How to Handle Debt in Marriage
Paying off debt is a team effort once you are married. If you and your partner have debt on your hands, sit down and honestly discuss how to deal with it together.
Whether you’re married or soon-to-be wed, make sure you’re on the same financial page with your other half. To start, set up a date to discuss the overall state of your finances. The topics of this conversation include:
- Full disclosure of any savings, investments and debts.
- The nitty-gritty of your debts: interest rates, minimum payments and balances remaining.
- Spending habits. Even if you have separate bank accounts, you should both track your individual and joint expenses. Backtrack a bit and reference prior statements to see where your money has been going.
- A budget plan. This keeps your spending on track. After you budget for your essentials, you know how much is left to pay down debts.
- Financial goals: buying a home, establishing an emergency fund or saving for a family.
- A plan to reach those goals – including paying off your debt. List out action steps to boost your income and cut expenses, such as picking up a side gig, working overtime and eliminating unnecessary costs.
After this initial meeting, check in with each other once per week or once per month to see how much progress you make. It’s OK if you can’t stick to an original plan, but you must be open about it.
Communication is key, and you should always be supportive of each other when you decide how you deal with debt. If both of you bring debt to the table, you can either tackle all of it together or pay your own debt off separately. If only one of you has debt, you may agree that the debtor holds the responsibility to repay it. Ultimately, this is a personal decision that every couple has to make for themselves.
If you have multiple debts, they may feel completely overwhelming. Before you panic, know that you can do this together. And there are strategies you can use to make it easier.
The first is known as the avalanche method. You prioritize your payments by interest rates. You work to pay off the debt with the highest interest rate first, while still paying the minimums on other debts. Mathematically, this makes the most sense. The interest rates on loans and credit cards cost you more the longer you hold on to them.
Another popular way, called the snowball method, is to start with the debt with the smallest balance and work your way up, regardless of interest rate. Some find it intimidating to try and tackle their biggest, baddest debt. If you are easily discouraged, starting small can keep you motivated by giving you a quick win. Although it may not be most financially efficient, what matters is that you don’t give up making progress.
Lastly, marriage is a partnership that both should contribute to – and it’s not limited to providing money. You share ideas and emotional support. While things might get tough, remember that you have the same goal. When all is said and done, you’ll have a stronger relationship.
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Mary Beth Storjohann, CFP, is the founder of Workable Wealth, an RIA in San Diego. She is a writer, speaker and financial coach who is passionate about working with individuals and couples in their 20s and 30s to help them organize and gain confidence in their financial lives. She has been quoted or featured in various industry publications on the local and national level. You can find her on Twitter at @marybstorj.
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