The following post is by staff writer Melissa Batai
When my husband and I were dating, and later when we were engaged, we had a frank discussion about finances. He came into our marriage debt free largely because his parents gave him living money in college and paid for his education. I came into the marriage with over $20,000 in student loan debt and $10,000 in credit card debt.
As people are marrying later and later, this type of financial inequality is not unusual. The question facing many couples is, how do you handle the debt? Who pays for it? Should you merge finances or keep them separate?
If you’re facing this situation, here are some options:
1. Pay it off together.
Going this route might be the easiest. You merge your finances together and pay off the debt together.
However, before making this large commitment, it’s important to know why the person is in debt. Is he in debt because he spent recklessly or because he was pursuing his education? In my case, I incurred the student loan debt while getting my B.A. and M.A. After I graduated, I was working several adjunct teaching jobs to gain experience to apply for full-time teaching jobs. They paid next to nothing, and I had to use the credit card to meet basic expenses.
2. Have the debtor pay it off herself.
If your spouse incurred the debt, you might feel more comfortable having her pay it off herself. In return, maybe you pick up a larger portion of the household expenses to pay. This is a good option if your spouse wants to retain her independence and not rely on you financially. It’s also a good option if she is financially responsible and current with her debt payments.
3. Keep all accounts separate.
Another alternative is to keep all accounts and finances separate. You pay your portion of the bills out of your money, and your spouse pays his portion (and his debt) out of his money. This is a great option if you’re worried that your spouse will continue to incur debt or spend recklessly.
This is also a good option if he comes into the marriage already behind on payments and receiving calls from creditors. If you keep your accounts separate, you won’t be responsible for his debts in the event of an early divorce. In addition, you’ll want to avoid opening new accounts in case you live in a community property state. This will also help you avoid having his lower credit score affect your higher credit score.
What We Did
We ended up merging our finances together and working on the debt together. Our feeling was “what’s yours is mine and what’s mine is yours”, even when it came to debt. We paid off the credit card and are nearly done with the student loan. It worked for us, but that’s not the path everyone wants to or should take.
My Questions for You
What do you think? How should a couple handle one partner being debt free and the other one bringing a substantial amount of debt to the marriage?
Have you been in this situation? If so, how did you handle it?