Published in: Credit Cards | Nov. 10, 2019
86% of Newlyweds Face This Financial Challenge
By: Maurie Backman
Here's what to do if you're part of this statistic.
Americans certainly aren't strangers to debt, whether it's of the credit card or student loan variety. But kicking off a marriage with debt could wind up being a recipe for disaster. And unfortunately, the majority of newlyweds are doing just that.
A common problem
In late 2017, Ramsey Solutions surveyed more than 1,000 U.S. adults and found that 86% of couples who got married in the previous five years started out in debt. Now that's not particularly unusual, especially given the ubiquity of student loans. The problem, however, is that the survey also shows that debt has been a clear source of strife for a large percentage of those newly married couples.
Specifically, 41% of couples with debt say they not only argue about money, but that money is the one thing they fight about the most. By contrast, only 25% of debt-free couples argue about money.
And it's no shock to learn that couples with greater amounts of debt tend to fight about it more. A good 48% of couples with $50,000 or more in debt cite money as a top source of conflict.
Tackling debt as a couple
Being in debt isn't necessarily a reason to postpone getting married. But if you and your spouse are kicking off your union with a pile of debt hanging over your heads, then it's imperative that you work together to address it.
For one thing, be open about your debts in advance, and figure out whether you'll tackle them individually or jointly. For example, if you owe $8,000 on a credit card, and your spouse owes $20,000 in student loans, you'll need to decide whether you'll jointly try to pay off both sums, or if each of you will tackle the sum you racked up.
Regardless of what you choose, your next step should be to set up a joint budget. This way, you'll understand where your money goes month after month, and you'll also have a clear way of knowing who's responsible for which bills. Some couples, for example, split shared bills evenly down the middle. Others pay their bills proportionally to what they earn so that if, for example, you make twice as much money as your spouse, you might contribute twice as much to the mortgage.
Again, you and your spouse need to arrive at the decision together, but be sure to get on the same page. Doing so could help you avoid major arguments down the line.
Once you have your budget in place, you can see how much money you'll have available to tackle your debt problem. You'll also be in a position to more easily cut back on non-essential spending to free up more money to pay down that debt.
Which debts should you pay off first?
Assuming you and your spouse are lumping your various debts together and paying them off jointly, it's important to prioritize your payoff plan. Generally, it makes sense to put extra money toward whichever debt carries the highest interest rate. Usually that's credit card debt, though if you took out private loans for college with a variable interest rate that's been climbing, you may want to prioritize those, too.
Federal student loans tend to carry relatively low interest rates, so they're often the last category of debt you should work to get rid of. But always make sure to keep up with all of your monthly payments, even if you're working on eliminating other debts first.
It's hard to start off a marriage with debt. But if that's the situation you're facing, you'll need to make an effort to avoid letting money problems wreck your relationship. Being open and honest about your debt, setting proper expectations, and following a smart debt payoff plan could help you avoid some of the problems that so many other couples grapple with.
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