How to Get Out of Debt for Newlyweds
First, a quip about money and marriage:
“Success in marriage does not come merely through finding the right mate, but through being the right mate.” ~ Barnett R. Brickner.
If you’re in debt because of choices you or your partner have made — such as poor financial investments — know that you can have a great love relationship if you focus on being the right type of spouse. A less effective tactic is to expect your partner to act and think the way you do, especially when it comes to money management. If you think you have no chance of retiring early, read Start Late, Finish Rich: A No-Fail Plan for Achieving Financial Freedom at Any Age
How to Get Out of Debt for Newlyweds – Financial Problems and Marriage
“With the economy in flux, it’s more important than ever to stop paying interest to the credit card companies and to stop living beyond one’s means,” says Ewing. “Credit card debt — and the balances carried from month to month — is a huge concern.”
1. Trim your excess spending. Do you and your new spouse have a budget? If so, examine your budget’s “optional expense” category to trim unneeded costs and use that money to get out of debt. For instance, no one needs premium TV channels or restaurant meals! If you want to solve your financial problems, you might want to eliminate modern-day “necessities” such as cell phones, home Internet access and caller ID. Just putting $15 more a month toward a credit card bill will painlessly help you get out of debt and attract more money into your life as a couple.
2. Seek debt management help. “If you have serious debt that you can’t pay, know that help is available, especially if the situation was caused by a short-term problem such as a medical emergency,” Ewing said. “If absolutely necessary, you could borrow from relatives, borrow against life insurance or retirement funds, or consolidate old debt onto a no-interest credit card. If you need more help paying off your debt, seek a credible debt resolution advisor.”
3. Pay more than the minimum on your bills and credit cards. To get out of debt as newlyweds, pay every bill in full, on time. If you can’t afford to pay for something in the month you purchase it, don’t buy it. If, however, you cannot pay your credit card bill in full for some reason, then try to pay more than the minimum payment. Minimum payments are set at a very low percentage of the balance, and typically go primarily to interest and fees, rather than paying down principal significantly. Paying only the minimum will keep you in debt for years, and won’t help you create financial abundance. The resulting total interest payments could exceed the amount borrowed in the first place.
4. Track your spending habits and patterns. For one week, both of you need to carry a small notebook and write down every purchase. “You will soon see how small purchases add up — coffee, fast food, candy bars, drugstore purchases and items you ‘just pick up’ in a shopping cart,” Ewing says. “Or you might learn that you do not spend frivolously and need to look more closely at ongoing bills or income. This step alone will help newly married couples get out of debt and save money.”
5. Make a budget or spending plan that addresses your financial problems. Creating a budget means taking responsibility for where your money goes, rather than allowing whims, advertising or habits to influence what you buy. As a married couple, divide your spending into the categories of “musts” (food, housing, basic clothing, transportation, education) and “optional” (dining out, entertainment, gifts). This will help you get out of debt by giving you control of your finances.
6. Pay for everything in cash. Pay bills with checks or set up automatic payment plans to eliminate worry about a late or forgotten payment. For all other expenses, use cash. Debit cards can be helpful for transactions for which a credit card is required – such as paying for gas at the pump – as they allow people to still pay with available cash rather than risking piling on debt. This tip for dealing with financial problems in marriage includes being cautious using a debit card online, as it can create a theft risk.
7. Prioritize your debt payments. “If you cannot pay all of your debts down in a short period of time, then prioritize,” Ewing says. Make minimum payments on the cards with the lowest interest rates, and put all excess cash to the card with the highest interest rate. Once that is paid off, put excess cash to the card with the second-highest rate, and so on until you’ve paid off your debt.
“When it comes to statistics about credit card debt, you can choose to be among the indebted, or you can choose financial freedom for yourself and your family,” Ewing said. “Follow the steps above to pay off your debts so you can stop paying interest to your creditors and instead start saving for the future. Then you can be one of the lucky ones who are prepared to ride out any economic bumps that lie ahead.”
A tip for newlyweds and money: if you want to solve your financial problems in marriage, remember that men and women handly money differently!
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Category: Engagements & Weddings, Love, Marriage, Money & Finances, Money and Expenses, Solving Problems
Thanks for a really interesting read, learn quite a few tips here, trying hard to improve my credit , i did a consumer proposal 7 years ago and just now i am starting to rebuild my credit slowly but surely and trying to avoid that credit card trap.