Financial Affairs

What to do when you marry someone in debt

Getting married means combining many aspects of your financial life, even if you decide to try and maintain separate accounts. So if your current or future spouse has a lot of debt, this will inevitably impact you too.

Debt can add stress to a relationship and make money conflicts much more likely, so it’s important to deal with the issue as soon as possible. You and your loved one need to be on the same page, and you need a plan for how you’re going to tackle debt. Here are some tips to help you make that plan.

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Discuss how debt will affect your financial goals

When a partner is in debt, it can affect all aspects of your joint financial life. For example, you may not be able to buy a house as soon as you planned because your partner’s debt ratio will be too high thanks to loan repayments. Or you might not have as much money to spend on other goals, like saving for retirement or starting a family, because the money has to be used to service the debt.

It’s important to understand what many debts can mean to you and to set realistic goals together in light of the financial situation you find yourself in. You also need to determine if paying off debt will be a primary goal that you are trying to accomplish as soon as possible or if you will be living with debt for decades.

Decide how you are going to handle the reimbursement – separately or together

If you are fully combining finances, paying down the debt will obviously have to be a common goal that you are working on together. But if you maintain separate bank accounts, you will need to decide whether the money for the debt payment will come only from your spouse’s paychecks or whether you will both work to pay it off.

There are obvious benefits to joining forces and spending as much money as possible on debt, especially if it’s high interest debt like credit card debt. After all, if two people are working to pay it off, you can make larger monthly payments and actually speed up your debt repayment schedule.

On the flip side, if you’re hoping to maintain separate accounts so that everyone can have the financial freedom to do whatever they want with a lot of your money, you might not want a lot of your money. available go to your spouse’s debt. If so, make sure you both agree that the debt will be borne by the spouse who acquired it.

Anticipate how future life events, such as having children, might affect your payment plan

While you may have big plans for your spouse to pay off their debts just on their account, or think you can get out of debt in a few years, the reality is that sometimes life gets in the way.

You need to consider how the big changes you anticipate might affect your payment plans – and you need to talk about unexpected surprises, too. For example, if you have separate accounts and your spouse is paying off their own debt, what if they lose their job or decide to become a stay-at-home dad? Would you like to participate?

You need to be on the same page about how you are going to plan for contingencies and adjust to life changes while making sure the debt is paid.

Make and live on a budget that takes into account your partner’s debts

Whether you have shared or separate accounts, you need to make sure that you can afford your lifestyle while still working to pay off the debt. This can be especially important if you plan to keep separate bank accounts. After all, how is it going to work if one spouse can afford a vacation or pay the rent for a nicer apartment and the other can’t because all of their money is used to pay off loans? ?

Sit down and figure out what you will spend, what you will save, and what you will spend on debt and make sure the budget is realistic and enjoyable for both of you. This will help you avoid a lot of arguments and resentments during the process of paying off the debt.

Find out if you need to take steps to protect yourself financially

In some cases, it will be very important for you to make sure that you do not end up having to share the legal responsibility for your spouse’s debt if you divorce or if your spouse dies.

While no one likes to think about these things, you need to be practical and make sure to protect yourself when entering into a marriage – especially if there is a large income disparity between you and your spouse or if you have children in your life. ‘one year relationship and you want to make sure they are financially protected.

In most cases, the debt your spouse contracts is yours alone and you will not be required to pay it after a divorce. But if you refinance the debt in both of your names or if your spouse takes on more debt and you live in a community-owned state, you could be on the verge of being paid off.

To protect yourself, understand the rules in your state when someone’s debt becomes a shared marital debt for which you could be held legally responsible. And if necessary, consider talking to a lawyer about a prenuptial agreement. It’s not romantic, but it could save you a lot of financial worries if something goes wrong.

Take these steps as soon as possible so that debt doesn’t hurt your relationship

It is very important that you go through each of these steps because you don’t want your spouse’s debt to introduce resentment into your relationship or cause money feuds. When you put together a plan on how to manage debt, you can make sure that you’re on the same page and that getting out of debt fits well with your shared financial goals.

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