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Yours, Mine, And Ours: Love And Debt
It’s finally happened. You met the love of your life, moved in, maybe tied the knot. All is bliss. Except for one thing: you’ve got debt.
Whose debt is it? It could be his, or it could be yours. It hardly matters, now that you’re together. Of course, you can have a discussion about who is responsible for paying what share of which debt, but ultimately, what you need to do is pay it down. Here’s how to go about it:
• Write down all your debts. Get out all your credit cards, all your student loan papers, all your account paperwork and bills. Add it all up, make lists, and go crazy with spreadsheets if that helps. The idea is to figure out what you owe, and to whom. The number might end up being less than you fear, or it might be overwhelming. Either way, try not to panic. Getting it all in front of you both is of utmost importance.
• Get copies of your credit reports. You can do this for free once a year; be sure to get copies from each of the three major credit bureaus. It’s important to go over each report thoroughly and make sure everything is accurate: what accounts you each have open, how much you owe, if you’ve made payments on time. If there are errors, as there are on an estimated 80% of credit reports, call up the credit bureau to get them corrected. Make sure everything matches up with what you know you owe and get clear about your standing with each creditor.
• Look at your interest rates. How much interest are you paying on each of your loans, credit cards, or other debts? It’s very important to know this. Write down your debts in order of highest interest to lowest, and then highest balance to lowest. There are two schools of thought on paying down debt: one way is to tackle the lowest amounts first, so you can get them paid off and feel that rush of satisfaction that comes with paying off a debt. The other way is to pay down the highest interest debt first, so you’re paying less in interest. This might make more financial sense, depending on your particular situation, but it can be daunting, because it feels like chipping away at an impossible mountain. Whichever you prefer is really fine. Just be sure to agree on it so you’re both on the same page.
• Apply for a balance transfer credit card so you can pay down your debts faster. If you’re trying to get your credit card balances down to zero, the best thing to do is apply for a balance transfer to a card with a zero percent rate for an introductory period. This can be anywhere from a few months to more than a year. The better your credit score, the better offer you’re likely to be approved for, so whichever one of you has the best credit should apply to be the primary cardholder.
Once you’ve done these steps, you’re on your way to your happily ever after—hopefully debt free, and for richer rather than poorer.
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