So you’re getting married. That’s the good news. The bad news: Your beloved has tons of debt on their hands. And not just any debt — student loan debt. How will you manage?
We asked Robert Dowling, a certified financial planner with extensive experience advising high-net-worth individuals and their children for Modera Wealth in Westwood, New Jersey, for some primers. Here’s what he told us.
Have the Talk
Before you state your vows, it’s important to acknowledge your feelings around the debt and share them with your fiance, Dowling said. That way, you’ll be able to address any issues upfront and concentrate on tackling the debt together as a team.
“The best thing to do is to have an open conversation, which will help in the long run,” he said.
Being candid about money matters may also help you avoid financial infidelity, which is what happens when one spouse hides aspects of his or her finances from their partner.
Get the Details
If you’re coming into the marriage without any debt, know that you won’t be responsible for your spouse’s student loans, Dowling said. You will be on the hook for any debt taken out while you’re married or loans that you cosign. (You can learn more about the risks of cosigning a loan here.)
But whether you owe money or not, it’s important to know how much debt your spouse owes. Any debt will affect your future together, Dowling said, even if you don’t want to raise kids. Specifically, you need to find out how much debt they owe in relation to their income (or prospective income). If they’re in med school and have solid earnings potential, perhaps you shouldn’t be worried. But if the debt will take years to pay off — and at the expense of other opportunities, like starting a family or buying that cabin — you’ll need a game plan.
Make a Plan
Face it: If your spouse is carrying debt, you need a plan for paying it off, Dowling said. Not doing so could impact their credit, which in turn could make it harder for your family to secure a mortgage, take out a loan or rent an apartment, for instance. If your spouse has savings, perhaps they should go toward the loans. Or if they’ve been steadily contributing to their 401K, perhaps it’s time to cut back and allocate the money elsewhere. Another option: Pay more money on your tax return by changing your filing status to married filing jointly, Dowling suggested. Some student debt can be factored into income-based repayment plans; just make sure you know what you’re doing.
Before you have “the talk” with your partner, it’s a good idea to know where your finances stand too. You can get a free snapshot of your credit report, updated each month, on Credit.com.
Image: Sami Sert