Recently engaged or married? After all the excitement and honeymoon bliss has faded, you might be left wondering how to manage your finances as a couple. Concerns over how to work together to deal with your newly joined lives might be heightened if you have more than just bills to pay and savings to build. When it comes to newlyweds and money, figuring out how to deal with debt when one or both individuals brings it into the marriage is an important step.

Joint or Separate Finances?

The first thing you need to figure out with your other half is whether or not to combine your finances. If you already have a working plan in place, great! Skip ahead to the next piece of advice. Ultimately, this is a personal decision, and one that every couple has to make for themselves.

What’s Mine Is Yours…Wait, Does That Apply to Debt?

You now need to decide exactly how you’ll pay off your debts. Again, every couple has to make this decision for themselves. It could depend on who has debt and how much. If both of you brought debt to the table, you can either tackle all the debts together or focus on it individually. If one of you holds debt but the other doesn’t, this may be a topic to discuss before the wedding. You might choose to support your future spouse and help them pay their debt – or you may agree that the individual with the debt holds the responsibility to repay it. Whether you work together financially or choose to keep money separate, you should always be supportive and encouraging of each other. “Helping out” isn’t limited to providing money. You can share ideas and knowledge to create a better repayment plan. One of you can research to find programs and tools to help make money management easier. Or you can even do a few more chores around the house when your spouse is out doing some part-time work on the side to earn more money to repay that debt even faster. Remember, this is a partnership and everyone can contribute – even if those contributions don’t look exactly the same.

Communication Is Key

When deciding how you’ll deal with debt, keep in mind that no one should feel resentful or neglected. It’s important to set up regular money dates to go over your finances together and allow both individuals to voice concerns as well as to celebrate little victories. You should discuss money with each other to ensure you’re on the same financial page. To start, set up your date to discuss the overall state of your finances. You’ll also want to create a plan on how to pay down your debt. If you need help getting started, use these ideas to get your first money date going. You can:

  • Discuss the nitty gritty of your debts (and everything relating to them: interest rates, minimum payments, balances remaining), bank balances, and investments.
  • Track your spending together. Even if you have separate bank accounts, you should both track your individual and joint expenses. If you’ve never done this before, it might help to backtrack a bit and reference prior statements to see where your money has been going.
  • Create a budget, with input from both parties. This will help keep your spending on track, possibly allowing for extra payments toward debt.
  • Mention and discuss the financial goals you both have (buying a home, establishing an emergency fund, saving for a family).
  • Establish a plan to reach your goals – including paying off your debt. List out action steps that you’ll take to achieve financial success. This might include boosting your income (by picking up a side gig, working overtime, or earning a raise) and cutting expenses (by eliminating unnecessary costs, living beneath your means, and looking for frugal alternatives to expensive purchases).

After this initial meeting, make sure you check in with each other regularly to see what kind of progress you’re making. That might mean once per week or once per month – depending on what your “team” feels comfortable with. It’s okay if you don’t stick to an original goal or if your priorities shift, but you must communicate that with your partner. Regular money dates help create a good time to share all this and stay on the same page.

Prioritize Your Debt

If you have multiple debts, they may feel completely overwhelming. Before you panic, know that you and your partner can do this! And there are a few strategies you can use to help make it easier. The first strategy is known as the avalanche method. This method directs you to prioritize your debts by their interest rates. You work to pay off the debt with the highest interest rate first (while still paying the minimums on your other debts). Mathmatically, this makes the most sense. The interest rates on loans and credit cards cost you more the longer you hold on to them, and of course higher rates cost you the most. But some people find it really intimidating to try and tackle their biggest, baddest debt as the first step toward debt freedom. If you prefer to start small, you can try a different strategy that comes at the problem from the other end. This strategy, known as the snowball method, involves prioritizing debts in order of the amount of money you owe. You start with the debt with the smallest balance and work your way up, regardless of interest rate. This is helpful for those that feel discouraged by the amount of debt they’re in, as it should give them a quick win. However, it may not be the most financially efficient way to deal with all of your debt. You may end up paying more in the long run if you let high interest rate debts sit on the back burner while repaying other balances. What matters is that you’re making progress with your debt and moving in the right direction. It’s best to just start. If there’s one debt really weighing on you emotionally, tackle that first!

Don’t Give Up

Lastly, focus on the fact you both want to get out of debt. While things might get tough, remember that you’re both working toward the same thing. Be supportive of each other, even when mistakes happen. Be thankful you have someone to share the journey with. When all is said and done, you’ll have a stronger relationship.

Need Some Extra Guidance?

Check out the Newlywed Money Bootcamp to see if it’s right for you!