4 Tips on Managing Your Debt as Newlyweds

As newlyweds, there are many things that you have to settle in order to enjoy your life to the full. You may forget one important item in preparing your to-do list. It can be a make-or-break factor In ensuring a happy and fulfilling life for you both. If you are not careful, it can become the elephant in the room: never talked about but always there.

By now, you have probably realized that we are talking about your household debt. There are four key factors you should be keeping in mind: Only in this way can debt be working for you rather than against you.

You Both Should Be Aware of Your Debt Commitments

It is important that you and your partner have an understanding of what debts you are jointly incurring. Very few people have enough cash on hand that they can live their lives without incurring debt. You may have a warm feeling when you hear that you have been approved for a loan or a credit card. However, you must realize this only means that the lender is willing to take a risk.

Like many people, you will probably repay the loan with interest. That approval in no way signals that this is good for you. You must do your own analysis of what the obligations involved with that debt will mean to your future well-being. Both partners should have a complete understanding of what is entailed.

When you are dealing with something major like a mortgage for your home, then the details of the loan agreement are clearly visible and understandable. If you choose not to pay off your full credit card debt any month, then the mechanics may be less clear.

Have an Agreed Long-Term Financial Plan

To ensure you are using debt wisely, it is important to have a long-term plan. Do you wish to buy a bigger home at some time? Would you like to send your children to college? The choices you have available may well depend on how well you have handled your debts over the years.

These long-term decisions have major implications for your financial well-being. It is important that you and your partner come to an understanding. This may possibly change in the future but it is wise to have a common view at all times. In this way, you will both be working to achieve your shared common goals.

Work With a Budget

An essential tool in fulfilling your obligations relating to your debts is to budget your daily expenditures. Only in this way can you be sure you will have the money on hand to make your debt repayments on time. Again both partners should agree on the details of this budget. By so doing, the budget can become the reality.

The budget will ensure that incoming funds will cover outgoing expenditures. Ideally, it is useful to add a contingency item each month. In this way, you can create a rainy day fund that will cover unexpected expenses. Suddenly the car needs a new alternator. Or the washing machine stops working. You do not want such incidents to prevent you from making a repayment on one of your debts.

Have a Shared Common Bank Account

The fourth item is one that many couples have a problem with. When you have a good and trusting relationship, there is little difficulty in accepting that most expenditures will be covered by a shared bank account. There are many advantages to doing so. Perhaps the most important is that you can easily see how well things are going relative to the budget. This also applies to joint credit cards.

If the partners do not wish to follow this advice, there can always be tensions that may develop from time to time. It is possible that it may even create a slight feeling of mistrust.

This does not rule out each having supplementary bank accounts or credit cards that are not joint. Each couple can work out what’s best for them.