Few couples enter a marriage free of debt. Whether it’s student loans for those in their 20s or an upside-down mortgage for those beyond 40, you simply must disclose these things before tying the knot. Being open and honest about debt won’t derail an engagement or spoil the romance; rather, it will likely prevent a nasty surprise down the line. Best of all, this kind of honesty can strengthen a couple’s determination to support one another as long as they both shall live.
The average credit card debt in U.S. households with any credit debt exceeds $15,000, according to Nerd Wallet. Most people don’t get into credit card debt because they purchased fancy cars or went on amazing vacations. Investopedia reports the top five reasons for serious debt:
- Medical expenses
- Job loss
- Poor or excess use of credit
- Divorce or other household separation
- Unexpected expenses, particularly property losses due to natural events
Number 3 is a big one, and one that many people with a sudden income loss turn to just to get by. If you’re intended has had an extended period of unemployment or underemployment, don’t be shocked that s/he has credit card debt.
Talk About Debt Calmly
For most couples, debt can be managed and even eliminated in just a few years. But this effort could test your compatibility, and it will require restraint from both of you when it comes to spending and judging one another’s decisions. Agree on some ground rules:
- Be respectful
- Listen actively and don’t interrupt
- Use “I” sentences, such as “I am concerned about X” rather than “You did Y!”
- Don’t make assumptions; ask for facts
- Approach this like a researcher to better understand why the debt occurred
Examine how the debt snowballed. There may be an underlying problem, like emotional spending or a gambling addiction that will require in-depth counseling.
A Partner’s Debt Is Not Your Responsibility
Spouses are not held responsible for debts owed by partners before marriage. However, common-property states do hold couples liable for debt accumulated during a marriage.
If you are the partner with the debt, don’t assume that your spouse-to-be should help you pay it off. It’s his or her decision to make. Take responsibility for your own debt, even if it happened as a result of a layoff, medical event or because you had to pay your way through college.
Start Paying It Down
Think about what assets you can liquidate to pay down your existing debt. It may serve you better to sell any stocks or bonds you hold and pay off high-interest loans. If you receive regular payments from an annuity, consider selling your future payments to a company such as J.G. Wentworth for a lump sum of cash. You could use this money to help reduce your debt.
Most financial experts advise working on paying down the highest interest loan or card first. Making a substantial payment can bolster a request to lower a high interest rate, too. If you have student loans, consolidating them can result in a lower overall interest rate. The Department of Education has more information on consolidating loans.
Don’t hesitate to consult a debt consolidation expert for help. And if you feel comfortable settling credit card debt on your own, keep these near-universal recommendations in mind:
- Pay more than the minimum amount each month on credit cards
- Pay down the card with the highest interest rate first
Finally, make a budget you both agree on and stick to it.