For couples getting married this summer, here is a little advice. There are a lot of changes that come about when you say “I do”. One change that you should swiftly embrace is the joining of your finances together. Particularly if you or your spouse is struggling with debt, combining your efforts to pay down debt can yield bigger results in a shorter period of time.
Why? There is nothing like teamwork to get a job done effectively.
“The whole concept behind debt consolidation is to combine debts so that you can focus your available payment money to target specific debts. This is more effective than spreading what available cash you have around to make small payments on numerous debts.” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“This concept can be even more effective when couples agree to attack debt together. Not only will you reduce your debt load at a quicker rate, you can work towards achieving mutual financial goals together, encouraging each other along the way. It’s no secret that finances are one of the leading causes of divorce. Get your marriage and your financial future off on the right foot by combining forces,” says Schwartz.
Here are some suggestions on how to set up your strategy:
What’s mine is yours
What kind of debt are you and your spouse saddled with? Student loans? Credit cards? Don’t play the blame game if one spouse is carrying more debt than the other. Look at your debt as a collective sum and your first collective hurdle to overcome as a couple. Add to that, in most cases once you are married, your spouse can be responsible for paying your debt- another of the good reasons to adopt this approach.
Set your budget
Now that you know what you want to achieve, how are you going to get there?
It might seem overwhelming when you combine two debt loads into one, and feel like you’ll never pay it down. But don’t forget, not only are you combining debts, you are combing incomes into a household budget. If you structure your debt and your budget accordingly, you’ll be more effective at paying off that debt more quickly.
Set a specific budget that allows for some wiggle room. Given that you are both trying to adjust to the new household budget, it may take some trial and error to make it work well. Commit to revisiting it often to fine tune it.
Set your goals
It’s time to set your goals and to commit to them. Do you hope to buy a home? Do you want to have a family? Maybe you’d like to travel? There is no use in having a strategy unless you are working towards something. It’s not enough just to want to pay down debt. Paying down debt is the first step towards achieving these other goals.
Commit to these goals by establishing a timeline and visual reminders of your progress. Don’t forget to include savings in your budget so that you can reach those goals.
Pick your target
Start by picking either the smallest debt or the highest interest bearing debt. Put all of your available extra money down on that debt only, while paying minimums on other debts. When that one is paid, move on to the next and so on until you are debt free.
Married and in debt? Our trained credit counsellors can help weigh your options, call 1-888-287-8506 to receive the advice you need now. You can also complete our Free Debt Analysis online