How much debt do Newlywed Couples have?
People are getting married later in life than they used to. It’s more and more common for people to wait until they’ve completed their educations and secured careers before getting married, a decision made easier by the rise of cohabitation in recent years. Although waiting until later in life gives couples a chance at a solid financial foundation for their marriage, it can also mean that couples are entering into partnerships with substantial debt between them.
Fortunately, you don’t inherit your fiancee’s debts when you tie the knot unless you’re added onto the accounts. Their credit score will not directly affect yours and you’ll still be able to apply for credit on your own based on your own merit after the wedding. Marriage does have some implications on your finances, however, that can be dramatically effected by debt.
First, any purchase you intend to make together will assess both credit scores. This happens most often when applying for a home loan, but it can come up for any major purchase that you buy as a couple. Additionally, you may be tempted to consolidate loans or add each other to existing lines of credit, and once that happens, your debts will become muddied. Finally, and perhaps most importantly, once a couple’s finances are fused together after marriage, you share in the responsibility for paying off debts that aren’t yours.
Of course, some couples do manage to maintain completely separate finances throughout their marriage. It requires concentrated effort, careful budgeting and, in some cases, several bank accounts. Even when you work to keep your finances separate, your household income must still be divided into expenses, and debts can count for a large portion of your individual incomes. This can put a strain on a household budget and cause marital strife if it’s not dealt with swiftly.
How Much Debt Do Newlyweds Start With?
There are several sources of debt that newlyweds may bring into their marriage:
– Student Loans
The average college graduate has around $20,000 in student loan debt, and people with advanced degrees can easily have two to three times as much.
- Consumer Debt
Most Americans have around $5,000 in credit card debt, and $10,000 is not uncommon.
– Car Payments
People who buy new cars can expect to pay $300 or more a month to pay off their vehicles, and the more expensive a car is, the longer it will accrue interest while the borrower pays it off.
– Wedding Debt
In addition to individual debts, married couples often have the expense of the wedding itself to deal with. The average wedding costs $22,000 and many couples finance this cost rather than spending cash.
In addition to these three major sources of debt, couples may have other problems like existing medical bills or short-term loans. This puts some couples in the position of owing as much as $100,000 altogether once all debts are added, which is a staggering sum to consider. Of course, not all couples will face numbers this high, and some may have debts that are even higher. Even discounting student loan debt, however, substantial consumer debt has been linked by some studies as a major source of conflict among newlyweds.
How Debt Affects Your Marriage
According to a study by the U.S. Department of Health and Human Services, 48% of husbands and wives enter marriage with credit card debt, 55% have car payments, 23% have student loans and 12% have medical debts. Moreover, 57% of married couples have a combination of two or more types of debt.
Interestingly, all debts are not viewed equally between couples. When surveyed about their feelings, couples admitted that they felt student loans and medical debts were “necessary” debts and were less bothered by them than consumer debt. There is a high correlation between consumer debt and marital strife; couples with no debt scored substantially higher in terms of marriage satisfaction than those who carried debt, and higher debts are usually linked with greater unhappiness.
There are many reasons why debts would lead to marital dissatisfaction. For one, debts reduce the amount of free money available to spend on building a new life as a couple. They also damage people’s credit, making it more difficult for couples to buy their first home, purchase a car together or finance a business, vacation or other purchase. Moreover, debts can lead to resentment, especially if there is also an income disparity between members of the couple.
How to Reduce the Impact of Debt on Your Marriage
- Frankly discuss financial matters with your fiancee before the wedding to make sure you’re on the same page about how money should be handled.
- Consider taking a course or talking with a marriage counselor prior to the wedding to get assistance in working on finances.
- Work diligently on paying off as much debt as you can before the wedding, even if that means prolonging the engagement slightly.
- Save money on your wedding by having a smaller event, doing more of it yourself and enlisting help of friends and family whenever possible.
- Consider using any monetary gifts you get from the wedding to pay off debts.
By maintaining open and honest discussions about debts and money with your spouse, you can strengthen your bond and avoid some of the strife often associated with debt. Once you do pay off your consumer debts, make a point of avoiding debt in the future; make a concentrated effort to spend in cash whenever possible, budget your expenses and put plenty of money aside into a savings account. This will help ensure that your future is built on a solid financial foundation on which you can build a lifetime together.