What's our plan for paying off debt?
Not many people come to marriage without some financial baggage, often in the form of credit card debt, car payments and student loans. Each dollar you spend on interest, though, is a dollar you don't have for your other goals. And as you know, debt is often a signal that you're living beyond your means, which could mean never achieving your dreams.
Creating a debt repayment plan will require that you first find out how much you spend and then determine a realistic budget for future spending. This is a joint effort, not something either one of you can do alone.
Some couples decide that payments for premarriage debts be made from separate accounts, rather than the joint account. Others take a more all-for-one approach, reasoning that they're a team now and that whatever benefits the team financially is the right thing to do. Discuss which way you want to handle it.
Debts incurred during marriage, of course, are a whole different matter. You're often on the hook for a spouse's spending, whether you knew about it or not. That's why financial planners say honesty and continued communication are so important.
What if you just can't seem to agree?
Jennifer tried to work things out with her spouse, a compulsive spender. They experimented with joint accounts, separate accounts and an allowance system in which each got a weekly infusion of "no-questions-asked" spending money. But Jennifer's husband kept overspending, and he sulked when she reminded him that they were trying to save for a house. One of the last straws: he decided he "needed" a new $40,000 car, and he stopped speaking to her when she pointed out that the vehicle cost twice his annual income. After four years, Jennifer gave up and filed for divorce.
"I should not have let it go as long as I did," says Jennifer, a financial professional in her midthirties. "I should not have let myself be emotionally bullied."
Others hang in there longer, sometimes to their regret. One poster on the Your Money message board, who has been married twenty-nine years, recounted how she refinanced a mortgage to pay off $45,000 in credit card debt her husband secretly had incurred.
"I just found out that 4 years later, he has run up his credit cards again to $36,000 and can't help me pay taxes or any emergency expenses that come along. I am sooooo mad, frustrated, and resentful of him I can hardly stand it," poster "purse" wrote. "We are at retirement age and he doesn't have ANY money saved. . . . The sad thing is I never saw anything new to indicate he was spending. He was supposed to cut up his credit cards after the refinance. . . . I just feel so betrayed."
Another couple I know kept their accounts separate from day one because of her extensive credit card bills and student loans. When her husband asked about the debt, the wife always assured him she was taking care of it. Then the collection calls started, and he discovered she had instead maxed out all of her credit cards and had turned to payday loans to try to pay her bills. He was furious at the deception and couldn't believe she would hide the magnitude of the problem from him. But she was angry, too, claiming his holier-than-thou attitude about debt prevented her from talking to him honestly about what was going on.
Few couples are on exactly the same page when it comes to money, but some partners are so far over the edge that their destructive habits can sabotage the family finances. How can you tell whether your partner just needs a little persuading or is a total financial basket case? You're facing an uphill battle if:
There's an underlying addiction.