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4 steps to take when you or your partner is in debt

If you're dating or married, it's likely at least one of you has debt. Select guides you through four steps to manage the topic before it affects your relationship.

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Seven out of 10 Americans get married with some amount of debt — mainly credit card and student loan debt, according to Debt.org.

While having debt is common, it can unfortunately be a relationship dealbreaker no matter how long you and your partner have been together.

For instance, Kara Stevens, a personal finance and lifestyle blogger at The Frugal Feminista, was open with her husband about how she felt about his credit card debt and even refused to marry him until he paid it off.

But before you let money woes interfere with your love life, Select has some advice for when you or your partner is in debt. The first step? Talk about it with your partner. From there, you can work on being solution-oriented, creating a budget and teaming up to help one another's credit.

Below, we break down each step so that you can be ready to manage any debt that comes in you and your partner's way.

Step 1: Communicate

Communication is key to any sort of relationship, whether it be with a family member, friend or spouse. But it's ever so important when you're talking about finances.

Creating a safe space to encourage discussions about money with your partner will help you both ease into the conversation, especially when the topic is debt. It's easy for those who are bogged down with debt to feel shameful about what they owe.

Both partners need to be communicative about how they feel about their own or the other person's debt load.

Stevens suggests that each person's debt has a story behind it and it's more important for both partners to understand the story behind each other's debts and how they got there, versus just the amount they have to pay. Instead of assuming your partner racked up credit card debt by frivolously spending, understand the bigger picture. Perhaps your partner had a sudden job loss and had to rely on their credit card to get by, or maybe that debt includes a barrage of unexpected medical bills that they just couldn't afford at the time.

Whatever the case may be, talking, listening and understanding your partner's situation will create a good foundation for the next three steps.

Step 2: Find solutions

Instead of dwelling on the debt that you or your partner owe, be proactive about tackling it together and getting ahead.

For instance, sometimes balance transfer credit cards allow you to transfer a family member or friend's balance to your own card. This is a good idea if a) your partner wouldn't otherwise qualify for an introductory period of zero interest on balance transfers over a specified time period, typically 12 to 21 months; or b) you want to accelerate the debt payoff by taking advantage of your now two-income household and both chip away at the debt.

If you're considering opening up balance transfer cards to pay off debt with 0% APR, just be aware that your credit score may take a hit since each new card application adds a hard inquiry onto your credit report and you'll eat away at your credit limit depending on how high of a balance you transfer.

Another option for tackling multiple credit card balances is to combine all those debts into one and apply for a personal loan, also known as debt consolidation. Instead of paying off multiple credit card balances each month, you would repay this one loan. The interest rates on most debt consolidation loans are usually much lower than what your credit card charges, and most APRs remain the same, or the fixed, throughout the life of the loan.

Learn more: How to decide between a using personal loan or a 0% APR card to get out of debt

Step 3: Budget together

If you want to be realistic about paying off your own debt or helping your partner pay off theirs, create a budget together.

You can start by building a spreadsheet in Excel. When you open the program, go to File>New and type "budget" into the search bar. A variety of budget templates will show and each one has premade spreadsheets within it, which means all you have to do is input your expenses. Some examples of templates include a personal monthly budget, a household monthly budget, a bill paying checklist and a monthly college budget.

A budget makes it easier to be disciplined with your monthly spending. Whether or not you share a credit card with your spouse, it can be helpful to have someone else reviewing your spending to hold you accountable for how much you spend and save. 

Some common things to include on your budget spreadsheet include your rent, groceries, subscriptions, memberships, travel and entertainment expenses, as well as your irregular expenses and any emergency fund savings. When you are going through how to budget you and your partner's future paychecks, consider the popular 50/30/20 budgeting rule. This rule calls for each individual allocating their income to spend 50% on their needs (housing, food, utilities), 30% on their wants (travel and entertainment) and 20% toward their savings or debt payoff.

It may help to set aside a recurring day each month to discuss with your partner where you are at together in your debt payoff journey. You can reflect on what has been paid off in the last 30 or so days and plan for the months ahead. Use this time to talk about how you both are managing your finances, like credit cards, and any future financial goals you have. 

Step 4: Help each other's credit

While debt can be damaging to you or your partner's credit score, you can build it back up as you pay off the debt.

Lenders will often consider both of your credit profiles when you apply for a loan together, such as a mortgage on a new home, so this step is just as crucial as the first three.

Wilson Muscadin, a financial coach at The Money Speakeasy decided to help his wife learn about credit and build her score up by adding her as an authorized user on a his credit card. Muscadin had a high credit limit and a zero balance — thus a healthy utilization rate that transferred over to her personal credit report.

If you're considering this route, know that some credit cards charge a fee for adding authorized users. A few cards that don't charge authorized user fees include the Chase Sapphire Preferred® Card, the Capital One Venture Rewards Credit Card (see rates and fees) and the Citi Double Cash® Card (see rates and fees).

Adding your partner as an authorized user onto your credit card would mean that you are responsible for the payments, but if your partner wanted to build credit and manage payments on their own, consider a secured credit card. Unlike many of the traditional credit cards, you don't need a high credit score to qualify but will have to likely make a security deposit upfront that acts as your credit limit until you graduate to an unsecured card.

Select ranked our top secured card picks and a couple of our favorites include the Capital One Platinum Secured Credit Card for a low deposit (see rates and fees), the Platinum Secured Mastercard® from First Tech Federal Credit Union for a high credit limit and the Citi® Secured Mastercard® for low interest from a major bank.

Information about the Platinum Secured Mastercard® has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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