Is it worth it to create joint finances?

How to explain ERE, arranging family matters
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Olaz
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Is it worth it to create joint finances?

Post by Olaz » Thu Jan 05, 2017 12:26 am

is it? I can see having a larger tax deductible as a married couple being useful, but that's hardly a useful enough incentive for me.

I'd want my partner(s) to be able to stand on their own financial feet rather than one of us paying for the other(s) in a joint account (no child rearing is involved here). This is especially important should a separation occur, because then both/all parties can use their own money to relocate and meet their needs, individually.

I've seen couples divorce with joint finances and a mortgage where only one person had an income, and (eek) lawyers have to get involved to solve the money disputes. Too complicated, too de-skilled.

I could see setting up a small joint account for toilet paper, food ingredients, and other small items to be convinient.

Non-marriage life partnership can also have its benefits in that the process (communication skills) of setting up "life" partnership norms are more on the couple rather than the institution of marriage and prevailing cultural norms around marriage. Furthermore, although being married does provide legal benefits in legal matters such as estate planning, many of these benefits can be had by creating a living will.

Thoughts on joint-finances and different ways to arrange life (long-term) partnership?

James_0011
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Re: Is it worth it to create joint finances?

Post by James_0011 » Thu Jan 05, 2017 5:26 am

I wouldn't do it, if you get divorced joint finances sound like a huge headache.

By if you get divorced, I mean when you get divorced. Statistically most marriages won't hold up.

wood
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Re: Is it worth it to create joint finances?

Post by wood » Thu Jan 05, 2017 6:28 am

I've been thinking alot about this lately, because me and wife are considering moving apart.

We have a prenup, because we married, because being married is the only way of being in the same country without visa stress.
The reason for prenup is because we both believe prenup should have been the norm, and the way divorces play out financially around here, it makes no sense not having a prenup.

For money its quite easy. We have a small joint account like you describe, but we don't really need it. We spend very little on food/household items, so simply taking turns in paying would be fair enough.

Now for arranging life partnerships. We both believe we will have a close relationship until death. We are nothing like the traditional married couple. We have a (semi) open relationship, we allow for partners on the side in the form of approved (by the other spouse) serial side partnerships (not many at once because of STD risk and potential drama). This still poses practical challenges sometimes. For instance, I was recently involved with someone I could only realistically meet had I invited her to my home. But since me and wife live together, and we have certain regulations like not to bring side partners to our home because of said potential drama and wanting to keep our own privacy as a couple, I'm not able to see this person currently. Wife has had the same issue in the past. So we have decided to move out and live separately. It will be kinda like dating boyfriend/girlfriend again where we live in 5 min walking distance from each other, but apart from the financial downside of moving apart I don't really see any other downsides. We will still see each other alot, spend quality time together and also get more sovereignity, space and privacy in our individual lives. It seems like a nice balance. I'm quite excited about the arrangement, but I won't be surprised if we decide to move back together again in the future.

For all intents and purposes, keeping separate finances avoids alot of potential drama down the road.

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vexed87
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Re: Is it worth it to create joint finances?

Post by vexed87 » Thu Jan 05, 2017 7:41 am

DW and I have a shared savings account for a house deposit. Otherwise, we divide up the household bills reasonably equally and operate out of our separate accounts. Who knows if it's fairer this way, or another, but it works for us.

James_0011
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Re: Is it worth it to create joint finances?

Post by James_0011 » Thu Jan 05, 2017 8:20 am

@wood, sounds like a great plan + a healthy relationship seriously. Probably more marriages would last if people were as opened minded, honest, and practical as you two

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Dragline
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Re: Is it worth it to create joint finances?

Post by Dragline » Thu Jan 05, 2017 8:29 am

@OP For you at your stage of life, the answer is "no." That may change if you acquire a lot of assets, get married (that's a binding legal contract, son), have kids and/or have other "complications".

As you surmise, the only real legal benefit to joint ownership of an account or any other property is that if one person dies, the other automatically gets the whole thing without having to lift a legal finger, so long as the arrangement is set up "with right of survivorship". You can always set up some assets/accounts with this feature and maintain separate accounts for other things, though.

BTW, a "living will", which should really be called an "advance directive", has almost nothing to do with estate planning or distribution of assets -- its about medical treatment for an incapacitated person who is usually near death. Look it up.

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Ego
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Re: Is it worth it to create joint finances?

Post by Ego » Thu Jan 05, 2017 9:34 am

Here at ERE central we worship at the alter of independence. It is good to be independent. But once we as individuals reach the point where we can stand firmly on our own two feet, that independence should be used as the stepping stone to something greater.

The world is an interdependent place. It is the nature of our reality as a species. Most everything we do requires collaborating and working together with others. The great things we accomplish are done in tandem, groups, many.

People who think of themselves as independent can fall in love with their personal narrative of independence and become the story they tell themselves. They begin to see the world as zero-sum. They fail to see that two interdependent people can experience power-law results from synergy.

This is not limited to marriage. See: viewtopic.php?t=8371

If you decide to link yourself to one person in this world then be sure to choose that person wisely. Once chosen, go all in. Give it everything you've got. That way they will be inclined to do the same.

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Dragline
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Re: Is it worth it to create joint finances?

Post by Dragline » Thu Jan 05, 2017 10:20 am

Ego wrote: If you decide to link yourself to one person in this world then be sure to choose that person wisely. Once chosen, go all in. Give it everything you've got. That way they will be inclined to do the same.
+1

Although in the back of my mind I keeping hear the words "Choose and perish!" from Ghostbusters: https://www.youtube.com/watch?v=3Ctgn7kKYHo :lol:

Scott 2
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Re: Is it worth it to create joint finances?

Post by Scott 2 » Thu Jan 05, 2017 10:52 am

Outside of marriage, no, absolutely not. Agree on who buys what, do not mingle finances.

+1 to draglines comment on a marriage being a legal binding contract. As much as society romanticises getting married, this is what it really is. In my opinion, a prenup is a must, in that you don't want the state setting the terms of your contract.

I think there needs to be a benefit to both parties upon entering the contract. In other words, you are negotiating terms. Joint finances is one of the elements of those terms. They benefit one party more than the other. Understand the trade-off, negotiate. It won't be fun.

An interesting story on the impact of keeping the government out of your relationship. I know a woman who did not get married, but lived with her partner from early twenties on, having three kids. Close to age forty, she decides she can't handle his dumb choices anymore...

Turns out she was the higher earner, and had bought the house in her name. It was as simple as "get out of my house", and he was gone.

Marriage would have protected him, but would have hurt her. She is in a much better position due to their choice to keep everything separate.

7Wannabe5
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Re: Is it worth it to create joint finances?

Post by 7Wannabe5 » Thu Jan 05, 2017 11:23 am

I am pretty much in agreement with Ego. If you don't intend to share in equity growth moving forward and most important aspects of decision-making then you may want to consider a form of relationship other than marriage. The keep accounts separate and chip in 50/50 for everything model is actually best fitted to a completely careerist/consumerist lifestyle where both partners have independent sources of income outside of the home/relationship and everything of value that is consumed in the household or retained by the household is produced outside of the household. If either or both of you engage in any sort of production within the home/relationship then the complexity will demand constant negotiation of transfer of funds if you aren't engaged in amiable joint equity venture. Also, there may come a day when you wish to straight-forwardly enter into a relationship that will be separate-but-unequal in terms of finances, which will open up another layer of complexity.

I fairly frequently hear complaints, mostly from men, that a divorce settlement wasn't fair because he earned more money during the course of the marriage. My response, usually unvoiced, is something like "So, why didn't you insist that she make an effort to earn more money during the course of your relationship?" and "So, why did you enter into a contract without understanding its implications?" IOW, it almost always comes down to some combination of stupid and/or wimpy (or lack of willingness to cop to true terms of trade/partnership) when somebody whines about that sort of thing.

A man once told me "Any man who offers you a 50/50 relationship is trying to rip you off." His philosophical take was that the man ought to pony up more "leadership" (as opposed to more money) in exchange for the greater sexual value of a female on the open market. I'm not in anyway suggesting that the male-led relationship model is to be recommended, but there are infinite junctures in long-term relationships where decisions must be made, and often compromise or consensus is either impossible or less than ideal, so one partner is going to want to have the option to choose to take on more authority, cover more risk, or take a hit for the team, and a fixed-as-separate-and-equal relationship model will actually leave you both with fewer degrees of freedom, and a greater tendency towards drift to lowest common denominator. Simplest, common example I can come up with would be if one of you is offered a great opportunity for personal growth/profit in a different location. Being married under such terms is eventually going to be kind of like going on a date to the movie theater and then you both buy your own bags of popcorn and your own tickets for different movies. What's the point?

George the original one
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Re: Is it worth it to create joint finances?

Post by George the original one » Thu Jan 05, 2017 4:38 pm

James_0011 wrote:Statistically most marriages won't hold up.
For the USA:
41 percent of first marriages end in divorce.
60 percent of second marriages end in divorce.
73 percent of third marriages end in divorce.

This is why us older folks are saying be choosy, pick a good partner.

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Ego
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Re: Is it worth it to create joint finances?

Post by Ego » Thu Jan 05, 2017 5:33 pm

George the original one wrote:
James_0011 wrote:Statistically most marriages won't hold up.
For the USA:
41 percent of first marriages end in divorce.
60 percent of second marriages end in divorce.
73 percent of third marriages end in divorce.

This is why us older folks are saying be choosy, pick a good partner.
PDF http://crcw.princeton.edu/workingpapers/WP07-03-FF.pdf

Money Management and Union Dissolution in Marriage and Cohabitation

Explanations for why couples' money management might influence relationship stability can be divided into two categories. The first suggests that the use of certain money management systems itself leads couples to be more or less likely to break up. As Vogler (1998) argues, the money management system used "sets the agenda" for marital bargaining in ways that constrain the possible allocative outcomes. In other words, a dollar in the joint account might not mean the same thing as a dollar in his or her account, regardless of who initially earned the money. The second suggests that rather than being causal itself, couples' choice of money management system is a proxy for some underlying component of commitment, trust, or degree of mutuality as a couple that goes unobserved using conventional relationship measures. As Treas (1993) argues, couples may be choosing the common pot versus separate purses for their money as a deliberate strategy to minimize"transaction costs" within their relationship, given their level of joint investments and expected continuity. Regardless of the reason, however, knowing more about associations between couples' financial practices and union dissolution may prove valuable to researchers and policy makers alike.


and

... results presented here suggest a strong association between money management systems other than the "common pot" and divorce. Our results also show that the difference in money management practices between married and cohabiting couples can explain remaining differences in union dissolution between the two relationship statuses when the "usual suspect" factors have been controlled

Scott 2
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Re: Is it worth it to create joint finances?

Post by Scott 2 » Thu Jan 05, 2017 6:15 pm

I've been married for a little over ten years, with my wife for almost twenty years. We've always managed money in personal accounts, though we were too cheap to do the prenup.

I'm not sure we'd still be married if we'd had a shared pot. Both of us have issues around control, and having his and hers accounts, sidesteps a lot of them. We've avoided many more fights than we've created, I believe.

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Ego
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Re: Is it worth it to create joint finances?

Post by Ego » Thu Jan 05, 2017 6:49 pm

Twenty-three years of marriage for us.

A prenup is by definition preparation to fail. Whenever you lay the groundwork for something it becomes easier for that thing to happen.

Regarding joint accounts, we both consider it a good thing that we were not able to sidestep issues early in our marriage. The first 14 months we spent living together in a camper van in Europe. We only had a little bit of money and when it ran out we had to go home so there was no room to move let alone sidestep issues. :D We had to deal with them. At times it was hard. We were not able to avoid fights. We had to make it work, sink or swim. We learned to swim together.

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Re: Is it worth it to create joint finances?

Post by Scott 2 » Thu Jan 05, 2017 7:35 pm

14 months in a camper van with anyone sounds like torture to me. I'm not sure I'd last a week.

My wife and I both work from home. We're together most hours of the day. It's nice to have our own personal space too. We each have a spare room setup for our personal hobbies. We each pick out our own food at the grocery store. Heck, we each have a blanket in the bed.

Every day, we choose each other. We choose to share. It's not the default option, it's a deliberate choice. I think doing so makes us both more appreciative. It also addresses our personal quirks. I can be controlling or distant. She will run if she feels trapped, automatically do the opposite if bossed around.

The terms of the marriage need to consider the unique traits of the individuals.

A marriage without a prenup still has exit clauses as part of the contract, the involved parties are just ignorant to the terms.

It seems reasonable to me that burning the boat and charging ahead leads to a lower rate of divorce. I question if it leads to a better life. Probably, it varies based upon the individual circumstances of the marriage. I've certainly seen marriages ruled by fear of the unknown, which I absolutely would not want to be part of.

halfmoon
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Re: Is it worth it to create joint finances?

Post by halfmoon » Thu Jan 05, 2017 9:46 pm

This is such a subjective issue, as is obvious from the responses. I could never tell someone else that my own choices would work for them in the relationship arena.

My personal experience and philosophy, however, align with Ego's. DH and I will celebrate our 37th anniversary this year. We decided at the start to never consider splitting up, and taking that off the table allowed us to focus on a forward path together through a variety of difficult circumstances. Some of the hardest external challenges came in the early years, and it would frankly have been easier for me to walk away. I think of it as similar to having children, which is a lifetime emotional (and often financial) commitment.

We always shared money along with financial goals and values. We had the 1-year plan, the 5-year plan and the 10-year plan. We discussed our progress and strategy on a regular basis. I can't remember ever arguing because one of us wanted to spend money on something and the other didn't.

Not that we didn't argue...oh, did we argue! Just not about money. Ask me how I feel about DH leaning out from the raised front loader of a tractor with a chainsaw in hand and cutting large tree branches. As a friend of ours said about her husband: I never considered divorcing him. KILLING him is another matter. :lol:
Last edited by halfmoon on Thu Jan 05, 2017 10:00 pm, edited 1 time in total.

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Dragline
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Re: Is it worth it to create joint finances?

Post by Dragline » Thu Jan 05, 2017 9:59 pm

halfmoon wrote: Not that we didn't argue...oh, did we argue! Just not about money. Ask me how I feel about DH leaning out from the raised front loader of a tractor with a chainsaw in hand and cutting large tree branches. As a friend of our said about her husband: I never considered divorcing him. KILLING him is another matter. :lol:
Shhh -- DW might get ideas, except I don't think the insurance pays if she is responsible. Of course, she might ask your DH to employ his chainsaw "skills" . . . :lol:

halfmoon
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Re: Is it worth it to create joint finances?

Post by halfmoon » Thu Jan 05, 2017 10:43 pm

Dragline wrote:Shhh -- DW might get ideas, except I don't think the insurance pays if she is responsible. Of course, she might ask your DH to employ his chainsaw "skills" . . . :lol:
Not to worry unless your DW suggests buying a tractor. Or a chainsaw. Or...maybe you should just agree to whatever she wants. :shock:

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Dragline
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Re: Is it worth it to create joint finances?

Post by Dragline » Thu Jan 05, 2017 11:56 pm

halfmoon wrote:
Dragline wrote:Shhh -- DW might get ideas, except I don't think the insurance pays if she is responsible. Of course, she might ask your DH to employ his chainsaw "skills" . . . :lol:
Not to worry unless your DW suggests buying a tractor. Or a chainsaw. Or...maybe you should just agree to whatever she wants. :shock:
Well, that happened once. Per day. Or maybe per hour.

wood
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Re: Is it worth it to create joint finances?

Post by wood » Fri Jan 06, 2017 9:47 am

Ego wrote:A prenup is by definition preparation to fail.
Ego said, and divorced 14 months later without one.

Just kidding, but, I've seen way too many of these outcomes to feel comfortable without a prenup.

Should one do what feels right emotionally, or what seems right logically?

poleo
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Re: Is it worth it to create joint finances?

Post by poleo » Tue Jan 17, 2017 3:16 am

It seems like the general tone in the thread is that separate everything is the way to go, which to me is weird. For me, and in order to achieve full embodiment of the ERE philosophy, it doesn't stop at my relationship to a significant other.

ERE is to me about analysis of life and subsequent wise decision making for the individual person. I would claim it fallacious then, to limit such thinking to all one's pursuits, save romance - this also being a thing we as individuals do. Surely in order to have a romantic relationship to anyone, values must be shared?

Thus, a partner with whom one shares the ERE way of thinking, and importantly, life, is the "wise decision", or optimum one should aim for.

In addition, financial wisdom being a part of this lifestyle, the sharing of these values makes having joint finances a very good idea indeed. Two people focussed on the same kind of goals, are much more likely to succeed - for a number of reasons I would reckon. When the day comes to split the bill, reasonable people well seasoned in the ERE mindset surely will find a way to work things out?

To me it seems like some others in this thread perhaps take it for granted that such a thing is unattainable, or at least unrealistic, and therefore one must be pragmatic. I disagree, to the effect that I believe there's a strong likelihood of someone out there being a better match for you in your walk of life.

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Re: Is it worth it to create joint finances?

Post by saving-10-years » Tue Jan 17, 2017 5:10 am

DH and I have both separate accounts and joint accounts but we treat all the money as OURS. I don't think its so much where you keep it but how you treat it. If its small stuff that we are buying on an impulse (up to and including an occasional saxophone for DH or a spinning wheel for me, say £200 max*) then we would not necessarily consult beforehand although we'd let the other know what is happening. If its a planned purchase (rental property, car, etc) its treated as joint property and recorded/insured as such (jointly) even when one person funded it (e.g. from their pension fund or their bank account).

After 35 years together we do need to rethink this because its messy and a system that we understand but others may not (should they have to track our estate). Before we married things were messier (marriage assumes that it is all joint property which suited us). This is a very personal decision. If you are both on the ERE journey together then it will be easier than if one of you has a different plan. You obviously need to be able to trust each other with money. Joint finances should not be a surveillance method.

* We have a habit of buying these hobby things, using and then selling on for changes or upgrades, so this is not as non-ERE as it sounds.

wood
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Re: Is it worth it to create joint finances?

Post by wood » Tue Jan 17, 2017 5:52 am

Sure joint finances is a good idea and you are speaking from the offset of a wonderful & perfect relationship. Until you catch her cheating on you before she takes off with her affair partner.

saving-10-years
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Re: Is it worth it to create joint finances?

Post by saving-10-years » Tue Jan 17, 2017 8:33 am

@Wood (in this example does she take off with the money too?) I can't see that not having joint finances would have prevented this unless what you suggest is that she is taking off with your share of the money as well as her new partner? Certainly not suggesting that joint finances are a good idea if you don't know the person well or trust them. Also not meaning to sound smug.

If you have a partner who is of the same ERE mindset as you then it will probably follow that you will plan financially (and otherwise) and save together and have the same careful considered attitude towards those activities. Whether the finances come from two pots or one joint pot you should be agreeing on what gets spent and how much. If you are not on the same ERE page (or at least the same book) and there is no respect for a different point of view (on both sides) then I would be concerned about having joint finances with that person. I think of ERE as about lifestyle as well as spending habits here.

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Re: Is it worth it to create joint finances?

Post by 7Wannabe5 » Tue Jan 17, 2017 9:30 am

@wood: I think that those of you who are voting for strict division of finances are thinking that those of us who are voting for joint finances are being overly "romantic." It's not that. It has more to do with matching the financial functionality to the terms of the contract. Obviously, there are all sorts of different contracts one could enter into with a romantic/sexual/companionable/parenting/business/life partner. Because I have chosen to interact with men from different cultures and sub-cultures, in different phases of life and/or financial status, under different circumstances, it is likely that I have freely entered into (and exited out of :oops: ) a wider variety of contracts than most people, so my perspective is not limited to validation of my previous choices.

https://medium.com/@nntaleb/how-to-lega ... .66cd0c1ky

Taleb was also quoted somewhere on this forum as repeating the rule-of-thumb that goes something like "The three things you should always lease rather than buy all start with F. These are anything you fly, float or f*ck."

From the description of "Designer Relationships" by Michaels and Johnson.
http://tantrapm.com/wp-content/uploads/ ... elease.pdf
Non
-
monogamy is NOT the same as cheating.
Designer relationships are based on
egalitarianism and mutuality, not on
proprietary thinking. From this perspective,
if people decide
they will have multiple partners, the approach is the antithesis of cheating.In the conventionally
monogamous model, each party owns the other (a modern variation on the more antiquated view
of
woman as property).
In designer relationships,
each party
voluntarily owes the other
transparency, some measure of emotional loyalty, and a determination to abide by agreements. (bold mine)
I am not going to develop my argument at length, but I will note that it is based on my experience of the modern mating/dating/marriage market, and rational thought processes inclusive of theory suggested above, and other reading on the history of the mating/dating/marriage market. In short, the problem with the long-term monogamous egalitarian separate finances relationship model, whether it is a legal marriage with significant pre-nups and other safeguards put in place or a "forever live-in girlfriend" cluster of contracts is that it is often inherently unstable because the female party to the contract or set of contracts is getting a poor deal for what she is bringing to the relationship vs. what she could get on the open market. The reason this is not apparent to many men is that they are not acting in self-aware accordance with the reality that any contract puts two obligations upon both parties. The obligation to honor your end AND the obligation to enforce fulfillment of other end. IOW, the overt desire to not put any skin at risk in the game is usually indicative of a covert desire to avoid or evade the necessity to enforce fulfillment of contract. IOW, the desire to cling to the romantic delusion that another person will behave counter to their own self-interest because that is what they "should" do. In any circumstance in which you are confident about your ability to fulfill, enforce and revisit/renegotiate contract as needed, in alignment with your own self-interest, why wouldn't you choose to profit from continuing and expanding investment in joint enterprise?

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