How to pay off marital debts

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Walking down the aisle is a joyful occasion, but the costs of the big day often leave couples with a significant debt burden. While this is common among many American newlyweds, it is critical to address marital debt immediately. Failure to do so could put a damper on long-term financial goals such as buying a home, starting a family or saving for retirement.

The importance of addressing marital debt

a recent survey found that a third of American newlyweds financed at least some of their wedding costs. The average couple ended up racking up around $11,740 in debt, with 37 percent regretting the choice.

Addressing debt early in a marriage is critical for several reasons. First, the ongoing debt can put a strain on your relationship due to the increased stress, which can lead to frequent arguments and resentment.

By settling marital debts quickly, couples can reduce feelings of frustration and build a healthier and more robust foundation for their marriage.

Paying off marital debt quickly also allows couples to focus on saving without the burden of lingering debt. This can make it easier to set and achieve long-term financial goals, such as buying a house and starting a family.

Strategies for Paying Off Marital Debt

There are several ways to tackle marital debt. But for all these solutions to work, both partners must be on the same page and remain transparent and committed throughout the process.

Use wedding gifts

Monetary wedding gifts can serve as a practical tool to help newlyweds pay off marital debt. It is wise to spend some money on the wedding bills first.

This approach will help you get your honeymoon started without the burden of debt, making it an investment in your relationship and future financial stability. Before you discuss the funds, however, it’s important to have a conversation about your financial goals and make sure you agree on how you’ll use the funds. Otherwise it could seem like a breach of trust and cause tension.

Apply the debt snowball or avalanche method

Debt payoff strategies, such as the debt snowball or avalanche method, can be effective for managing marital debt. The snowball method involves paying off the smallest debts first, regardless of their interest rate. The avalanche method, on the other hand, prioritizes paying off debts with the highest interest rates first.

Both methods can help reduce the total amount of interest paid and speed up the payout process. Using the snowball method, you gain momentum through small wins, which increases motivation. The avalanche method can save more money in the long run because it targets debts with the highest interest rates first, but it can also be a slower process.

To choose the right strategy, list all your debts, along with their outstanding balances and interest rates. The snowball method may make more sense if you have a lot of debt with similar interest rates. But if you have debts with very different interest rates, the avalanche method may be the better approach because it allows you to save more.

Consider a balance transfer credit card

A balance transfer credit card is a financial tool that allows you to transfer high-interest credit card balances to a new account with a 0 percent introductory period. This can be a strategic way to manage and pay off marital debt because it can save you on interest costs and potentially pay off principal faster.

When using a balance transfer card to pay off marital debt, it is essential that you have a repayment plan in place to pay off the outstanding balance before the 0 percent introductory period ends. This way you maximize your savings and you do not have to pay regular interest.

Explore debt consolidation loans

A debt consolidation loan is a type of personal loan that allows you to consolidate multiple unsecured debts into one account with a fixed interest rate. These loans often have a lower interest rate than the average credit card.

The process involves applying for and receiving a loan for the amount of your total debt and then using that money to pay off each individual debt. You are then left with a single monthly payment for your debt consolidation loan, streamlining your finances and making it easier to manage your debt.

Debt consolidation loans can also serve as a tool to create a clear timetable for when you will be debt-free. Some lenders even offer the convenience of paying your creditors directly, further streamlining the process.

This approach is best suited for people with good to excellent credit to ensure the lowest rates. Although some lenders offer bad credit loans, they often come with higher interest rates and fees, which can defeat the purpose of saving money in interest.

Optimize your finances to pay off marital debts

After the wedding, it’s a good idea to look at your joint financial picture and make changes where necessary. Consider the following options to create a solid financial plan for the future:

• Selling wedding items: Consider selling your wedding dress, bridesmaid dresses or decorations on platforms such as eBay, Poshmark or specialist wedding resale sites. This allows you to recoup some of the costs and free up storage space in your home.
• View subscriptions and memberships: As a newlywed couple, you may have dual subscriptions or memberships, such as gym memberships or streaming services. Go through these together and cancel any unnecessary or unused items. This can lead to significant monthly savings.
• Choose affordable date nights: Choose cheaper or free activities instead of expensive nights out. This could include cooking a romantic meal at home, going for a walk, or having a movie night with a streaming service you already subscribe to.
• Meal planning: Eating out or ordering takeout can add up quickly. Instead, plan your meals in advance and cook at home. This is not only often healthier, but also much more budget-friendly.
• To consolidate accounts: Consolidating your bank accounts and insurance policies can lead to savings through combined discounts or lower costs. Managing your finances as a couple can be much easier when everything is in one place.
• Keep an eye on financial opportunities: Look for extra income and cash by exploring legitimate side hustles or using windfalls like tax refunds to pay off a lump sum of your debt. You can also put the leftover amount into a joint savings account to build up a savings pot for future goals.

it comes down to

Addressing marital debt early in a marriage is critical to creating a strong foundation and achieving long-term financial goals. It is also important to optimize your finances together as a couple and communicate openly about financial goals. Couples can pave the way for a less stressful and stable future by taking action and being proactive.