How to Talk About Debt to Newlyweds
According to CNBC, seventy percent of Americans marry with debt, usually student loans and credit cards. A recent report from NerdWallet showed that college graduates in 2018 should have an average student loan balance of $ 29,200 , and Experian reported that the average credit card balance was $ 6,194 in 2019.
The problem is that it can be difficult for couples to talk about these debts. According to a recent survey by CreditCards.com , twelve percent admitted they are hiding debt from their partner, and it’s easy to see why. “There is a lot of shame and silence around debt,” says Callie Ingebritson, a financial coach who works with LGBTQ + clients at Chillax Finance . Some people may avoid debt because they are worried about the verdict or starting a fight.
But it is very important for newlyweds to discuss these topics, even if it is inconvenient, because it can affect your finances as a couple. Here are a few ways to approach the topic and work out a payment plan together.
Talk about your values
Ingebritson advises you to start by examining your values, the lessons you learned as a child, and how that might affect your finances if you were afraid to approach the issue of debt. For example, your households may have different socioeconomic backgrounds, which could affect your level of student loan debt. “People often have aha moments, and this is a way to disarm part of their current situation,” she says.
Be honest with the numbers
This part may be the hardest: the debt numbers, to be honest. “Nothing beats the good old spreadsheet,” says Ingebritson. You can use a spreadsheet to list the amount of each debt, including interest rates. Specifying numbers can make it easier to discuss the next steps.
Regardless of where debt comes from, Ingebritson advises remembering that debt does not define you, your partner, or your future together. “You are in a relationship and this is just one part of your life,” she adds.
Make a plan to achieve your goals
Once you reveal the numbers, you can start talking about your payout strategy. Depending on your situation, you can solve the problem on your own or together. Ingebritson says there is no right or wrong decision.
There are several popular tactics when it comes to debt repayment strategies . You can use a snowball of debt that focuses on your smallest debts in the first place . Or, you may prefer to pay off the highest interest rates first with an avalanche of debt. A debt blizzard is another option that combines both methods.
No matter how much debt you have, Ingebritson says you can make progress over time and achieve a better financial position.
Rely on the power of automation
One of the best ways to achieve your goals – no matter which reward strategy you use – is to rely on the power of automation. Ingebritson offers to open different accounts for accounts and debts, savings and fun money.
“One of my best tricks is to check if your employer offers a split direct deposit, because these days most employers do offer the option to split your salary into multiple accounts,” she recommends.
Change the way you approach debt
It’s easy to get lost in the cycle of shame when you’re struggling with debt, but Ingebritson says this can be a way to build your relationship and make it even stronger. By working together to achieve goals, you can form new connections that will make it easier to solve future problems. “Ultimately, managing your finances with your partner is a form of intimacy,” she says.