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How Couples Can Team Up on Debt Repayment

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Sarah Lassner

Between helping his parents financially and losing his income as a result of the COVID-19 pandemic, Jeremy Mazza has been hit hard. credit card debtRelief came from an unexpected source for him: His partner Gina Lambert became a minor heir. By lending it to Mazza, he proposed to “invest” a portion of her winnings in their shared future.

It took a little persuasion.

“The reason I’m the donor and I have to ask for money when my parents want it is because I didn’t want to follow in their footsteps,” says Mazza. No, it was considerate.”

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Mazza and Lambert addressed the situation with open communication and specific loan terms.And for them it has paid off: Mazza is his credit score About 150 points up. The Richmond, Virginia couple are getting married this year and want to buy a house soon.

“I had a very, very, very strong interest in keeping my partners’ credit scores and financial health as good as possible,” says Lambert.

Joint debts are joint responsibilities, but the individual debts you bring into the relationship ultimately need to be addressed by you. It may make sense for your significant other to help you with your debt in some way.

Become vulnerable in the financial picture

It’s essential to be open with each other about your individual financial situation, especially as your relationship becomes more serious.

“If a couple is planning to get married, it’s a good idea to have a conversation before tying the knot,” says Trina Patel, senior financial advice manager at Los Angeles-based financial services firm Albert. .

Schedule a few distraction-free money dates and talk about what’s going on with each one. These conversations can help you set common goals and understand what actions you should take to reach them, such as adjusting your budget or finding ways to increase your income.

“Debt often brings feelings of guilt, embarrassment, and embarrassment that make spouses stop talking about debt,” says Leanne Rahn, financial adviser at Fiduciary Financial Advisors in Grand Rapids, Michigan. But remember, you and your loved ones are a team.”

Consider non-monetary support methods

You may not be able or unwilling to pay off your partner’s debts.A lot Other ways you can provide support, however. You can serve as an accountable companion, rethink your household budget if you live together, or find ways to make shared spending more frugal.

You can do a little more household chores at home to give your partner time to get some extra time at work, or you can help your partner compile his resume if he wants to find a higher paying job.

discuss financial arrangements

If you don’t mind giving or lending money to your partner to pay off their debts, work out all the details.

For example, Lambert began by offering Mazza a six-month interest-free $2,000 loan. Over time, they were both satisfied with additional, larger loans.

Working with an attorney on a contract can give both partners peace of mind.

“A legally binding agreement would make each spouse’s/significant other’s responsibilities clear and simple and accountable by law,” Rahn says.

Know when to say “no”

Even if you care about other people, it’s okay if you don’t want to be their financial burden. Even if your relationship is relatively new or you don’t know how it will progress, you can still cheer your partner on as he pays off his debts.

If your partner doesn’t accept your “no” money red flag and proceed with caution.

“If we were still in the honeymoon phase, we wouldn’t have offered this,” says Lambert. “At that point, we were already living together. He’d already proven, time and time again, that he could be trusted.”

This article was written by NerdWallet and originally published by The Associated Press.

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