Debt is a serious problem in the U.S. It not only affects the potential individual’s financial prospects, but it can also derail marriages. For instance, statistics show that 63% of marriages start with one or both partners in debt. The good thing is that debt consolidation is the perfect solution.
Studies show that financial issues, such as credit card debt, are to blame for 20% to 40% of all divorces. Given the risk, married couples are advised to consult a financial solutions provider who specializes in debt reduction.
Who Owns Debt in a Marriage?
The answer depends largely on which state you live in. California is a community property state, which means that both spouses are equally responsible for paying off debt. So, if your husband buys a car, you share the liability, regardless of whether you knew about the purchase or not.
The law carries over into divorce. Assets are shared in an agreed-upon manner, and so are debts. You remain liable for your husband’s car if you and your spouse haven’t paid it off.
According to local law, a person’s spouse is solely responsible for any debt they accrue during a marriage. So, if your husband buys a car, he has to keep up the monthly payments himself. You aren’t liable at all. Note that both spouses are liable for debt incurred on a joint basis; for example, if you and your husband buy a car together, it’s joint debt.
You are liable for any debt you brought into the marriage and any debt you incurred as an individual during the marriage. However, you are only jointly liable for debts jointly accrued within the marriage. One of the most common examples is a mortgage where both spouses are on the deed.
Steps to Take When Your Partner is in Debt
If you’ve been following the advice of a debt reduction service provider but still haven’t been able to make a significant dent in your debt, it’s time to consider your options. Your best bet is to go back to your financial advisor to discuss the situation as one entity. Together, you could look into a debt consolidation program.
Debt consolidation is often the last resort because it has many long-term consequences for both spouses.
Financial Planner and Counselor
Debt is a sensitive matter that requires delicacy when being discussed. As a result, a new trend has emerged where financial planners include psychological counseling in their qualifications. It’s called financial therapy.
They provide expert financial advice in a therapy setting to ensure both spouses understand the importance of regular discussions about money. The planners provide them with the tools to keep the discussions calm and reasonable without letting emotions get out of control.
Advice typically focuses on maintaining a healthy marital relationship that emphasizes long-term goals and the importance of long-term commitment. It includes the following:
Making Paying Debt A Priority
Take a good hard look at your finances and decide which of your ‘nice-to-haves’ you are willing to sacrifice to pay off your debt faster.
For example, instead of eating takeout four days a week, you cut it down to once a week and use the savings to pay off your debt.
You should explain spending priorities to your children, so they understand the need for a family budget. In this way, they can help stick to the household budget by taking packed lunches to school and not demanding high-end clothing.
Monthly Budget Discussions
Perhaps the single most important thing you can do is discuss a joint budget once a month. Set a date, so that neither of you forgets. Stick to it; don’t get into the habit of postponing it. It’s a good idea to discuss the previous month’s budget to determine the negative impact of unexpected expenses or slip-ups. Don’t start throwing blame around. You’re a team and should endeavor to remain so.
Look ahead to the upcoming month’s budget. To make up for the loss the unexpected event caused, see if there are any areas you can shave. Plan for important upcoming events and expenses, like your wedding anniversary or your child’s school science trip.
Be completely open and honest to ensure the debt management plan is on track and you can still reach your goal of eliminating the debt within 18 months.
Discuss Your Dreams and Goals
Paying off debt needn’t be joyless. It’s nice to have something to aim for; a reward for your hard work. Just ensure that the reward doesn’t restart the debt cycle.
Discuss what you want to do when the debt has been paid off. For example, your dream is to see the pyramids in Egypt before you turn 40. Your financial goal is to save $35k for a deposit on a home. Your spouse might share your goal to save for a home, but they dream of spending two weeks in a 4-star hotel in Mexico on the beach.
You can set up a joint account to save money for your home and discuss how you can make both dreams come true. Be specific. For example, each will put 5% of their monthly income into the joint account. Remember, you don’t earn the same amount, so the contributions will differ. Discuss how you both feel about that.
You might also decide that you’ll aim for your spouse’s dream first, provided they compromise and you stay in a nice Airbnb on the Mexican Riviera for 10 days. You’ll also find a way to make your dream come true through compromise. Both of you must discuss how each holiday will be financed; through a joint account or by saving a certain amount of money separately each month.
Hire Alleviate Financial for Your Marriage and Debt Relief
One aspect of debt and marriage is that neither one can manage them on their own. Regardless of who brought the debt into the marriage, you have to act together as a team.
Alleviate Financial Solutions brings you together through our performance-based debt relief services. We’ll take you through your options, including debt reduction strategies and services.
We’ve settled over $300 million in debt. So, what are you waiting for? You can benefit from our experience by calling our toll-free number, 800-308-2935, at Alleviate Financial Solutions today!