.
“Sometimes people have fabulous employers that will work with them as well and then it’s getting on and just taking one small step at a time, practising gratitude for all the things they do have, whether that’s a supportive family or friends, their health.”
Amanda sold her car and moved into a share house
After the break-up, Amanda moved in with a friend in Brisbane’s inner-west. While walking home from work one afternoon, she went into a bank to see if anyone could help.
“There was a person there who took pity on me after hearing my story, and told me that I needed to be really hard and just budget and work it out,” she said.
“He asked what my assets were and I told him I had a car and he told me to sell it.
“He asked me how much rent I was paying and he said it was too much money and I should move.
“He kept going through everything and told me to just get rid of everything I possibly could and start again.”
Amanda did sell her car and also moved into a share house, paying $50 per week for her room.
“I took lunch to work every day and if friends asked me to come out to dinner, I would tell them I was busy but could meet them out after they’d eaten, to save the money.”
She also returned to working a second job in the hospitality industry to boost her income.
“I just kind of had some goals and my first was that I wanted $10,000 in my bank and I knew once I had a good track record of saving and had stayed in my job for a decent amount of time, I might be able to think about a home loan,” she said.
“I remember my parents were visiting at one point and we went into an art gallery, which had a Brett Whiteley painting on the wall for $10,000, and I said ‘well I can buy that — I’ve got $10,000 in the bank!’
“And my Dad said to me ‘love, you don’t have a bloody wall to hang it on!'”
With some money behind her, Amanda bought a house
That 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.
This article contains general information only. It should not be relied on as finance advice. You should obtain specific, independent professional advice from a registered financial planner in relation to your particular circumstances and issues.
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