How to Manage Debt as a Couple
You and your significant other dutifully share furbaby duties, split plates of pasta at your favorite Italian eatery, and squeeze from the same tube of toothpaste. You’ve divulged your weirdest desires, and what your dream house would look like. But when it comes to talking about your respective debt situations, you might be might with silence. It can feel quite unsettling.
I get it. Sharing how much of a credit card balance you carry or where your student debt load can feel like you’re letting a ghastly skeleton out of the closet. But getting financially naked with how much debt you have is next-level — and essential to building a life together. Not discussing your debt and your plan to tackle it could lead to relationship issues. And hey, no one wants that.
Here’s how you can go about managing your debt as a couple:
Overcome Your Debt Shame
First things first: Debt shame is very real. However, it helps to know that consumer debt is at an all-time high — $4 trillion to be exact — and most people carry some form of it. Those deep-seated feelings of anger, regret, and embarrassment? Completely understandable. You might blame yourself for making poor financial mistakes, or angry that something unexpected happened and threw you in a lurch.
Whatever the case might be, you’re not alone. Sharing the fact that you acquired debt before the relationship could clear the air and help you overcome your fears of being judged. It’s an important first step in coming up with a game plan to manage your debt.
Lay Out the Details
Know exactly how much debt you each have. Know what the terms and interest rates are. If it’s installment debt (think: car loan, student debt, or personal loan) how much time do you have to pay them off? Are the loans still with the creditor or lender, or have they gone to collections?
If you’re not exactly sure who is holding your federal student loans, you can retrieve such info through the Department of Education’s National Student Loan Data System (NSLDS). You can also see which accounts might’ve gone to collections by ordering a credit report. You can order one for free from each of the three major credit bureaus — TransUnion, Equifax, and Experian — at AnnualCreditReport.com.
Learn Your Partner’s Comfort Level With Debt
It’s quite common that one partner in a relationship will be comfortable having debt, while the other partner experiences anxiety about carrying debt and wants it paid off as soon as possible. One person might view debt as a death sentence, while the other sees it as another bill to pay. The important thing is to have a discussion to know where your partner stands, and to respect their comfort level and emotions around debt.
For instance, when my friend got a new job and a significant boost in salary, the first thing her husband asked her was if she planned on paying off her debt. She wasn’t terribly concerned about paying it off as soon as possible. Mind you, her husband did everything he could to aggressively crush his mountain of student debt — we’re talking spending the bare minimum on groceries and gas for his car, and doing without cable.
While her husband felt uneasy about her slow-boating her student debt payment, they came to an understanding that it was ultimately her money and her choice. Sure, she could save on interest fees on her debt, but she prioritized having more disposable income to enjoy her life in the present. And that’s perfectly a-okay.
On the flip side, if your partner gets terrible anxiety about carrying a debt load, try to see where they’re coming from and why they might feel that way. Perhaps their parents were terrible with money, and their debt load affected their well-being. If that’s the case, display empathy and consider meeting them in the middle by making paying off your debt a greater priority.
Come Up with a Game Plan
Is the debt you incurred prior to the relationship something you’ll be solely responsible for paying off? Or will you tackle it together? How will you handle debt you took out together, such as a car loan where you’re both co-signers? Will one person pay the other for their share of the monthly payment?
Besides sussing out if and how you’ll be divvying up any of the debt, come up with target dates to pay them off. It’s important to get nitty-gritty to avoid miscommunication — and missed payments.
Let’s say your partner has a hefty student debt load, while you’re debt-free. Whether you choose to pool your resources together or knock it out solo, this is something you’ll have to decide on together.
Express Expectations and Boundaries
You hear these stories about how debt can create rifts in a relationship. What’s causing tension might not be the debt itself. It could be due to debt that’s kept a secret. Or that you’re not clearly expressing boundaries and expectations.
Set expectations from the get-go. Which partner is responsible for which debt? Or will you be paying them off together? Besides setting expectations, you’ll need to revisit the conversation if either of you aren’t holding their end of the bargain.
If your partner is falling behind on payments, how could that affect some of your shared goals, such as saving for a vacation or buying a home together? What’s more, if you have fears and concerns about debt, let it out. It’s better to communicate than to let something fester. It will only lead to problems and potential feelings of anger, betrayal and resentment down the road.
By being open in a relationship with your debt load, and coming up with a game plan that you both feel comfortable with, you can work toward building a partnership rooted in trust and shared goals and values.