“Ask Brianna” is a Q&A column for 20-somethings or anyone else starting out. I’m here to help you manage your money, find a job and pay off student loans — all the real-world stuff no one taught us how to do in college. Send your questions about postgrad life to firstname.lastname@example.org.
This week’s question:
“I’m getting married, and my partner has hefty student loans and credit card bills. I don’t. Should I be worried enough to reconsider?”
You’re fortunate to have found someone you want to spend the next, oh, 60 years with. Debt shouldn’t keep you from putting a ring on it, if you take the right precautions.
Most importantly, you need to know the details of what you’re getting into. Financial problems are one of the leading causes of divorce, so avoid potential strain on your relationship by talking candidly about spending attitudes and debt early on. Discussing your financial histories openly can help you both assess whether getting on the same page is possible. Only then can you plan together how to pay down the debt.
Get the facts
Debt incurred before marriage won’t become jointly owned when you say “I do.” But when you’re building your life with someone, their financial history has an impact on your future plans. Also, debt either of you takes on once you’re married is legally both partners’ responsibilities if you live in a community property state — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin. And if you combine your debts by consolidating them into one joint loan, you’re both on the hook for paying them off regardless of where you live.
To kick-start a candid money conversation with your partner, share credit reports. Everyone is entitled to one free credit report annually from each of the three major credit bureaus. The reports show current and past accounts and payment histories. Discuss any patterns, such as frequent late payments, and why they occurred. Were they the result of a short-term and situational issue, such as a medical crisis? Or do they demonstrate ingrained behaviors that could be tough to change?
You also should share credit scores, which are based on credit reports. You can get free access to credit scores through various websites, and they’re often included on monthly bank and credit card statements. In general, a score lower than 630 is considered poor, which can mean higher interest rates or rejection on loans and credit cards. It’s reasonable to ask a partner with poor credit not to take on new debt in the short term, and to try to save at least $500 for emergencies that would otherwise go on a credit card.
Create a plan
Barring any truly scary revelations from your partner’s credit history, start building a plan that puts you on a shared road to financial wellness.
“I would not suggest postponing marriage until the debt is cleared up,” says Ann-Margaret Carrozza, a New York attorney and author of the soon-to-be-released book “Love & Money.” “I would, however, postpone a marriage until a sensible and manageable repayment plan is underway.”
Your partner should aim to get rid of credit card balances first, then pay extra toward student loans. Credit cards often come with higher interest rates, which will make carrying a balance cost more money over time.
In the case of a particularly large student loan burden that makes paying extra or keeping up with regular bills impossible, your partner could consider a federal income-driven repayment plan, which links payments to income.
If you want to help your partner pay down debt, make sure you have adequate emergency savings first, says Katie Gampietro Burke, a certified financial planner and founder of the fee-only financial planning firm Wealth By Empowerment in Jacksonville, Florida. A solid goal is to save at least three months’ worth of expenses.
Kitty Bressington, a certified financial planner and president of Linden Financial Consultants near Rochester, New York, said the couples she works with often attack debt by cutting back on dining out, impulse purchases and personal care such as manicures and haircuts. But a budget shouldn’t be so restrictive that it makes you miserable and likely to abandon it. Setting smaller repayment goals along the way while paying off large debts can help prevent discouragement.
Sharing your financial histories and creating a solid debt-reduction strategy could be one of many challenges you’ll talk through, plan for and overcome together.
“If you can’t talk about money, you’re not going to be able to talk about some of the other, more difficult things that you’re going to encounter as a couple,” Bressington says.
This article was written by NerdWallet and was originally published by The Associated Press.