What to do when your spouse’s debts become yours

What to do if you’re marrying into debt

The situation

I’m getting married in the fall—yay!!!—to my partner of five years. Our financial goals are very much in alignment: First, pay for this wedding; then save up and buy a house; then (someday) have kids to support. But our financial circumstances are very different. I work in law and paid off my student loans last year, so I’m saving money. My fiancé has a master’s in library science. He loves his job at a public school, but his total debt—including on a credit card he used while he was looking for work—is now is in the low-six figures, including undergrad and grad school loans. Once we say I do, we want to hit the ground running toward our financial future together. How do we keep his debt from becoming a roadblock?

—Arturo, Jersey City, N.J.

The solution

First of all, mazel tov on your upcoming nuptials—and your inspiring positive attitude. Staggering levels of student debt are putting a dent in millennials’ prospects of achieving major financial goals like homeownership. (Marriage, too, but you’ve got that one in the bag.) I’m touched to hear you haven’t let it get in the way of love.

There’s no sugar-coating (or wedding-caking) it: Your fiancé’s debt is going to affect your timeline for some of those big-ticket savings goals. It sounds like you two have a policy of transparency and communication when it comes to talking money, and that is half the battle. It’s going to serve you well as you come up with a plan to deal with the debt and move on to growing your savings together.

Ready? Here’s your post-wedding debt-tackling checklist.

Step zero: You did already have that money talk…right?

Based on the frank assessment of your fiancé’s finances, I sense that you have already discussed important matters of love and money. But debt and marriage make for a complicated financial, emotional, and logistical tangle, one that may require you to go deeper.

A few big questions come to mind: Will you help him refinance his debts, given that you likely have a better credit score? Or will you just provide the cash to pay them down, given the income difference between a librarian and a lawyer? There’s no right answer; it comes down to how you’ve decided to share finances. But sometime before the wedding, take a break from the seating arrangement chart and come up with a plan. Calculating your net worth as a couple, including your savings and his debts, might help you jump-start the conversation. You’re in this together, after all.

Step 1: Credit cards

Even if his student loan balance is higher, I’d advise that, in the short term, you make your spouse’s credit card debt your first priority. This should be part of your overall family strategy for paying down the money he owes: Take care of debts have the highest interest rates first, before they have time to get any bigger. And credit cards tend to have the highest rates of all consumer debt—the national average is currently hovering near 17%.

The best way to make credit card debt disappear is to have the cash on hand to pay it off. After you merge your finances, you and your husband may opt to put your savings toward doing just that. But if you’re not in a position to (or don’t feel comfortable doing a lump-sum payoff), there’s another option. As the debt-free spouse, your higher credit score may mean you’re eligible for balance transfer cards with lower rates, or even a zero-interest “teaser” rate. That way you can move the balance from his higher-rate card and keep paying it off with less interest.

Speaking of credit scores, one way you can help your future husband improve his is by adding him to your credit card as an authorized user—as long as the card is used responsibly. That means paying it off in full, on time, every month.

Step 2: Student loans

Now onto the (likely) bulk of the debt. Your fiancé isn’t alone in his predicament: The insane growth of student loan debt over the past generation affects millions of Americans, and among the worst hit are people who borrowed for grad school.

When it comes to prioritizing, continue to put high-rate debt first—otherwise you’ll pay far more in the long term. That means setting your sights on any private student loans from banks or through institutions where he studied. These tend to have higher interest rates than federal loans. Again, probably the best thing you can do here is to start aggressively paying down the balance in cash. But given that you’ve just begun rebuilding your own savings, you probably don’t have a spare fifty grand (or more) to move around.

What you can do, though, is help him refinance these private loan balances. This isn’t quite as simple as a credit card balance transfer, but with your relatively high income and credit score, you can cosign for a consolidation loan for your fiancé at a lower interest rate through a company like SoFi or CommonBond. This could shave thousands of dollars off his loan payments.

Any lower-rate federal student loan debt should be next on your list. His job at a public school may qualify him for the Public Service Loan Forgiveness program, which wipes away the debt after 10 years of on-time payments. Make sure to read the fine print; the qualifications are annoyingly tricky.

Step 3: Planning for home-buying…and more debt

If you stick to your plan to buy a house in the next few years, there are a few things to consider. The most obvious, of course, is that saving up for your down payment will go on the back burner while you focus on paying down your partner’s debt. (And keep in mind that the down payment isn’t the only bucket your home-buying savings are going into, although it’s the big one. My infographic on the subject breaks it all down.)

And unless you’re bringing suitcases full of cash to the closing, the second thing to remember is that buying a home means taking on more debt, in the form of a mortgage. I’d consider taking this step only once your spouse is in the black, and not just because that means you’ll have just one loan to worry about.

When shopping for a mortgage, you want to put yourself in a position to get the best possible rate. And if you’re applying together, lenders are going to take a look at both of your credit scores—say they’re 500 and 800—and make a judgement based on the lower score. That’s right: Even if you have sterling credit, your spouse’s score is still the deciding factor.

You could, then, apply for a mortgage only in the name of the higher-scored spouse, but there are a few reasons why you might not want to do that. For one, you may need to include both of your salaries on the application to meet minimum income requirements. Second, even if he has paid down his debts, regular on-time mortgage payments could also boost your spouse’s credit score. Lastly, if you start out with a mortgage held in only your name, and you decide you want to add your spouse later, you can’t simply switch to a joint mortgage. You’ll have to go through the costly and time-consuming process of refinancing the original home loan into a new loan for which you and your spouse apply together.

Complicated? Yes—but no more so than many situations you’ll navigate as a couple. (For better, for worse, for richer, for poorer….) You’ve got this. (And P.S.: If you’re looking to save a little cash on the wedding to get started, click here.)

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