Do you have any recommendations for couples who find themselves owing a lot of money to a lot of different creditors? I'm not quite sure how it happened, but my spouse and I have come to the realization that we're in deep debt and serious financial trouble. As you can imagine, this is putting a severe strain on our marriage.
Debt can place a huge stress on any marriage. It creates a situation where each spouse is forced to wrestle with questions of security and priorities. It can also cause husbands and wives to become deeply frustrated with one another. We'd advise you to take some clear and definite steps to get out of debt – and stay out of it – as quickly as possible.
So what can you do? You can start out by sitting down and talking about the problem. Effective interaction and a willingness to compromise are crucial to surviving debt. If one of you is a "saver," he or she may want to deprive the "spender" of any new purchases, no questions asked. But that approach will only lead to more tension and difficulty. If you're in debt, you and your mate will have to agree on a plan to pay it off. That can't happen without honest communication.
Once you're on the same team, make a list of all your debts – credit cards, school loans, car payments, etc. Note the amount owed on each debt, the interest rate, the minimum payment due, and any payments made above the minimum. Then come up with a plan to pay each one off. There are several approaches to debt elimination that you can take.
One strategy is to prioritize the payoff of each debt simply on the basis of mathematics. Let's say, for instance, that you have three credit cards, each with a different balance. Regardless of the amount owed, take all money paid above the minimum on the two cards with the lowest interest rates and apply it to the card with the highest interest rate, while continuing to pay the minimum on the other two cards. By using this approach, you will minimize the total amount of accumulated interest required to retire the balance on all three cards.
A second approach of debt elimination, often referred to as the "Debt Snowball Method," is also advocated by many financial and wealth management professionals. As in the previous example, you will need to take inventory of all of your debts. Using this plan, however, you will focus on paying off the smallest balance first – while again continuing to pay the minimum on each – regardless of the interest rates involved. This theory is based on the understanding of human behavior as much as financial principles, and suggests that paying the little debts off first will provide you with quick, positive feedback that will motivate you to see the plan through to its conclusion.
Whatever strategy you decide to use, avoid the temptation to take the easy way out. Consolidation loans aren't recommended if your debts were caused by irresponsible spending habits. Often, they can lull you into a false sense of security and entice you to spend even more. As for declaring bankruptcy, we are of the firm opinion that every effort should be made to repay a debt. Bankruptcy, a desperate, last-ditch measure designed for use in extreme or catastrophic situations, should not be used to relieve a spending problem.
Be sure to get help if you need it. A good financial planner or debt counselor can help you work toward your goals. If they are a Christian, your planning sessions will have the added benefit of confirming your commitment to biblical values and a Christian worldview. Call our staff counselors to begin the process of speaking with an objective third party.
In the meantime, remember that life has to go on. There's no need to sentence yourselves to a bleak and joyless existence simply because you're trying to get out of debt. Keep on having fun and enjoying each other, but find ways to do it more inexpensively – for example, by going on picnics, playing board games, reading aloud to each other, and visiting your local library. And stay vigilant – don't allow yourselves to fall into the debt trap again. You can do that through careful budgeting, avoiding careless credit card use and risky loans, and resisting the temptation to artificially raise your standard of living. If you get an increase in salary, consider saving that money instead of using it to buy a new house or "upgrade" your situation. If you follow this plan, you'll have a greater "cushion" in the event of a medical crisis, layoff, or job change.
Money and Finances