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Q: My boyfriend and I have been together for close to six years. We hit if off in one of our first-year university classes and ended up graduating together. We’re now talking about our future more seriously and I think he’s planning to propose soon; however, I’m concerned about how much debt he has. We both have student loans, but he bought a new car when he got his new job and I know he’s got three or four credit cards that he owes on too. I’m not sure how much he owes in total but I know he likes to indulge, probably more often than he should. I really want to say “yes!” when he pops the question, so what can we do about his debt? ~Brenda
A: Starting a joint life with debt is something many couples fail to consider. It’s great that you’re thinking about this ahead of time because even though his debt doesn’t legally come with any ring, if he’s saddled with debt it will affect your life together. From paying for a wedding, to managing the bills and day-to-day expenses, planning vacations, buying a home, or how to afford taking maternity leave — money, and in particular debt, is a hard topic for many couples to discuss.
Before figuring out the best way to tackle his debt, set aside time where both of you aren’t rushed or stressed, and start talking about how you envision your financial life together. Things to consider include: How will bills get paid? Who is responsible for keeping track of the household budget? What debts do each of you have, and how do each of you currently manage your obligations, savings and goals? You may also want to talk about what your contingency plan will be if one of you has reduced income, which can happen for any number of reasons. Take it easy and go slowly. Both of you already have a system to manage your money for yourselves, so coming up with a way to do it together will have its growing pains.
The goal behind talking about a contingency plan for when you face reduced income is to open the door to talk about debt payments and fixed obligations that continue regardless of what happens to your income. It is important that both of you are open and honest with each other and set the stage to work together, even if right now one of you has more to pay off than the other.
In addition to a realistic budget that accounts for all of your payments, here are three things to help you dump debt faster and not let it get in the way of your future:
Be afraid of being the same
Once you’ve set a goal to get out of debt, anyone who tries to pull you away from your goal might not fit your frugal lifestyle — and that’s OK. Give yourself permission to distance yourself from those who are choosing to live with debt. Make a clean break if you have to protect yourself from their spendy ways because you shouldn’t need to be afraid of being different; being the same is a much more frightening prospect.
Think of it this way. You’re not living like them right now so that you won’t have to live like them later. In 20 or 30 years they’ll still be a slave to mortgage, car loan and credit card payments while you’re enjoying financial freedom. Surround yourself with like-minded people to make it easier to work toward your goals.
Scour the internet to find the best tips for you
The internet holds a treasure trove of ideas when it comes to finding tips to get out of debt fast . There are entire websites devoted to money-saving tips for all of your everyday expenses, along with sites for creative ways to earn extra income (avoid anything that sounds too good to be true).
There will be loads of tips and tricks that will work for you if you give them an honest shot. Join forces with your partner and come up with a plan for which tips to implement right away, which you’ll save for later, and which tips you like and want to hang onto for inspiration . Then do whatever it takes to pay off your first $500. Seeing success will motivate you to keep working hard to pay off the next $500. Before you know it you’ll have paid off a couple thousand dollars and be well on your way to clearing up all of your debt.
Some of the most effective tips around include:
Snowball or avalanche — they’re both great debt-reduction strategies , so pick one and let the payoff begin.
Stop buying new clothes and shoes unless they are absolutely essential. You likely already have enough clothing, so shop in your own closet or trade with friends or a sibling. If you really do need to shop for more, only buy when an item is at least 50 per cent off or is a good deal at the consignment or secondhand store. Here are 24 more tips to spend less on clothing .
Eat out only for special occasions . Eating out, grabbing coffee or tea, or picking up take-out have no part in a plan when you want to get out of debt as fast as possible.
Stay away from malls, favourite stores and online merchants and websites by finding something else to do. Avoid spending on random stuff — just stop. The amount of debt we rack up by spending aimlessly and without intention is significant. Look at your credit card and bank account statements if you think you’re immune to this affliction. “Have credit, will spend” is not the motto to live by when you want to get out of debt.
Get rid of your credit cards (temporarily) and any other easy access to credit (e.g., a large overdraft limit or credit line attached to your debit card). You don’t have to cancel anything, just make sure you can’t use them. If you are serious about being debt-free, you have to stop making debt a normal part of your life.
Review all of your household bills and services (e.g., hydro/electricity/gas, cellphone, cable/internet/phone, banking, streaming, online subscriptions, insurance, memberships, storage, etc.) to see where you could save. Take a month or two and call each and every one with an eye to save at least $10 a month or more (it will add up!). There’s a good chance you’re even paying for services you don’t fully utilize, so by simply scaling back a plan or service package to what you actually use, you might save without having to compromise at all.
Financial extremes are a tough place to live, and for most people, best to be avoided. Take your budget — it can be tempting to dump every spare cent down on your debt, but you need savings when paying debt down aggressively and balance in your budget if you intend to stick to your plan long enough to realize success. You also need a little spending money for entertainment, recreation and fun. Giving yourself some guilt-free cash is actually one of the best strategies to help yourself stick to your budget and your goals.
Another tempting extreme to avoid is falling for a sensational headline about how someone paid off $82,000 of debt, for instance, in an unreasonably short period of time, and thinking anyone can do the same. Living in a car to save on rent, avoiding all social engagements where a gift or expenditure is the norm, commuting for hours to avoid having a vehicle, foraging for food, or dumpster diving for clothing and items to fix and flip can spur us on to think carefully about our needs versus wants. It may also cause us to think about which additional tips we can implement to dump our debt a little faster. For some, their gutsy moves and drastic decisions pay off; however, most of us do best when we take the inspiration behind their story and give our own debt-repayment strategy a boost.
The bottom line on dumping your debt and becoming debt-free
Time will pass whether you pay your debts down or not, and if it took years to get into debt, it will take time to get back out of debt again. Working with a spouse or partner will make getting through the bumps and bruises easier and give you someone in your corner to help you stay on track when being different doesn’t seem worth it. Topping up payments even by small amounts will help you get started and set your mind and finances onto a game-changing path.
Scott Hannah is president of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Scott by email , check nomoredebts.org or call 1-888-527-8999.
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