What’s mine is mine until it destroys our marriage. But then it’s all yours, right?
Wrong! Not when it comes to pre marriage debt.
I personally had a bit of debt when I stepped into marriage. A student loan and a bank overdraft. Coming clean to my partner about why and how I ended up in this debt was the tough part; mainly because i feared the judgement. But I was anything but judged. We sat and plotted a way to managed and get me out of this debt without it having an effect on our future financial position. Maintaining and managing debt is very important but I won’t lie, I still struggle.
So here’s some advise about managing and maintaining debt pre marriage.
- First, obtain your credit report from one of the national credit bureaus such as TransUnion. You can get your report by logging on to www.mytransunion.co.za.
- List all your active loans, credit and other account information from your credit report. Make sure to review the report carefully to ensure its accuracy.
- Next, write down your total monthly income. Not what you hope it would be.
- List all your monthly expenses. Don’t leave anything out and do not underestimate or write down what you think you could reduce your cellphone bill to – if you try really hard – just be honest. Rather over estimate than under.
- Calculate your monthly budget – Realistically
- The next step is to try and reduce your monthly expenses so that you are able to save 10% of your income each month – sacrifice in the short term fro long term gain
- Examine your budget honestly and critically to see where you can realistically reduce your expenses. Decide what are “must haves” and “nice to haves”. Eat out less often; opt for a smaller DStv bouquet or cut out DStv altogether; reduce your expenditure on luxuries.
- Now look for ways to reduce your “must have” monthly expenses. Carpool to save on petrol; conserve water; turn off lights when you leave the room.
- Redirect these savings towards paying off your debts.
- Consider paying off any debts with high interest rates first; accounts above 35% of their credit limit; debts that are close to be being paid off; or those with high annual fees.
- Finally, create a payment calendar with the due dates of each debt and the payment amounts – and stick to it.
- Track improvements in your credit standing by registering for credit monitoring at www.mytransunion.co.za.
- Set goals for your debts and do not forget to celebrate – within your means – when you reach a major debt reduction milestone.
Stress and lack of communication over money are one of the lead causes of divorce. Therefore a financially stable future is critical in relationships.
Do this together and communicate all the way. When you struggle or fall back, speak to your partner about it. It is always better to get into a relationship with your eyes wide open. Discuss financial matters openly before the wedding bells start ringing.
Sources: www.fin24.com| www.wplawpractice.com