Debt didn’t enter the conversation when Stephanie Jankowski and her husband were engaged.
“I was pretty naïve,” said Jankowski, an English teacher from Pittsburgh who got married about ten years ago. “I didn’t have any debt. I assumed he didn’t have any.”
She was wrong.
After the wedding, her husband’s credit card bills started rolling in. As the coach of a kids’ baseball team, he had used his credit card to fund equipment and fees for players who couldn’t afford to pay on their own.
Over the next 18 months, the couple “threw every last cent” at paying off his balance. Jankowski’s advice: “Even if you’re marrying the most wonderful person on earth, have a talk about debt.”
Sharing information about your debts with your sweetheart might fall low on your list, especially if the news isn’t good. But while it might be the opposite of romantic, having a debt talk before you get married is critical.
Uncovering unpleasant surprises after the wedding might increase tensions in your marriage. The more you know about each other ahead of time, the more you can work together to improve your finances and get on the right track.
“Money touches everything a couple will do,” said National Endowment for Financial Education (NEFE) spokeswoman Patricia Seaman. “It’s important to know the good and the bad.”
It’s also important to be truthful, since trust is also an important component of any relationship. Unfortunately, a survey by NEFE found that 8 percent of couples lie to their partner about the amount of debt they owe.
Bruce McClary, a spokesman for the National Foundation for Credit Counseling, recommends having a conversation about debt “in a formal setting.”
“You should both come prepared and bring documentation,” he said. “You’re about to put everything on the table.”
Here is checklist couples might use to guide the conversation:
Think your partner’s phone number is the only important number you need to know? Here’s another: his or her credit score.
Credit scores are a numerical representation of a person’s creditworthiness. Compiled by credit rating agencies, credit scores are based on a number of factors including your payment history and how much you owe. These numbers, which generally range from 300 to 850, are used by lenders to determine whether or not to give you a loan and how much interest you’ll be charged.
Why does your future spouse’s credit score matter to you? After you’re married, you will each continue to have your own individual score. However, if you apply for credit together, such as for a mortgage, your partner’s credit score will be taken into account.
Large gaps between partners’ credit scores may also predict future trouble in marriage. A study conducted by the Federal Reserve found that couples with a gap of 66 points at the beginning of a relationship had a 24 percent greater likelihood of breaking up within two to four years, and a 12 percent higher chance of separating during their fifth and sixth year.
If you learn that your fiancé has a low score, it doesn’t have to be a deal-breaker. Rather, the sooner you know about it the sooner you can work together on a plan to improve it.
You can access your credit scores in a number of ways, including possibly from a credit card statement, a non-profit credit counselor, or for a fee, from a credit-reporting agency.
You might also want to pull and share your credit reports, which will provide detailed accounts of your credit histories. By law, you’re entitled to a free credit report annually. You can access your free credit report at annualcreditreport.com.
Couples should share all of their liabilities with each other, including credit card balances, auto loans and student loan debt. You’ll want to know exactly what the debts are, the interest rates and when the loans are due.
It’s also important to understand how your future spouse is managing his or her debts and to look for red flags, McClary advised. For instance, you’ll want to know if he or she is just paying the minimum required payments on credit cards, as opposed to paying off balances.
At the same time, partners should ask each other what caused their debts in the first place.
“If that person has a spending problem, you need to know about it,” said Beverly Harzog, the author of the book “The Debt Escape Plan.”
In most states, you are not responsible for the debts brought into the marriage by your spouse, said divorce lawyer Cari Rincker. It’s usually considered “separate debt.” However, debt incurred by your spouse during your marriage is considered marital debt, in most states. Debts you take on together are your joint responsibility, Rincker said.
Regardless, if either one of you has debts, it can put a dent in the family’s finances.
“Even if the debt is in your partner’s name it will affect you,” said Harzog. “If your partner is stressed, you’ll be stressed.”
Now that you’ve shared information about your credit profiles, you can start to make wise decisions together.
Will you apply for a mortgage together, or might it be better for the spouse with the better credit to apply individually? What kind of cuts are you both willing to make in your spending that will help you pay down your debts?
Whatever you decide, be sure to keep the conversation going once you’re married. After all, you’re about to set off a journey together. Don’t let debt get in the way of your future happiness.