Understanding and Tackling Debt Together as a Married Couple

Getting married is an exciting time that marks the beginning of the rest of your lives together as a team. As you merge your lifestyles, you might also decide to merge your finances, which includes dealing with any existing debts. Understanding how debt works when you get married and learning how to manage and pay it off together can set the foundation for a financially healthy future.

How Debt Works When You Get Married

When you get married, your previous debts and credit scores will impact financial decisions you make as a couple. This includes getting a home together, purchasing a car, or getting a joint credit card. Here is how each of these will impact you when you get married:

Individual Responsibility

Any debts from before marriage remain the responsibility of the person who incurred them. For example, if your partner has student loans from college, those loans will still be their sole responsibility. Also, if your partner were to open a new credit card or take out a loan solely in their name after you get married, that debt is still theirs alone.

Joint Debts

Any debt that has both of your names on it after marriage will be a joint responsibility. This includes things like your mortgage, a car loan you share, or any other credit and loan accounts that you are a co-signer on.

Credit Scores

Each partner's credit score remains separate, but joint financial activities can impact both scores. For example, missing payments on a joint loan can affect both partners' credit ratings.

Regardless of these rules, depending on where you live, there can be different laws about how debt is managed in marriage. Some states in the U.S. follow "community property" laws, meaning that any debt taken on during marriage is shared equally between spouses. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If you live in a community property state, research your rights to know how marriage will affect your specific debt.

Discussing Debt Before Marriage

Before getting married, it's essential to have an open and honest conversation about your finances, including any debts you each have. This discussion helps you understand each other’s financial situation, choose if you’d like to consolidate your finances together, and plan how you'll manage debt in the future. Some key points to cover are:

All Debts

Talk about all existing debts you have like credit cards, student loans, home or car loans, and more. Be transparent about amounts you still owe and interest rates.

Credit Scores

Discuss your credit scores to understand your overall financial health and how this will impact when you get a house, car, or credit card together in the future.

Income and Expenses

Talk about your earnings and spending habits. Are you a spender while your partner is a saver? Create a plan for how you can encourage each other to make the best financial decisions together and stay out of debt.

For more tips about combining finances and how to create a budget together, read How to Marry Your Finances After Getting Married.

Paying Off Debt Together

Once you’re married, you can tackle debt as a team. Working together to pay off debt can strengthen your relationship and bring you closer to financial freedom. Here are steps to manage and pay off debt together:

Create a Joint Budget

Develop a budget that includes both incomes and expenses. Account for debt repayment while making sure you can still cover your everyday living costs. A joint budget helps you see the bigger picture and prioritize paying off debt as a team. For more information about how to create a budget, read How to Create a Budget in 5 Steps.

List Your Debts

List all debts and prioritize them based on interest rates and urgency. Follow the Debt Snowball Method to help you create a plan in paying off your debt as quickly as possible. This will also help you create clear, achievable goals.

Consider Debt Consolidation

If you have multiple debts, consolidating them into a single personal loan with a lower interest rate can simplify repayment and potentially reduce how much you pay in interest over time.

Automate Payments

Set up automatic payments to ensure you never miss a due date. This helps avoid late fees and keeps your repayment plan on track. You can also use a debit card round-up program like Change it Up to automatically round up your purchases to the nearest dollar to help you pay down your principal loan balance.

Seek Help if Needed

If debt becomes overwhelming, seek help from a financial advisor or credit counselor. These professionals can provide guidance and help you develop a plan to manage debt effectively.

Continue Communicating

Effective communication is key to managing debt together. Schedule regular financial check-ins to discuss progress, adjust your budget, and make sure you're both on the same page.

Building a Debt-Free Future

Paying off debt together is a journey that requires patience, discipline, and teamwork. As you work towards financial freedom, focus on building healthy financial habits:

Save Regularly

Set aside money for emergencies with an Emergency Savings Account to be prepared for anything that comes your way and open additional savings accounts for your future goals.

Spend Wisely

Revise your budget as needed and avoid impulse purchases by waiting at least 24 hours before buying something in your shopping cart.

Celebrate Your Milestones

Be sure to celebrate your financial wins and celebrate each positive step you make along the way! Once you complete a goal, find out your next Money Milestone to stay on track and receive a personalized plan with next steps.

Managing debt when you get married can be challenging, but it’s also an opportunity to build a strong and rewarding financial foundation together. By understanding how debt works and working together as a team, financial freedom is possible for you both! Remember, the key to success is collaboration, communication, and commitment to your shared financial goals.