Getting Out of Debt Can Improve Your Relationships
How would you feel if you suddenly found out your partner owed thousands of dollars in debt? This can be a big source of disagreements in relationships. One partner’s debt can stand in the way of another’s financial goals. Sometimes spending can come under the scrutiny of the wealthier partner, while the indebted one may have unreasonable expectations regarding their partner’s assistance.
One survey discovered that 46 percent of people consider high credit card debt to be a romantic deal-breaker and wouldn’t go on a second date with someone who had it. Learning about a partner’s high debt and dire financial straits later on in the relationship can be even worse.
Credit can easily get in the way of a happy, healthy relationship, even for partners who go in with eyes open.
Finances Cause Too Many Arguments
Money is one of the leading causes of arguments in marriages and long-term partnerships. There are all kinds of money issues that can get in the way of a happy relationship. Some of the most common include:
Sharing Finances: The decision to share or split bank accounts as a couple can be a divisive one. One partner may be reluctant to share finances due to another’s high debt load, or resentment can build up over individual purchases when bills are shared.
Power Plays: Common in situations where one partner earns significantly more than another (or the other is unemployed), this is where the higher-earning individual wants to dictate spending.
Debt: When one partner has a high debt load, the other can feel like it’s holding them back from their own financial dreams. It opens up judgement about spending habits and can lead to all kinds of disagreements.
There are countless other disputes that arise from money issues. If you’ve found debt getting in the way of your relationships or preventing you from finding a romantic partner, it’s time to take control of your finances and put your debt behind you.
What Does It Take to Get Out of Debt?
There are many paths out of debt. You need help finding out which one is best for you. Start by getting in touch with a certified Credit Counsellor at a non profit credit counselling agency. You can get a free consultation that’s confidential and non-judgemental. A professional looks over your finances with you during a free appointment and tells you how you can reduce your monthly payments, stop collection calls, and ultimately eliminate your debt for good. Head over to Creditcanada.com to learn more about what this free consultation will look like.
Your Options for Debt Freedom
1. Debt Consolidation Program
A simple DCP takes care of your unsecured debt. This includes credit cards, lines of credit, payday loans – anything that’s not attached to an asset like a car or a house. The program wraps all of your debts to various creditors into a single monthly payment. If you’re forgetful or disorganized, you can often wind up simply forgetting to pay a bill, especially when you’re already coping with financial stress. A DCP is an effective way to address that problem.
As part of a Debt Consolidation Program, a certified Credit Counsellor speaks with your creditors on your behalf, including banks, credit card companies, payday lenders, etc. They negotiate reduced interest rates (even as low as zero percent), lower monthly payments, and put a stop to collection calls. With lower interest rates, more of your money goes toward paying down the principal, getting you debt-free faster.
Once they’ve negotiated with each of your creditors and they accept their proposal, you send a single monthly payment that is then automatically distributed to all your creditors on the program .
In addition to reducing your monthly payments, your Credit Counsellor will also work with you on creating a personal monthly budget. The goal will be to make sure you can keep up with your debt payments while also managing your daily expenses (i.e., groceries, transit, etc.) by tracking and controlling spending and setting clear financial goals.
2. Debt Consolidation Loans
This is a low-interest loan you can take from a bank or another top-tier lender to pay off your credit cards and other unsecured debts. Then you can make one simple monthly payment at a lower interest rate. There are a couple of downsides to these loans, however.
First, they’re not easy to qualify for. You’ll need a decent credit score to get access to better interest rates, but not many people looking for these types of loans have good credit. Worse still, even applying for new credit can hurt your score, so don’t rush out to apply for multiple loans at once.
Second, they can even make the problem worse. You’re transferring your debts to a new account, meaning all of your credit cards will have room on them again. It can be tempting to rely on them when money is tight, potentially doubling the problem.
3. Budgeting
Budgeting is the way to do it yourself. You trim your expenses, you add income, and you tightly control your spending. If you manage to make every payment on time, your credit score will also begin to recover.
The downside to budgeting and paying everything without help is that it’s more expensive. High interest rates bite into your purchasing power and keep the debts going longer than they might if you sought some kind of help.
4. Bankruptcy
A last resort, bankruptcy eliminates your unsecured debts but you may have to surrender assets and pay a percentage of your income to creditors for a period of time. Bankruptcy also comes with a big hit to your credit score, which can delay plans like buying a house and put a significant strain on your relationship.
Financial Health Means Healthier Relationships
The irony of relationships is that financial opposites attract. Often, born savers are drawn to born spenders, which can lead to trust issues, opposing desires, and frequent disagreements. But it’s never too late to change. If you find yourself arguing with your partner about money, or high debt is keeping you from starting a long-term romantic relationship, getting out of debt will be an enormous relief.
