In the honeymoon phase of any new romance, money is typically the furthest thing from anyone’s mind. Love is in the air—why would anyone want to ruin that with a conversation about finances, let alone credit card debt?
Here’s the thing: 55% of American adults have credit card debt (CNBC). This means that chances are, either you or your partner could be struggling with outstanding credit card balances. As a relationship becomes more serious, the importance of not just discussing but also understanding each other’s financial situation grows. Whether you’ve been dating your partner for six months or six years, our tips for having an open conversation about credit card debt can help you build the trust and commitment necessary to move beyond the honeymoon stage.
When It’s Your Debt
If you’ve already come clean that you have credit card debt, there is nothing to gain by hiding certain aspects of it. While it’s tempting to gloss over the $200 you spent on shoes or the $1,000 on a new TV, if you’re going to get on the same page about your debt as your significant other (SO), you need to be honest. It’s just not possible to commit fully to someone when you’re withholding details that could have a negative financial impact on your partnership.
Confront the Situation Openly
Whether you use paper, an electronic spreadsheet, or another method to keep track of your debt, now is the time to put it on the table—literally. Show your partner a detailed account of your credit card debt, including how much you owe, how much you’re paying each month, any interest rates associated with the debt, and any plans you’ve made in terms of repayment.
It’s also a good idea to pull a copy of your credit report. This will help your partner gain a more comprehensive understanding of your finances. Be prepared to honestly and openly answer questions around high balances, late payments, or even collections.
After this, create what’s known as a “net worth statement.” To do this, you’ll list your income (or both of your incomes if your partner has agreed to aid you in repaying your debt), your assets, your debts (including interest rates and terms), and other obligations. This will help you get a better sense of how much is currently going towards repaying your debt and how long it will take to pay it off entirely.
Set Payoff Priorities
Unless you win the lottery, it’s unlikely that you’ll be able to pay back all of your debts upfront. Working with your partner, determine what credit card debt requires your attention first. We recommend starting with the card that has the highest interest rate in order to reduce the total interest paid. However, if you’re a person who needs to see results in order to stay motivated, it might be wise to pay off the card with the smallest balance first. Once you’ve successfully paid one off, that feeling of accomplishment will help you get excited to tackle the next one!
Look for opportunities to save money on interest payments with a personal loan, as they typically offer lower rates than credit cards. By consolidating credit card debt with a personal loan, you can combine multiple balances into one affordable monthly payment, making it easier to manage your debt.
When It’s Your Partner’s Debt
Compassion Over Judgment
Having debt can come with an emotional burden in addition to a financial one. Whether your partner’s debt was a result of external circumstances (unexpected medical expenses, job loss, etc) or simply a series of poor decisions, the added stress of judgment from a loved one won’t help them get out of it.
The best thing you can do when approaching your partner’s credit card debt is to be calm and compassionate. Try to find something in their story that you can relate to. This will make you more empathetic to their situation.
Ask the Right Questions
Talking about finances can be awkward at best, and heated at worst. However, it’s like ripping off a Band-Aid: you never look forward to doing it, but once you do, you’ll be glad you did it efficiently and quickly!
In addition to asking about their debts, you should also ask about their credit score, expenses, savings, and income. Try to get a full, comprehensive picture of their financial situation, and don’t be afraid to ask the tough questions.
Celebrate the Victories
Paying off credit card debt requires a lot of patience, self-restraint, and perseverance. Be sure to cheer your partner on every step of the way! Review their progress regularly with them to ensure they’re on track to meet their payoff goals. Reward them along the way with little surprises, like taking them out on a dinner date or buying them those pair of new shoes they’ve been eyeing. Celebrating the victories will motivate them to keep going.
Ready to tackle credit card debt together? We can help make debt easier to manage by consolidating multiple balances into a personal loan. Apply online to check offers in minutes and see if you could save with a lower interest rate.