Assessing Debt in Relationships

For many couples, when a partner reveals that he or she has significant personal debt, it’s often met with a whole range of emotions: doubt, disappointment, embarrassment, discouragement. The big question often becomes, can we overcome this?

Dealing with a partner’s debt can be daunting.

Consider this real-life example: An engaged couple, two years into dating, were excited about what was next for them. They were discussing home ownership, travel, and starting a family. Then, the gentleman revealed he had more than $10,000 in credit card debt – it was the first time his debt had been quantified aloud. His partner was stunned; she began replaying his spending decisions in her head. His short-term spending had left them with long-term consequences. He’d been making minimum payments only, allowing debt to continually increase.

Ninety percent of people in a serious relationship — married or living together —choose to combine finances. This means that the old saying “what’s mine is yours” often includes debt. And debt can be uncomfortable!

Open conversation and full financial disclosure are key to building a healthy money dynamic in any relationship.

But all is not lost on those who enter a relationship with money issues. Every couple needs to evaluate whether the benefits of being together outweigh the challenge of lingering debt. The best course of action, of course, is to engage on the issue early and often so you can assess what role debt will play in your future together.

Digging into the Details

Once you and your partner are ready to discuss debt on a deeper level, it might be helpful to create a spreadsheet that outlines how much each person owes, to whom, how often you plan to make payments, repayment plans, and an achievable payoff deadline. Populate the spreadsheet together while you talk. Here’s a list of questions for discussion:

1. How much do we each owe?

2. What is our plan to pay off our debts?

3. How do repayments fit into our overall budget?

4. Once we pay down our debt, how will we allocate that money? (here, discuss short- and long-term goals)

5. How does personal debt impact the life we envision sharing?

6. Will the process of paying off our debts strengthen or weaken us as a couple?

Now What?

After you’ve finished discussing debt and its implications, you may want a break from finance talk altogether. True, financial conversations aren’t fun or easy, but they’re essential for orienting couples in the same direction. The data you compile may give you the confidence that you’ve got your debt under control. Or you might find you’re faced with practical and emotional consequences that complicate a life together.

Regardless, getting debt details out into the open is a necessary step for the health of any loving relationship.