Marriage is a commitment, but in theory, it’s supposed to be a long and happy commitment. In order to give yourself the best chance at future marital bliss, you should have a frank “money matters” conversation with your partner-to-be before you tie the knot.
Marrying someone with substantial debts can impact major life decisions like buying a house, raising a family and even the type of wedding you can afford. It’s therefore essential that you sit down with your future spouse and get an idea of the condition of their credit and any hidden monstrous debts that may be lurking in the background, prepared to spoil your honeymoon.
Types of Debt
Debt can generally be divided into two categories: good debt and bad debt. Good debt is usually long-term low interest debt and is often backed by a government guarantee, think student loans, mortgage loans and even some small business loans. If your future husband or wife just finished their residency in endocrinology, they probably have some intimidating student loan debt from med-school. You should be aware of that debt, but it’s not the kind of thing that should scare you away from saying, “I do.”
Bad debt, on the other hand, is the type of short-term, high-interest debt that has the potential to cause serious problems, think credit cards, personal loans and some car loans. If your beloved has been earning a middle-class income but dresses in enough designer apparel to impress even the red carpet crowd, there might be some nasty high-interest credit card debt just waiting to cause some added wedding day stress. Some credit card companies can charge interest rates up to 34% in addition to high fees and enormous penalties. This type of debt can really put a dent in your monthly income and lead to the kind of lover’s quarrels you want to avoid.
To Delay or Not to Delay
Once you know where your future partner’s finances lie, you can make an informed decision about whether it makes sense to get married now or delay for a while. For the most part, you won’t be personally responsible for the debts your partner incurred before the marriage. There are some exceptions to this rule (the comingling of funds or assumption of debts) but they can be avoided with careful planning.
However, just because you’re not personally responsible for the debt doesn’t mean it won’t present problems. Most married couples operate their household as a single unit. That is, they contribute their earnings and assets to make ends meet. If a substantial portion of your partner’s income is diverted to old debts, there will be less money in the “pot” for things like rent, fuel, entertainment and food. Also, it will be difficult, if not impossible, to apply for a mortgage together if your partner’s credit is in the gutter. If you’re fine with these prospects, and head over heels in love, then by all means go forward with the wedding, at least you, unlike thousands of other couples, will have an understanding of the challenges you are facing.
If, however, you’re not comfortable with your partner’s finances, there are a few things you can do. First, you can delay the marriage and work together with your partner at restoring their credit and paying down their debts. You can still set a wedding date. In fact, the certainty of the wedding date is often an impetus to get down to the brass tacks type of financial sacrifice it takes to properly repair a credit rating and pay off those bad debts. In some cases, it takes only a year or less to get things in good shape.