Summer 2010 | Volume 108 | Number 656
Until Debt Do Us Part?
All newlyweds want to live happily ever after. Getting on the same page about your finances is a good place to start.
By Kate Ashford
Whether you're deciding whose family to visit at Christmas or what color the bedroom should be, for newlyweds the transition from "me" to "we" can be bumpy. But rarely is it more so than when it comes to financial matters. Studies show that money is a top cause of conflict among married couples.
"People come from different backgrounds and have different ideas about how much debt is OK to carry, what kind of purchases are too extravagant and everything in between," says John Knoernschild, a Thrivent Financial for Lutherans representative in Little Rock, Arkansas.
Plus, money represents much more than simply buying power: It's tied into our sense of security, autonomy, self-esteem and power. How can you steer clear of landmines? In spite of experts' often differing strategies about everything related to money, one thing is clear: A newly married couple must talk.
"Set aside a few hours over a few days, without distractions, and talk about money," Knoernschild advises. "It's important to know where each person is coming from and find some common ground." Even if you don't end up agreeing on everything, at least you'll know what to expect from each other and why. What, exactly, should you talk about? A Thrivent Financial representative and others offer these key talking points for just-married couples.
Talk about goals: With nothing but open road in front of you, the beginning of a marriage is an ideal time to start charting the life you want. Your goals don't have to be identical, but it's best if you're working toward common targets. David Bach, author of Smart Couples Finish Rich, advises talking about goals in terms of the values and motives behind them. If one person wants to travel a lot and the other is hoping for a nice home, you may discover that a desire to spend leisure time with family underlies both desires. A simple plan is often all you'll need. For example, if buying a house is your goal, each person could contribute $100 per paycheck to a house fund.
Talk about money habits: Do you splurge when you feel depressed? Do you hate to borrow? Do you have a hard time sticking to a budget? "Honesty is the best policy here," says the Rev. John O'Neal, lead pastor at Grace Lutheran Church in Des Moines, Washington. "Be up-front about how you handle money and talk about the role it's played in your life." When you understand where your partner is coming from, it's easier to find common ground and figure out what it will take to reach your goals.
Talk about debt: Debt brought into marriage is one of the biggest obstacles to newlyweds' happiness, says a Center for Marriage and Family study. But debt can be difficult to talk about because it often means admitting past mistakes. And if one spouse has significantly more debt than the other, it can stir up feelings of guilt or resentment. That's why paying off debt – regardless of where it came from – will benefit both of you in the long run. Knoernschild advises couples to make a list of all outstanding debts, then prioritize in terms of amount and highest interest rate. Draft a payment plan based on what you can afford to pay toward the debt each month. The idea is to pay it down as quickly as possible while leaving enough cash for day-to-day expenses (see "Start Off on the Right Track").
Talk about budgeting: Only 12% of married couples use a detailed budget, according to a national survey conducted by market research firm Synovate – and 38% don't budget at all. That doesn't bode well, considering that the survey found that couples with no budget were more likely to have frequent fights about money. Think of it this way: Once you've established what you want to achieve, your budget is the road map that will show you how to get there. "Be sure to share the burden of budgeting," O'Neal says. "You both need to have a realistic sense of what you can and can't afford."
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