Bringing Debt Into A Marriage

If you’re planning a trip down the aisle in the near future, there’s no time like the present to take a few moments to consider the way finances and spending will fit into your new life. Debt is one of the leading causes of marital strife and is at the root of many issues that eventually lead couples to divorce.

No one will advise you to start married life with a lot of debt, but many couples do just that. Often the combination of his-and-hers debt service can overwhelm the combined earning power of the couple, who may also be trying to purchase a new home or start a family.

Many young couples make the mistake of counting on future earnings to soften the blow of debts they accumulate at the beginning of their marriage. “When John gets this promotion…” or “When I finish my Master’s Degree…” isn’t exactly wishful thinking, but it also doesn’t justify the adoption of a more expensive lifestyle before these milestones are reached.

Certain debts, like student loans, can put a great deal of stress on monthly finances. These debts aren’t dischargeable in bankruptcy and enjoy special legal protections. There are few ways to eliminate student loan debts other than paying the loans back.

When you’ve just entered the workforce, it’s easy to believe that you can afford a $485/month car payment. Your $5,820 annual car expense will morph into a $9,000 annual expense when you take into consideration the cost of insurance, gas and maintenance.

You may also enter the workforce having accumulated a few thousand dollars worth of credit card debts in college. This debt service may produce a required minimum payment of $150-$200 each month, but payments of those minimums won’t allow you to decrease the debt much, if at all.

These seemingly small payments add up fast, and create ongoing problems for newly married couples. Before you marry, take stock of your current debts and explain them to your partner. Work out a monthly budget together that will cover all of your obligations. Determine what your plan of attack will be to reduce or eliminate debts, and figure out how you will handle new expenses in the future.

Write down the plan and review it annually. Tax time is as good as any, and a written plan will help you determine how to spend any refunds you may get, or how to apportion any taxes you may owe. Once you get your debts under control, spend some time with financial planners to help you and your spouse build a more solid financial foundation that will help you through tough times ahead.

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