Many couples have problems with their finances. Nest recently published information from a study done by the University of Texas. This study suggests that economic problems, including debt, have negative effects on many marriages. Married couples experiencing an extreme amount of stress over their finances tend to be less satisfied in their relationships. In fact, people that feel emotionally drained by their financial struggles can become irritable, hostile, and even uncommunicative toward their spouses.
Marriage and debt go hand in hand
According to Fox Business, Americans now carry an average of $4,878 just in credit card debt. Given this, it’s easy to guess that many couples entering into marriage come with personal debt. And that can quickly become a source of contention.
In most cases, debt that was incurred before the marriage does not automatically become joint debt. This includes student loan debts. However, if both of you signed on a joint account then both of you will be liable for it.
Which spouse is responsible?
If your marriage is debt ridden, or if you’re about to marry an indebted person, there are things you need to know.
The first of these is who’s liable for the debt. This varies based on where you live. Nine states, including California and Texas, are “community property” states. This means that most of the debt that one of the spouses incurs during the marriage will be the liability of both spouses. However, the other 41 states are ”common property” states. In most cases, the debt incurred by one of the spouses is his or her own – unless it was incurred for a family necessity such as shelter (read: mortgage) or a child’s education.
The Supreme Court ruled on same-sex marriages, but that doesn’t mean that there aren’t still obstacles (financial obstacles, in particular). As a general rule, which spouse is responsible for a debt will depend on where they live – just like other couples. However, it can get complicated if you live in one of the 13 states that had banned same-sex marriages before the Supreme Court decision. In fact, if you live in one of these states, you may need to discuss who’s responsible for which debts with an attorney or certified financial planner.
If you divorce, one of the two of you may be stuck with more of the debt than the other. This is because how the entire amount of debt will be split will be based on how the couple’s’ assets are divided when the divorce is finalized.
In most cases, the person that has more property will end up getting the biggest part of the debt. Again, this will depend on where you live as many states force debts to be split equally. But what usually happens is the person that is benefiting the most from the divorce will be assigned the biggest share of the couple‘s debt.
What you can do to avoid debt
Debt is among the major causes for the failure of marriages. Fortunately, there are things you can do that could help you avoid this problem.
The most important of these is that the two of you need to discuss your spending habits. It’s easier to stay out of debt if the two of you spend a serious amount of time discussing your spending habits and creating a budget that will prevent impulse buying and overspending.
A second good idea is to keep an eye on your spouse’s credit score, as this will tell you if he or she is falling back on their payments. Anything that affects one person’s credit score will affect the other person when the two of you apply for credit together.
Third, it’s critical for the two of you to discuss your goals for the future. You can avoid piling on debt if you and your partner make good, thought-out purchasing plans for the future.
Have an emergency fund. Try to save the equivalent of three months of your net income. You can never tell when you’ll have an emergency, but it’s certain you will have one. When you have an emergency fund, there will be cash available to pay for that emergency, and you won’t be forced to go into debt to cover it.
Finally, here’s a video with some good tips for avoiding debt and saving money.
Debt can be ugly and a serious bone of contention between spouses. However, it can be less contentious when you understand the rules of debt and the things you could do to stay out of it. In the words of the famous philosopher and poet Ralph Waldo Emerson, “A man in debt is so far a slave.”