Whether you’re married or in a serious relationship, conversations about money and debt are some of the most stressful you can have as a couple—in a recent poll, 41% of couples say that financial stress has put a strain on their relationship (CNBC). Managing debt can be challenging to do alone, let alone with another person, but successfully handling debt as a couple can set you up for a stronger relationship in the long run. Not sure where to begin? Here are our four best tips for tackling your debt together.
Step 1) Remove All the Skeletons—and Bills—From Your Closet
As a couple, it’s essential to have a clear understanding of where each of you stands financially. As painful as it may be, now is the time to put it all out on the proverbial table. Both of you should get out your bills and each take a debt inventory on a spreadsheet or notepad. Make sure you include what kind of debts you owe (e.g., student loans, car payment, credit card balance, etc.), how much you owe on each account, and how much you are paying each month.
At this point, you’ll want to pull each of your credit reports and go over them together. Cross-reference the debt inventory lists you made with each of your credit reports, checking to see that the debt types and balances match what you have on your list. Keep an eye out for any other negative marks you missed or mistakes listed on your credit report. Missing little details like these can hinder your plans to become debt-free.
It’s crucial to mutually agree to approach this conversation from a place of support rather than judgment. The couples that end up successfully navigating this issue are those who don’t point fingers, but rather work together to overcome challenges.
Related Blog Post: 4 Tips for Facing Your Financial Fears About Debt
Step 2) Get on the Same Page
After you know each other’s financial situation, you’ll want to discuss your overall financial goals and establish a roadmap to resolve your debt. Your financial goals as a couple will influence how you tackle your debts together. For example, if you want to pay off debt to buy a home together in five years, you may have to be more aggressive in your debt repayment strategy than if you plan on buying a home in ten years.
Making mutual goals will also help you outline a monthly budget, including how you plan to split up bills. There are a few different ways to divide debt payments which we describe below:
The Even Split
In this scenario, both partners contribute the same amount of money into a bank account that is used solely to pay bills.
The Ratio Split
Look at your combined total household income. Who brings in more money each month? This person may want to tackle debts with higher interest rates or more pressing debts that need to be repaid quickly. The other person can tackle the smaller debts. This way, you are both able to affordably chip away at debt from both sides.
The Watchman Split
Perhaps your partner is a stay-at-home parent or unemployed. In this case, you’ll likely be solely responsible for making payments. However, this doesn’t mean that the other person can’t be involved. Your partner can help out by keeping tabs on the debt through reviewing the household finances each month, keeping track of bills and other expenses, and prioritizing debt repayments.
Step 3) Decide on a Repayment Strategy Together
Let’s be honest: Managing your own debt can be overwhelming. Adding in another person’s debt can send your brain into overload. But working out a debt repayment strategy with your partner can make both of you feel more in control of your financial situation.
When it comes to repaying debt, there are a few different options to choose from. From the DIY debt snowball plan to working with a debt resolution company like ACCS, determining how to tackle debt payments ultimately comes down to the financial goals you decided on together.
Related Blog Post: How To Know if Debt Settlement Is Right For You
Step 4) Have Monthly Money Dates
Who said paying back debt has to be boring? Once a month, schedule a dinner date together. At the table, go over your finances as well as your income, budget, and spending challenges. Talk about the progress you’ve made, what still needs to be done, and what it may take to achieve your goals. Make these conversations something to look forward to rather than something to dread.
Ready to tackle your debts together but not sure where to start? Request a Free Debt Relief Evaluation today! With no cost and no obligation to explore your options with ACCS, you and your partner can find the right solution to reach your financial goals.