If you have debt in your relationship, don’t expect to get rid of it until you get crystal clear about who owes what to whom, how much exactly, and what the interest rates are on these lingering amounts.
This is a sponsored post written by me on behalf of Navy Federal Credit Union. All opinions are 100% mine.
And while these financial talks might be unpleasant to discuss, it’s never going to just go away on its own. What some people think of as the “easy” way out (bankruptcy or avoidance altogether) only leads to devastating financial consequences, like losing everything and ruining your chances of obtaining loans in the future. Do I even need to point out that financial strain is a leading cause of divorce? Here’s what you need to do to get clear on debt with your partner:
1. Make a list and check it twice. Sit down with your spouse and figure out who you still owe money to. This includes your loans (Yes, credit card debt is technically a loan.), your partner’s loans, and any loans you took out together. Write each one down in a Google doc or Excel spreadsheet. Use whatever works for you both, but jot it all down in one place so it’s easy to see what’s owed. Once you’ve made a complete list (with every single thing you can think of), write down the total amounts still owed to each creditor or private party in a separate column, and the APR (Annual Percentage Rate) in a third column.
2. Prioritize the entries. In some cases, it’s critical to get certain debts paid off immediately, like money owed to the IRS or child support, for example. While you should never miss a student loan or credit card payment, sometimes medical debt collectors are a little more lenient. There generally isn’t interest attached to medical debt, and often you won’t be turned over to a debt collector until you’ve missed at least three payments. In all cases, you should contact creditors to see if there is a grace period, if your payments can be lowered, if you are eligible for a lower APR, and if the date the payment is due can be shifted to a different time of the month when you might not have as many bills due at once.
3. Create a plan of attack. The most money savvy approach is to throw as much money as possible at the bill with the highest APR. The longer it takes you to pay off debts with high interest rates, the more you’ll pay over time. You deserve to keep your hard earned money, so don’t pay more than you need to in interest! If at all possible, transfer credit card debts with the highest APR’s over to accounts with low or even 0% interest, but be warned that if you open a new card simply to take advantage of the 0% introductory rate, don’t charge anything else to it and cut up the card to the old account so you won’t be tempted to unknowingly add to your existing mountain of debt. (Pro tip: Avoid debt consolidation solutions, which are often scams that could cost you more in the long run.)
Once you can see exactly what you’re working with and have created a plan to get rid of your debts, stay the course! It’s easy to feel overwhelmed and to get discouraged, but with some simple, temporary, lifestyle adjustments (eating out less often, selling your vehicle, or getting a second job), you can be free of this burden.
Navy Federal Credit Union has a plethora of financial articles filled with lots of financial advice for those seeking knowledge from improving your personal finances to saving for your retirement. While Navy Federal has been serving members of the military since 1933, their advice is for everyone. With over 7 million members, they understand the needs of their members, because they’re member-owned and their promise to always act in their members best interest, because they care. Switch your accounts to Navy Federal today and experience the benefits of membership.