Should Merging Finances Include Helping Pay Your Partner’s Debt?

2018-04-10T16:33:30+00:00

Newlywed games typically feature a host who separates a pair of lovers, and then approaches them with random inquiries about their romantic partner. What sports did they play in high school? What was their major in college? What are their political views? This process tends to result in comic relief when the partners’ answers reveal how little they know about one another.  The questions they cannot answer largely tend to be harmless topics that could have been brought up without any reticence expected in return.

How then would contestants do if they were grilled about their newly acquired spouse’s financial standing? More specifically, what if the host asked about their partner’s debt and where it came from? The answers to this line of questioning hide behind uncomfortable conversations. Since those financial conversations aren’t always taking place before marriage, we can imagine how inaccurate the responses would be.

This lack of knowledge about our life-partners has always been an ugly oversight for married couples, but in the present day the consequences have grown in severity. This is because the types of debt one can hold are exceedingly diverse, and couples’ premarital knowledge on this debt is alarmingly absent.

How Often are Finances Kept a Mystery?

In a recent study, respondent data showed that 80% of individuals entering a marriage with debt don’t plan to tell their future spouse prior to the wedding. The primary reason is because they’re concerned that their partner will react poorly to the news. So essentially the 80% respondents admit they are planning to leak the information at some point as a surprise during their marriage. This conscious deception could leave the financially responsible partner (if there is one) to deal with the concealed information once they have already committed for life.

Knowing how many partners conceal information about their financial history supports the reality that the majority of newlyweds have not laid out ground rules for how they plan to deal with the individual premarital debt as a couple. For instance, think about a wife in a marriage secretly having $60,000 in debt before vows are exchanged.  If she wants to quit work when starting childbirth, her partner might unknowingly have to take over her debt payments on top of supporting the growing family. Maybe his earnings capacity cannot support this. Therefore, the unknown financial history severely affects the husband’s life plan.

Could You Benefit from Your Partner’s Debt?

One of the overlooked distinctions in premarital debt is who becomes a beneficiary from the debt incurred. By having an open discussion about premarital debt a couple can objectively look at the fairest ways to handle it. In the previous example, imagine the wife who has $60,000 in debt incurred this disposition in order to receive a law degree. Even if the wife is not the breadwinner in the relationship the husband shouldn’t have a problem helping repay that debt throughout the marriage. Quite simply, this is because he will benefit from his wife’s increased earning capacity in the form of a higher standard of living. Not to mention the benefit of being married to a woman with legal knowledge. So regardless of who incurred the debt, in that example it certainly makes sense to attack it together.

What about Dead Debt?

Dead debt refers to a financial hole that was incurred without producing any type of future benefit. This could be credit card debt, over-extended loans on expensive cars, or education costs that didn’t yield a degree. Though there could have been decent reasons why an individual racked up dead debt, it is still tricky because it offers no objective reason for aid from the other partner besides the fact that they are married.

Though there is no right answer with respect to handling dead debt, there are a few things to consider before laying out a plan. The first distinction is whether or not the dead debt is part of the partner’s future way of life. If it is, then not only would it be questionable to provide financial support to ameliorate their standing, but it would also be worth questioning if marriage is wise.

On the other hand, if they have definitively changed behaviors that lead to this debt then it could be reasonable to move forward with marriage and attack it together. After all, if they’ve changed their spending behaviors then you’ll eventually achieve a higher standard of living together. Your partner being out of debt will allow their money to work for you both, capitalizing on the time element of compounding, and subsequently boosting your quality of life.

Often times, financial advisors will tell folks to “grow up” and tackle any and all marital debt together, regardless of its origin. After all, you’re married and two have become one as they say.  I personally feel this is archaic and ignores diverse situational factors. Imagine opening your checkbook to wipe out dead debt even though your partner hasn’t corrected the poor financial habits that created the original debt. You’d almost certainly harbor resentment against your fiscally reckless partner if they didn’t shape up.

In contrast, if I were entering a marriage with worthless debt I would feel miserable watching someone I love paying for my mistakes. If it was my bad decisions that created dead debt then dividing out subsequent responsibilities for it may not teach me my lesson.

A Few Final Thoughts

There are infinite examples of romantic financial scenarios and they should each be analyzed individually. Though marriage is a union of two becoming one, there are intricacies that make the merging process unique. By making it known to your partner that financial transparency is unnegotiable before exchanging vows, you create an opportunity to negotiate with your partner how you’ll merge your finances someday. Even if you don’t agree with my methods of determining what is reasonable, hopefully you’re still able to use this passage as fodder for your own romantic situation. Doing so could mean the difference between a successful or unsuccessful marriage.

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About the Author:

Darian
Hi, I'm Darian! I am a twenty-something insurance professional working on my ultimate quest for financial freedom. I hope you enjoyed this article. Stick around to learn more about financial strategies to manage debt, save more, spend less, and live the life you want.

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