How to Survive Financial Betrayal
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If you’re old enough to read, then you’ve almost certainly been “had” financially once or twice.
Perhaps a “friend” borrowed money and didn’t pay it back. Instead, she “remembers” that it was a gift from the start — and tirelessly tries to convince you.
Or maybe your brother-in-law sold you mortgage life insurance — and you didn’t need it. You later found out that he pocketed a huge commission and he knew you didn’t need it from the start.
Beyond the financial losses, the emotional fallout can be catastrophic.
Those feelings can weigh so heavily on you that it becomes debilitating.
You simply freeze. You become unwilling to take further financial action or to trust other people.
I can understand why you might react this way, but it’s really no way to live. It feels terrible, and it will cost you big-time in terms of lost opportunities in the future.
So what is the solution?
My experience tells me there are five steps that you need to take to overcome financial betrayal.
1. Damage Control
If the financial betrayal is happening now, you have to stop the bleeding. If someone has taken advantage of you financially, don’t allow them to continue doing so. This may seem like a no-brainer, but sometimes we tell ourselves that if we only give the perpetrator another chance or a little more money, it will all work out.
This is like Charlie Brown trusting Lucy NOT to pull the football out from under him at the last minute — like she’s done every time she had the chance.
Are you Charlie? Who is Lucy? Are you going to give her yet another chance to fool you?
Don’t fall for it. Get out now.
2. Get Right-Sized
As I mentioned above, the emotional pain of being messed with can be more devastating than the financial losses involved. Part of untangling that emotional knot is to understand the true nature of the losses you’ve incurred.
Somebody sold you the wrong life insurance. Okay… But you can cancel it.
Your spouse “nuked” your budget. Fine… You can fix that.
I know this is going to sound terrible. But even if you lose your small business, can’t you open another?
If a “friend” wrecks your credit, you can rebuild it… Yes?
You can even survive bankruptcy.
It’s not cancer… Right?
Very few financial errors are fatal to your future. Keep that in mind.
Don’t blow the problem out of proportion. This will help you stay present and make adult decisions.
Of course, I’m not saying to minimize the problem. But, in most cases, the problem is the person in your life who has betrayed you — not the actual financial cost of the deception.
3. Draw Boundaries
You certainly don’t want to repeat what you’ve just gone through. And you don’t want to give the “perp” another opportunity to put you in this position again.
You don’t have to write this person out of your life completely (although if it’s your brother-in-law, you have my blessing if you do). But you do have to install safe boundaries around this person so you don’t get taken to the cleaners yet again.
If someone has demonstrated poor character, have no further financial dealings with them. Period.
This is easier if it’s a non-spouse. But if it’s your husband or wife, it’s a bit trickier.
If that’s the case, explain how this failure has impacted you financially and emotionally. You may even want to see a marriage counselor together because it’s a core issue. I say this because you can’t have a happy relationship with someone when you have resentment towards them and/or you don’t trust them.
What can you do to put in safeguards?
Take his credit cards away? Manage the budget and pay the bills yourself from now on? Cancel that whole life policy and buy term life insurance instead?
Whatever you have to do, do it. Protect yourself. You’ll be doing yourself and the other person a big favor by being honest about your feelings.
4. Check With Others
If you’re hurt, you should talk about it with people you are close to. Tell them what has happened and what you plan to do about it. This way, you’ll have an objective pair of eyeballs giving you feedback to make sure your response isn’t over the top.
5. Understand Who the Real Loser Is
When we get hosed, we often blame ourselves and label ourselves the loser. This is not correct or even helpful.
Do you need to make changes? Yes.
Do you need to be more careful around others? Maybe.
But the real loser is the person who took advantage of you. All you did was trust someone. They are the person who behaved despicably. You only have to make minor changes and re-affirm your boundaries. The other person has a lot of amends to make. They have to live with the person they are. Thankfully, you don’t.
Have you ever had to deal with financial betrayal? What happened? What did you do? What was the result?
Published on August 5th, 2010 - 7 Comments
Filed under: Miscellany
About the author: Neal Frankle is a Certified Financial Planner in Los Angeles whose goal is to help people improve their finances and find balance in life. He covers these topics at his personal blog Wealth Pilgrim.
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August 5th, 2010 at 9:36 am
#5 is particularly important. As my wife and I always like to say:
“Oh well, we had to deal with him for an hour (or whatever timeframe). He has to be that way for the rest of his life.”
August 5th, 2010 at 10:52 am
Yup, it’s true that financial Betrayal can be quite a blow since it hurts you emotionally and robs you of your money at the same time. I have seen my friend’s husband cheating her all the way, forging her signature and stealing her money. Does a marriage counselor help in such a situation? Well, I don’t know. However, I agree with Neal that if it’s a non-spouse then drawing boundaries and learning from your experience is the most reasonable thing to do.
August 6th, 2010 at 8:01 am
Unfortunately, every financial betrayal I’ve experienced has made me a little less generous and a little more wary with my money. In part, that’s a good thing, as I’m likely to view every transaction with more care. However, it also has the negative impact of making me less benevolent.
The whole “I’m only looking out for me” attitude is a virus of sorts. Someone uses my good will for their short-term gain, but overall I become less willing to donate, to lend, to assume people will be fair in their dealings.
It’s an expensive lesson to learn, but we all eventually do — and we’re all a little worse off for it.
August 7th, 2010 at 11:10 am
This is a very good post, and I’m glad you wrote about it. Since my wife and I pulled ourselves out of the debt hole and began saving, we have encountered many “financial betrayals.” At first we adopted Dave Ramsey’s rule of never lending to family and friends. His “Financial Slave” theory makes a load of sense, but at the same time we totally agree with what Leigh said in the first response to this post. One should be giving under the right conditions. For one, never lend any more money then you are willing to loose. My wife and I only know two people we trust absolutely to pay use back if we lend them money. Everyone else we seek other means of helping before we give money. If we do end up giving money its just that… they will walk out the door one morning to find an envelope with money in it from an unknown source. We have never regretted giving money to people that are in real need of it, and it seems giving is always replayed with a good feeling of satisfaction. Sort of like being selfless adds to ones self worth.
There’s money other ways we can be used and betrayed for someone else’s gain. Don’t be stupid, be rational, and think before you make decisions. NEVER CO-SIGN ON ANYTHING!
August 10th, 2010 at 8:22 am
That,s a great post i think Financial planning means something different to everyone. For some, it’s about getting by month to month on their paycheck, for others it’s about watching how their stock portfolio performs each day.
August 13th, 2010 at 7:07 pm
This exact thing happened to my husband when we were dating. He had just started making a good salary and his cousin had recently gotten a job as a financial planner. She sold him an “investment” of universal or whole life insurance.
It was a total racket. She made a huge commission and his money is tied up in a sinking ship. To add insult to injury, she left the company and my husband didn’t even find out until a new planner called him to say that she was no longer in charge of his account.
Needless to say, the trust in that relationship has been broken. My husband is still civil to his cousin at family events, but it doesn’t go farther than that. It’s a damn shame, it feels like she sold their 25 year family bond for the sake of a commission.
July 30th, 2011 at 11:26 pm
I was betrayed by my mother and step father 6 years ago over the course of 16 years they milked me for $1.7 million dollars. They “borrowed” then begged then stole most of my inheritance. I am not particularly great at anything and have subsequently moved to “the woods” to seek a quieter life where I am exposed to fewer people who may take advantage. People still do in my new line of work but it is minor (i.e. less than $1000/incident). I have never believed in a God, and been subjected to so much more betrayal than this with other “close” relatives and “friends”. I spent my youth globe trotting solo and subsequently have no roots, few friends, of whom I am nervous to trust or insult, and have no other family of occasion, consequence or within thousands of miles. I feel my values, such as they were, are lost too. I have no passion left for anything. My marriage is on the rocks and I have a young child for whom I offer little inspiration, have little time for as I have a very public, home based business with little ability to afford staff that demands my attention 12hrs a day most EVERY day and ALL weekends and ALL holidays and well into the night unless I shut it down which is difficult to swallow considering my debt load and cash flow. I enjoy my work but does anybody have any ideas how can I rekindle myself when absolutely NOTHING interests me?