Breakups don't just end relationships, they force decisions, big ones, and a lot of them can be financial, especially if you're in that crunchy time of life, your 40s or 50s, when a long term relationship ends, that you probably made serious financial decisions.

Around now you're getting much closer to retirement but have to ask questions like what to do with the house and how you can rebuild QuickSmart.

And that housing decision is enormous for both lifestyle and money.

Your security, cash flow and whether your money will actually support the life you want in the years ahead.

So whether you buy the X out, downsize or find a different solution entirely, the pressure is on.

Well, welcome to Ask the Experts where each week people working in the money world answer your questions to get the answers you need.

Right now, Making Sense is proudly supported by Heartland Bank, a New Zealand bank here to help you make the most of your money.

In the hot seat, Will White, Heartland Bank.

Welcome back.

Are you ready for the letter?

Sure.

I'm Francis.

All right, here we go.

Kia ora Frances.

I'm 49.

My 10 year relationship has ended and I'm stuck on whether to sell the house and split things with my ex partner or, or whether I should buy them out.

If I buy them out, I can do it, but it will be tight.

If I don't buy them out, I won't be able to afford to buy a property like the one we own currently.

Together it's a three bedroom house and a large section and we have two dogs.

I will just be able to afford a two bedroom duplex with no section.

Ideally I would rather not have flatmates as I have a demanding job.

I'm an introvert, so having my home be a space where I can decompress at the end of the day is important for my wellbeing.

Honestly, I can't see myself making small talk with a flatmate after a tough day.

But also maybe it's something I should give some serious thought to.

So what is the better financial decision?

Buy them out, Sell and rent or sell and buy?

Is there another financial decision that I haven't thought about?

Thanks for any advice you can give me.

So a lot there, a lot there.

Starting over in that sort of later life stage, the 40s and 50s, I feel like there's a little bit of a time crunch happening there.

Right.

So what do you think are the financial considerations that need to be weighing up in this moment?

The most immediate one is probably the property decision because I assume that's on a bit of a time stamp.

You've got to decide one way or the other what you want to do.

You know, fellow introvert here.

Yeah, I don't want to live with a housemate in my 40s or 50s either.

So absolutely get where you're coming from.

From that perspective also, how is the relationship between you and your ex?

Is this going to be a transaction that can be done relatively easily or are we all lawyered up on both sides?

How much stress and pressure do you want to go through?

Even if it is financially possible?

Do you want that emotional toll or is it better to part ways and go and do something else?

Only you can answer that question.

If it's tight to do the transaction today and find the money each month in order to pay the mortgage, what does tight look like when interest rates look different?

So if interest rates were to go up over the next couple of years, what does that mean to your monthly budget?

Have you considered that?

If you haven't, that's definitely something you need to consider.

The dogs is not mentioned, but are you keeping both of the dogs?

Where are the pets going?

Because again, that will play into your decision around a house and the space that you need.

So they're all the things that you probably need to give some consideration to.

Yeah.

And I think that the house is such an important consideration.

Right.

Because it's both the financial and the lifestyle as you've pulled out there, I mean, especially in this later stage, getting closer to retirement.

How important is the house piece.

Piece of this?

It's very important because it's shelter.

You need somewhere to live again at this stage of life if you're going to be on your own, you know, for the foreseeable future, putting the pets to one side for a minute.

Do you need a house of that size?

Are you over stretching yourself for a size of a property that you actually don't need?

Is it comfort?

Is it you want to stay there because that's what you know people and you don't want the stress of having to go somewhere else.

Which is completely understandable by the way.

It's just a question you should probably pose to yourself.

Why is it that I do want to stay here as opposed to doing something else?

Yeah, I think that's actually as well.

The point you made there about comfort is a really good point.

I hadn't thought about this until as you said that, but I imagine with a 10 year relationship ending there would be a certain amount of pull towards decisions that keep some form of what you've known because that's turning your Life on its head.

Yeah.

When something as difficult as that's happened, what you can keep the same, you yearn to keep the same.

So if you can have the creature comforts of the home you've lived in for many, many years and you don't have to turn all that on its head, of course you want to do that, and that might be reason enough to determine you are going to stay where you are and you're going to try and make it work.

But also, if comfort is what's pulling you towards that decision, maybe it's time to get out of your comfort zone a little bit almost, you know, get off the dance floor into the balcony, right.

And actually assess yourself and go, what do I actually really need versus what I want?

Because they're two different things.

And just because you want it doesn't necessarily mean it's possible at this stage of life.

Now, of course, if you sell, you're out of the property market, so then what?

Buying back in, as you've alluded to, is going to be difficult.

You're going to get a lot less for your money than you've currently got today.

It doesn't matter if you're going to financially screw yourself in order to do it.

So if the budget's not been done, that's the place to start.

As I said.

Factor in what, you know, two rate increases might look like over next.

No one knows what's going to happen, but you've got to factor it in.

Got a factor in cpi.

So everything keeps going up.

Does your salary go up by the same amount?

The point around a tenant, I get that, but you know, Airbnb, you can potentially make some income and you're absolutely in charge around when you allow people to stay in your house.

So you don't have someone there all the time, but if there's a spare room you can get some income from, hey, that's something you should probably consider.

That's a really good point, actually, that you maybe don't have to have the permanent flatmate situation.

You can just have people at certain times and then you get the recharge the rest of the time.

But you've still got some extra money coming in.

Yeah.

And actually you'll earn more on a per night basis doing that than you would by having tenants.

And it's something I think a lot of people overlook.

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Okay, so let's run through the options again and just make sure that we've covered them off.

So she's identified to try and buy out the partner to sell and downsize, or to try and buy out the partner and maybe either rent out a room or, as you said, Airbnb a room.

That's.

That's really it in terms of weighing things up.

Right.

I think that's the immediate decision.

You've.

You've got to work out what to do.

And again, not knowing kind of what the standard of the communication between you and your ex is, you might be on a time crunch.

If you've got a bit more time, then take the time to make the decision that's right for you, I would say.

And I think the points that you've made about thinking about rates, insurance, if interest rates change, all of that stuff, if your income maybe will change, or that you don't want to, like, hinge everything on, I'll get a pair eyes and it'll all be fine.

But, you know, just.

Just factor these things in.

I think that's a really good point, because if.

If she's saying, you know, it'll be tight, but I think I can do it.

How tight can those margins get, do you think, before it's dangerous?

I mean, there's.

There's tight and then there's dangerous.

How do we know the line once

you've crossed is hard?

Because there's so many variables that will just creep up on you that you just weren't expecting, which is where the buffer becomes so important.

Now, what we're kind of hearing or inferring from the letter here is if I stay where I am, there is no buffer.

I will be nudging up against that every single month.

So it takes one car breakdown, one vet trip that was unexpected, and all of a sudden we're living on credit cards.

Short term, that's okay as long as you've got a plan to pay them off.

You don't want to be at the point of not being able to live your life simply because you made a decision to stay in a place that has an emotional connection to you.

If you can't afford it, if you think there is an opportunity there to find A way to make it work.

And you would prefer to stay.

Stay.

But don't do it at the expense of your overall well being because you're going to be going home to a house every night that you're stressed to the max about keeping and all that emotional stability you wanted by staying in the house will have evaporated.

So you have got to look at this quiet, coldly and then apply logic to it and go, okay, what do I, what do I want versus what do I need?

And probably the truth of those two things is in the middle there somewhere.

Yeah.

Okay, so what financial trade offs do you think should be on the table versus off the table in this situation?

Well, it's a good question.

So everyone always has disposable spend that can always be cut back.

If you're kind of ruthless enough, the eating out, the subscriptions, you know, you can look at all that and make some conscious decisions.

But what I wouldn't be doing is things like, well, you know, I won't have insurance, right, because that's, that's a cost that I can't really afford a month.

If you're going to pay the mortgage every month, you need to protect the asset.

So really think about where can you cut back?

And then if you find yourself of a gap, that's maybe where the Airbnb conversation comes in.

You don't want tenants.

You clear on that?

You do your budget and you have a, you know, several hundred dollar a month shortfall.

Well, you know, what's that on Airbnb in terms of income?

Is it, is it two, six, nine nights a month that you might need to do with some consistency and all of a sudden you can cover your gap.

Well then you've just solved your problem.

Yeah, love it.

Maybe find a flatmate who's a flight attendant or something.

Exactly.

Right.

Yeah.

Someone's there two days a month.

Yeah, pays for.

Right.

I love the sideways thinking that we need.

Thank you so much.

Will White, Heartland Bank.

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