Getting Married? All You Need Is Love, but What If You Have Debt, Too?

by TTMK on May 30, 2013 · 10 comments

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?

{ 10 comments… read them below or add one }

DJ - MoneyforCollegePro May 30, 2013 at 4:35 am

I know this is a controversial subject, but I am convinced that merging your finances is the best way to maintain a happy marriage. When you marry someone, you bring them into your life as a partner, therefore you must partner with them in everything. If they have debts prior to marriage they need to be incorporated into your new family finances. However, I also think it is incredibly important to be upfront and honest about your financial positions before getting married.

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TTMK May 30, 2013 at 9:25 pm

DJ – oh absolutely, being upfront and honest is mandatory, or should be anyway. Integrity isn’t something we would want compromised!

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Emily @ evolvingPF May 30, 2013 at 7:50 am

I think a couple should make the decision about whether and how much to join finances before considering who has what debt (I mean, they should know, but it shouldn’t factor in). I think that’s more of a philosophical decision about how one views marriage than a practical solution to anything.

My husband and I believe in one-ness in marriage so we have completely joint finances. That meant that his savings went to paying off my student loan debt upon our marriage. If I had any doubts about the financial responsibility of my SO (is he really reformed?), the answer wouldn’t be separate finances – the answer would be to not get married.

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Melissa May 30, 2013 at 4:45 pm

Excellent point, Emily, but there are so many people who go into marriage knowing about the big red flags. They just choose to ignore or minimize the warning signs.

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TTMK May 30, 2013 at 9:23 pm

That’s a good point, and it might be human nature to interpret things the way we want to. If already invested in a person emotionally, it becomes easier to gloss over what should be red flags.

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Matt Becker May 30, 2013 at 2:37 pm

I’ll start by saying that neither of us had any debt, so that wasn’t an issue for us. I don’t think there’s a right answer about joining finances. We have completely joined everything and it’s worked out really well for us so far. But I think a couple could have just as much success keeping everything separate. The key is, no matter what your approach, you need to be on the same page, working towards the same goals, and have a system that leaves you both happy and comfortable and keeps your family secure.

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TTMK May 30, 2013 at 9:23 pm

Ultimately, if both people genuinely think an arrangement is fair and they’re working together on the same page, then things are likely working well.

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funancials May 30, 2013 at 8:19 pm

I don’t think there’s one simple answer on how everyone should merge finances. My wife and I both entered the relationship with steady incomes and no debt to payoff so it wasn’t difficult to combine. We also purchased a house together before we were married (I knew that I was about to propose). It worked out perfectly for me, but I wouldn’t recommend it to anyone else.

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TTMK May 30, 2013 at 9:21 pm

There are varying ways to do it. We all have different personalities and life situations!

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Grayson @ Debt Roundup May 30, 2013 at 9:40 pm

My wife and I are different when it comes to this. She came in with no debt and I came in with $50k. I didn’t want her to pay off my debt and we were on the same page about it. Our approach works very well for us because we talked about it upfront. That is really the only thing that matters, being on the same page.

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