Love and marriage – the blissfulness of the romance, the wedding day, the honeymoon, the “forever I’m yours” vows… picture perfect! One of the primary tasks for most newlyweds is to begin the merging of assets once they return from the honeymoon. Joint accounts are opened, names are changed, legal documents are updated, and incomes are merged.
But the one thing I always wonder about is what happens to the old debt?
You Say “I do,” but Do You?
I love weddings. I’m a big baby and so I generally tear up throughout the entire ceremony. I think I get so emotional because I strongly believe in what the institution of marriage is all about – the togetherness of two different people joining as one. With the romance aside, I begin to think about how different those two separate lives were before they joined as one, and how those different lives are put to rest. Financially speaking (because I love talking money!), I think about how couples merge debts, or if debts prior to marriage are the responsibility of each spouse?
Of course I wanted to get some answers, so I decided to ask around and see what people thought. I asked a handful of married and non married individuals about debts prior to marriage. All of the people I asked stated they believe once married, all debts prior to marriage should be paid by the couple and is no longer just the responsibility of the individual debtor. It was no longer “his debt” or “her debt” but “our debt”. Pretty noble I think!
I was pleasantly surprised by this survey because I’ve heard and have come across many situations where married couples strongly believe that debts that occurred prior to marriage should be paid by the individual spouse. If you ever listen to Dave Ramsey’s talk show you’d know what I am talking about. I’m not sure if this is a normal thing in American society, or if those callers are a part of a dysfunctional partnership and should not be considered the norm. I’ve personally witnessed married individuals tense up at the thought of the other spouse’s credit card debts or student loans. They quickly respond stating “that’s not my problem”- but should it be?
I’m not an attorney, but I wanted to see if there were any legal matters to consider when it comes to a spouse’s old debts. Doing a quick Google search, I found that a spouse is not legally liable to pay the other spouses debts that were incurred prior to marriage. While I think this is good, I also think about other ways the old debts can have an impact on the marriage. If the debt is not in good standing it could certainly hurt the individual’s credit score. With a credit score in the dumps, it may leave the other spouse holding all of the financial weight when it comes to applying for loans like a mortgage. No bueno!!
Personally, I believe once married all debts, including the old college loan, becomes “our” debt. I even believe if a spouse pays child support from a previous relationship, it should be “we pay child support” instead of “he/ she pays, that’s their problem”. It is very important couples discuss finances BEFORE they walk down the aisle so that they know what’s ahead of them and they are able to create a game plan. I like the idea of sharing and oneness when it comes to marriage (call me old fashion!). I strongly believe once you take the vow and say “I do” you “do” old debts and all.
Guest post by Victoria @ Lend Not Borrow, who discusses all levels of personal finance – from getting out of debt and quick financial tips, to savvy investment strategies. Of course it’s never just all work…there’s always some play! To add spice into the mix, Victoria loves topics that are thought-provoking that gets EVERYONE talking! Opinions are crucial…so share your thoughts!!
(Photo by Corey Leopold)
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I completely agree, there is no longer mine but ours and no longer I, but we.
This is why it’s important to have a thorough money talk before marriage. Checking each others credit bureaus is also not a bad idea. I’ve seen situations where one partner was completely blind sided by their spouses debt load because they didn’t have the money talk prior to marriage.
My girlfriend owes a ton of money on student loans but once we get married I am going to help her tackle it so it gets out of the way. I think once you’re married everything should be shared but you need to know EXACTLY what you’re getting into. Nothing should be hidden prior to the marriage.
I’m one of those people with “my debt” When we first got married, I had no income at all and had to pay my debts out of the joint account, which caused a lot of issues. My monthly debt payments equaled an entire paycheck!
Now I have a separate account just for debt repayment. $100 from each of my paychecks go in there, plus all of my side hustle money.
If everything is out in the open prior to marriage, then it is important to share the finances so the household can run as efficiently as possible.
I’m getting married this fall, and my fiance and I have already planned to tackle our debts together. Sure, I could pay off “my” debts from “my” account, and he could pay off “his” debts from “his” account, but really it’s the same amount of money going out the door from our household, whether we call it his, mine, or ours. Plus, we can pay it off smarter by joining forces and paying off the highest interest rate debt first.
We discussed finances (shared all the numbers – what fun:P) before we got married and we decided that everything including debts became ours (he adopted my crazy cat!). We came with a plan to take care of the debts and right now we’re working together on the student loan.
I do agree that being upfront with finances is vital so the two of you can decide how you want to handle the situation.
I think one of the most important things that gets overlooked in this conversation is how debt effects larger purchases and/or financial goals: cars, homes, retirement accounts, college savings for kiddos, etc. If one spouse is paying off debt on their own, it still affects the other spouse’s ability to purchase/save for those other things.
For instance, if my (hypothetical) spouse and I want to purchase a home, we both work, but I am debt free while my spouse has $90,000 in student loans, that debt will bear on the interest rate we receive on our mortgage, not just my spouse’s contributions to the payments. Alternately, the $1,000-$1,500 student loan payment will bear on how much we can save for other purchases. It may be my (again, hypothetical) spouse’s debt, but it certainly bears on my financial situation as well!
This is the reason I think debt in marriage becomes “our” debt. At this point, major purchases are really “our” house and “our” retirement, right? Why is debt any different?
Everything of ours is combined. The debt is all mine (besides the mortgage), but I also make more, so I don’t feel too terribly bad :)
I am paying my student loan, but since that is the only debt we have it’s not really a big deal. I don’t ask her to pay on it, since I took the loan. But I understand why people feel like they want to combine everything, we just don’t
For anyone in the group of “pre-marital debt is the individual’s responsibility”…
…is the same thought process extended to “pre-marital income” or “pre-marital assets”?
Just curious what people think regarding this aspect (although the majority are not in this group).
My fiancee and I are getting married next June. I am the accountant of the couple and have already figured out what is the best route for paying off our debt to be able to afford a house and get debt-free as soon as possible. Combined, we have $96k in debt, $14k in a car loan and the rest is student loans. We have already combined our incomes and debts because we know and understand it affects us both with moving out and getting ahead. I make more than she does so I just pay her student along with mine while she focuses on paying her car payments.
It doesn’t bother me in the least bit because I know both of our debt payments will effect our family budget. I look forward to us being debt free and I think it’s the best idea for a couple to be open about it and tackle it together.
In the minority here, but I feel like my school debts are my responsibility. It doesn’t mean that we don’t plan for major purchases as a couple. But I don’t ask him where he spends his money so long as it doesn’t affect our other goals. And he doesn’t ask me so if it goes to debt or shoes, it doesn’t matter to him. I like it that way.
Besides if we ever split and he paid a huge chuck of my premarital debt, I would feel like I should repay that on divorce. It’s just cleaner to keep it separate.
Personally, I don’t feel like I have a claim on his premarital assets either. But if he choose to share them with me, I won’t complain.
My husband and I got married 2 years ago. We kept out finances separate and I worked furiously to pay off my student loans (20k in 1 year). It was important to me to pay them myself to demonstrate (to him and to myself) that I was financially responsible. It worked really well for us and now we have a semi-joint system.
I completely agree that it is “ours” not “mine and yours.”
We have been married for 3 years, and while my husband has always been debt-free (I married well!) I brought 25k of student loans into the marriage. We considered it “our debt” although my husband reasonably expected me to do my part in paying it off (as in working at a job and not sitting around watching daytime TV, even though we could technically afford to live on one income).
We have since paid off that debt, and rarely fight about money. We are now working on “our” house savings.
I guess I must think differently than the majority here. I have worked so hard for everything I have. I bought a house on my own as a single mommy. I have maintained only a mortgage as my debt. I think I would keep finances separate if they had a substantial amount of debt. I don’t know. I know if you love someone you are agreeing to take them on completely including their debt, but I think I would see that as their debt.
First off, huge “shout-out” to J Money for posting this article for me. Thought it was a great topic, and based on the comments looks like you guys likey :).
Seems like most have the same thought I do when it comes to money and marriage and paying off the other’s old debt. WinrWinrChknDinr (interesting name…) brought up a good point about pre-marital assets etc. Personally I think it fits into the same category of what’s yours is mine and what’s mine is mine (kidding!!)…seriously, once married it should ALL go in one pot.
Different strategies are going to work for different couples, but I can say that my husband and I have completely joint finances and this way of dealing with money taught us to communicate better. Working together on money has helped us learn to work better together in other areas of our marriage. Just a side-benefit to consider.
I actually got married a few weeks ago and just yesterday wrote an article about how my wife and I handle our finances so this post is very timely!
We have been dating for nearly 10 years and throughout that entire time, we’ve maintained both separate accounts and joint accounts. We each contribute equally to the joint accounts to cover our essential expenses and then we are free to use whatever is left in our personal accounts for whatever we want. It has worked out great for us because we each have different goals when it comes to money.
I am actively saving to achieve Financial Independence (FI) so that I can “retire” in my 30s but my wife loves her job and wants to keep working for the next 30+ years. It’s not fair to force my extremely frugal lifestyle on her, since she still has many years of wage-earning in front of her, so having separate accounts allows her to do what she wants with her money (which right now means paying off her student debts) and it allows me to save and invest the majority of my income so that I can reach FI as soon as possible.
Great story and ideas Mad Fientist! Keeping SEPARATE accounts certainly has prudent and practical reasons! Glad you shared your story and highlighted some very important reasons why it is great to keep finances separate. People do have different financial goals and values it is important to respect how you can keep your finances separated, as long as your actions still align with your combined goals (home, children, retirement, etc).
On a sidenote, I find keeping finances separate is not always because the other person does not trust or love them. The same holds true for pre-nups. Learn the REAL facts from attorneys not chick flicks and TMZ. That’s your fear talking ladies.
If I ever get married, I’m bringing a mortgage payment with me to the relationship. I think it’s definitely fair if whomever joins me in life had something else to bring in that I could help them out with.
I’m going to respectfully disagree with the crowd.
When I married, I had no debt while my ex had $100k in student loans. I paid some of her debt off from my money and managed the rest for the two years we were together. But Ex decided to get more schooling and a new car. Any progress I made was lost.
Two years later, Ex decided to move out of the country without me. Divorce. Had I paid off the total of her debt with my savings, I would have been more angry with myself than I was.
I can’t help wonder if that wasn’t her plan all along. Find someone who has money and take what you can get. I’d say, be careful. You think it’s going to last forever, but there’s a 50/50 chance it won’t. Don’t lose your marriage and your nest egg.
Wow Leigh you story is shocking, thank you for taking the time to share it with us. I agree, there are some people who are gold diggers and it goes for both genders regardless of ethnicity and age. What would you have done differently to protect yourself prior to the marriage?
If you could do things over would you have a trust, pre-nup or something else? Thanks for sharing.
@Leigh- Ouch! Sorry to hear about your bad experience! Certainly can’t speak for your situation, but I wonder if you would advise someone to communicate more in the beginning of the relationship to really see where their head is. Are they frugal, or do they want to “get more schooling and a new car?”
Personal finance has the word “personal” in front and I believe every situation is different and unique. Thanks for sharing your input and good luck!!!!
My husband and I have a yours, mine, and ours system for our finances. We both pay for joint goals and monthly expenses by contributing a certain percentage of our incomes (we don’t include any extra freelance work either of us takes on in our calculation). And we have separate accounts for personal purchases and debt repayment. The way we see it is, we took on our student debt loads before we knew each other and had an idea of what our incomes would look like after graduating, so we should accept the burdens of our own debt.
We also appreciate the freedom to spend our money as we wish without judgement. I may not understand why he’s willing to pay for lunches out every day and he might not see the value in spending $75 on a dress, but because we’re not spending ‘our’ money we don’t get upset about each other’s spending habits.
I just wanted to say that I love that picture. I’ve actually driven that carriage before, so imagine my surprise when I saw a picture of it when I opened your blog. :)
Thanks again Victoria! Great post indeed, and appreciate you responding to people too :) Have a couple of my own:
@Jenna – Great point! Never even considered that before, you could totally pay debt off smarter by combining forces – good tip :)
@graduate.living – Very true! Your side stuff still affects the major BIG stuff together.
@debtor – I think that’s a great system if it’s working :) We did it that way for YEARS and only now starting to combine more…
@Sarah – Wow congrats – $20k in 1 year is no joke!
@Leigh – OUCH! Good thing to keep in mind too, jeez… hope your next one more than makes up for it! :)
@falalalalalalalalalala – That’s exactly how our’s is managed right now. But we’re about to change it up a bit now that we’ve gotten it on lock for so long… glad it works for you guys!
@Christina – Hah! Really? That’s cool :)
I’m totally with you, Victoria. When we got married, my husband’s savings were earmarked to pay off my debt and we jointly decided how to invest the money until my loans come out of deferment. We fully embrace the joint money mindset and accounting!
I’m not a big fan of expensive weddings. It seems to me, from the weddings I’ve attended, that it’s just people wanting to show off money they don’t even have.
hah! That could be true ;)
Yeah, I disagree. It’s one thing if one partner has little or no debt and wants to help out the other who might have major debt due to medical bills or something, but I think it’s good for people to learn how to manage their own finances and deal with their own responsibilities. Sure, if you’re living in a house with a mortgage that he/she had before you moved in, help out with the mortgage because you’re living there too. But if you purchased something years before that this person had no say in, and you ended up in debt because of it, it’s not their problem. And them helping you out of it probably won’t teach you how to manage your money wiser. I bought a property several years ago that I’m now trying to sell. My husband keeps asking if I’ve updated my will so he doesn’t get stuck with it if something happened to me. lol. I haven’t. I should. Because it’s not his problem! It affects him, sure, but it’s up to me to deal with it so that it doesn’t affect him negatively. It’s not his responsibility. We also have separate and joint bank accounts. I prefer not to analyse his spending habits or have him analyse mine. I buy what I want to buy, and he buys what he wants to buy, and the joint account is for joint expenses. I don’t think it’s good to lose yourself TOO much in a relationship.
If you want to help out your spouse with debt, feel free, but I say do it with your eyes open and realize that perhaps managing their finances for them in that way might not be in their best interest if they’re to learn how to handle their own debt. If you’re thinking of giving them money for their debt, also think ahead to the possibility of a break-up. If you’re fine with never seeing that money again, go for it. If you think you’ll feel bitter about it, don’t.
As for sharing pre-marital income or assets… I think if you bought it, it’s still yours. You’re just sharing. Income… I’m not really clear on that. You always end up sharing money in some way.
I think you bring up an EXCELLENT point – it’s def. better to learn from mistakes and/or learn how to manage your money for sure. Though luckily that can still be done when couples help each other out too… Funny about your will :)
Wholeheartedly agree with you Whitney! What you describe when one person helps another with their debt is what I consider the same as giving a man a fish or teaching him “how” to fish. It is a noble intention to help a partner pay down their debts, but what have they ultimately learned about “how and why” they even acquired the debt to begin with? I feel there is zero introspection to “open their eyes”. And isn’t introspection one of the key actions needed to change habits?
I feel “balance” is the key in all areas of a persons life. Doing so helps prevent us getting lost in a relationship and even losing your sense of self.
Lastly, I agree so long as a couple ends up sharing their expenses (not necessarily previous debts) they are sharing the burden. You will end up helping each other so it is as if what is mine is kept 100% separate, correct?
We just got married 2 months ago and decided to join finances shortly thereafter. We both had a significant amount of debt, so maybe that played a factor. I am responsible for my debt, and he for his, but coming together and working as a team on debt is really the best way to go. If I have the highest interest loan, then we need to pay off that one first for OUR own good, not for mine. Later, we will pay off a good deal of his. I still feel a bit of guilt when a big monthly payment goes towards my debt, but ultimately, we will be working just as hard on his as well.
That makes me happy :)
This is why pre-nuptual agreements aren’t just for the well-to-do. If there are disparities in existing net worth, in expected earnings, or both, have a formal agreement on how the situation will be handled. It’s not solely a question of possible divorce, but also of money management behaviors. One of the respondents talks about agressive frugality, and another of a spouse’s excessive (to his mind) spending. Agree on at least an approach to such differences BEFORE entering a legal and binding marriage.
There are also many cases where a higher-earning spouse tries to use money to control the other spouse; sadly, this is too often a man trying to control a stay-at-home mother, or a woman with less earning capacity. Having an agreement in place in advance may mitigate this problem, as well. Or possibly identify the potential while she still has time to say “I don’t.”
Even if a couple does not sign a binding pre-nup, the discussions and financial disclosures are something every couple should have. How they will handle money is right up there with whether they want children.
I totally agree – it’s always good (and smart!) to discuss finances and how each other works wayyyyy before marriage. One less hurdle to get through to be happy!
@ drj_cpa: Pre-nuptual agreements get a horrible reputation due to romantic films and all of the popular and highly inaccurate misconceptions. Thank you for highlighting some of the benefits and concerns of pre-nup abuse. I agree regardless if a couple uses pre-nups the key is early communication on financial expectations, values, debts and full financial disclosure is essential to helping promote a honest and trusting relationship. It is never too earlier to talk openly about your hopes, dreams, fears and expectations in a relationship.
I find many people would benefit once they get their pre-nup facts straight! There are so many misconceptions involving pre-nups and here are some of the most common:
1) They forced me! He/She “forces” another to sign a day before or on the day of the wedding. Not true. At best your partner can ask you to sign but, if you two separate, in the eyes of the Court, the pre-nup was not validly signed.
2) I don’t know what I signed! Each partner is required to have their own attorney to represent them and protect their best interests. The attorneys must come to an agreement on all of the conditions within the pre-nup. Their job is to do this as they craft the pre-nup, before you sign it. So, if you don’t have an attorney when you signed, the Courts often times will invalidate the pre-nup.
3) They do not “trust me”! They don’t love me! They are hiding things from me! Or they are assuming we will divorce! These are such popular fear-based misconceptions highlighting why so many remain ignorant of one of the most important pre-nup requirements. If you don’t love the other person why would you even consider revealing ALL of your assets and liabilities? It would be infinitely easier to shelter your assets using alternative methods involving legal trusts. But by going the pre-nup route, understand this – each partner must FULLY DISCLOSE all of their assets, dependents and liabilities. If you have a pre-nup you cannot hide or fail to disclose your assets. If you do so, deliberately or accidentally and you separate, guess what, you just invalidated your own pre-nup and the other partner can and will fleece you. Courts do not look kindly on hiding assets when crafting pre-nups.
These are just a tip of the iceberg; read more from estate planning attorneys and when you get your own legal counsel, understand it is in your own best interests to full understand what a pre-nup actually does and does not do. There is no one size fits all, but in order to understand the true nature of a pre-nup, you need to look at it clearly and not through eyes clouded by fears and misunderstandings. Good luck!
I think that it is a really good test of your new spouse’s love for you when he or she realizes that your child support payments are being used by your former spouse and their new significant other for illicit drug use and your worries about child visitation with the ex are really unfounded.
I was proposed to then they had second thoughts cause of the debt that my ex partner left me in! I’ve been completely honest with my finances, but when the ring was on the finger, he had second thoughts thinking all the debt would be his!!!! I believe that if you are a couple. You will be a couple, forever!
Oh noooo – that is so sad :( I’m sorry to hear that.
Thanks for sharing. Can’t blame someone for not wanting to be buried by someone else’s debts. If your future partner has $100,000+ in debts (common if you get an MBA or JD) prior to marriage, would you want it? Not likely regardless if the debt is student loans or from credit cards.
We all want marriage to last forever but the reality is more than 40% end in separation. Sometimes an ounce of prevention is worth twice its value in the cure.
I completely disagree. My fiancee xwife was awared home and stopped paying mortgage. Now it is im forclosure and now us bank has civil charge on my fiancee and xwife. I am sorry I dont that thats right for this to be my dept when married no way!!!!!
Bad situation here. 26 years ago I was married to a retired Australian military man. He was in active service for 27 years and discharged for insubordinations. It was never good. He left several times. Has been gone now for 8 years. Has never returned to the states. I own 3 homes that I worked n paid for myself but his name is on the titles. He won’t give me a divorce as he would loose a big chunk of his retirement pymts from the army and his Aus. Social security. He was in America 13 years so he gets a small SS here. I retired from a professional position due to head injuries at age 62. For 19 years I didn’t even know I was getting a military wifes share of his army pay. He kept it in a separate account in Aus. I found out 6 years and demanded my share. He sent part of it for 4 years but has now stopped payments. He called me 6 months ago and asked , no told, me to cancel his life insurance . I have paid it for 20 years. Told him I did but did not. He said if the army and the Australian government find out I have the houses, the insurance and a pre-paid funeral here he will loose a big portion of his monthly income. I couldn’t care less. Now he refuses to send my due income from the army. He gets nearly $3,500 a month just from the army. I do not have but a small, less than $1,200 a month. Retiring early cost a lot. 2 of the houses I have residents but I collect absolutely no income from them. Disabled family members live in both of them, mine is paid for. Does anyone have ANY information on how to get a legal separation from him and force him to send my share. He knows I do not collect funds from the other houses and is O.K. with that. He is 80 years old now and I don’t have a clue as to what to do with him. He has no family at all. Distant nieces is all. Where can I go to get info on international marriage laws. He is a selfish, mean mouthed, self centered person who thinks the world owes him. All I do know is I sure don’t. He is racking up bills down there also. I really need to find help.
That is just horrible to hear – I am so sorry :( I have no experience/ideas for you in this realm I’m afraid, but please do keep on searching!! I feel like there has to be a process or something you can start to get it figured out? You can’t be the only one in this position?