Originally published on Tangerine Bank’s Forward Banking
Whether it’s student loans, credit card balances or a personal loan, many people bring some form of debt into a serious relationship or marriage.
The fastest and most effective route to debt freedom is to work together as a couple. Regardless of whose debt it is, this will help you reach your collective financial goals that much sooner.
Here’s how to put your heads and wallets together to quickly pay off debt as a couple.
Tips for Going Debt-Free as a Couple:
1. Create a Joint Budget
Every financial goal starts with building a budget. Working together to pay off debt will require listing your individual income, collective expenses and debts as part of a joint budget. You can then outline which financial contributions you’re each able to make, as well as what each of your obligations are.
Regardless of whether you choose to use an app, software, a spreadsheet or an old-fashioned notebook, a joint budget will help get both parties on the same page, while encouraging transparency and communication.
2. Establish a Fixed Debt Repayment Amount
Determine a fixed dollar amount or a percentage of your combined income that will go towards debt every month, and add “Debt Repayment” as a line item in your joint budget. This will allow you to incorporate a debt repayment strategy within the context of your overall financial life. It also makes it easier to see if you’ve allocated too much to unnecessary spending, for example, and will help you decide if you need to add more money to your debt repayment amount.
Instead of “divide and conquer,” combining your financial efforts allows you take a more aggressive and intentional approach to paying off debt. This is exactly how my husband and I managed to pay off $15,000 in debt over five months. Together, we paid $3,000 per month and became debt-free.
3. Combine Your Debts in One List
Once you’ve determined the amount you’ll put towards debt every month, one way to pay that off is to use the Debt Snowball Method. This is where you write out a list of all the debt accounts from the smallest to the largest balance, regardless of whose debt it is. You then start by paying off the smallest debts and work your way up to the highest. You can also take a similar approach based on the interest you’re paying. If there’s a debt with a higher interest rate, you might want to take care of that first.
Studies have found that the Debt Snowball Method can be an effective strategy to quickly pay off debt. By focusing on the smallest debts first, and on one account at a time, it’s easier to see progress, which can make you more likely to stick to your debt repayment plan in the long run.
Working as a couple, and combining your income and efforts, can help make you debt-free that much sooner.