Yours truly got out of debt in June 2016. This month, I didn’t have to pay a student loan bill for the first time in over 2 years and I’ll tell you, it felt weird. But it’s such an amazing feeling.
So here’s what’s crazy. I just got out of debt. And I’m going to be going right back into debt again. You see, Ms. Financial Panther and I are getting married next year and she has $130k in student loan debt. Ouch! What’s yours is mine though, right?
I’m not worried however. We’re both pretty smart (I think), work in high earning professions, and expect to make a very good household income. But perhaps why I’m so confident that we won’t have this $130k of debt for long is because we’re open about our finances and are on the same page financially. We’ve been that way ever since we knew this was a serious relationship.
It’s a bit of a taboo to talk about money before you are married (and sometimes even during marriage), but it’s something that I think is necessary if you want to succeed in reaching your financial goals. Personal finance is personal, no doubt. When you start out, its an individual sport. Go out and do what you need to do for yourself. Once you let someone else into your life though, personal finance becomes a team sport. For most people, you’ll become a team probably even before you are married. You’ll each have your own goals, your own assets, your own liabilities. Studies often show that money is the greatest cause for divorce. Seems like it makes sense to address money head on then, even before you are married, and to make sure you’re both on the same page.
Here’s how Ms. Panther and I made sure we were on the same page from the beginning:
1. We Were Open About Our Finances Once We Knew Our Relationship Had Legs
Ms. Panther and I had been dating for about 2 years when I started my first job at a large law firm in town. We both knew that I wasn’t particularly well suited for the big law firm life. The hours are horrendous. The work is often mind numbingly boring. The only thing really good about it is the pay. There really aren’t a lot of jobs out there that pay six figures to a 26 year old kid with no work experience.
At the time I started my new gig, Ms. Panther and I had been dating for 2 years and had just started sharing an apartment together. It was the first time I had ever lived with a significant other. Once we started living together, I thought this was probably going somewhere. I figured now was as good a time as any for us to really start discussing what we brought to the relationship and where we hoped to go in the future.
The big anchor I had weighing me down was my large student loan debt. I had $87k in student loan debt – a not too shabby amount. $87k on a standard 10 year repayment plan comes out to about $1000 per month depending on the interest rate. Your typical lawyer will take the full 10 years to pay that back, or maybe even drag it out longer. There was no way I was going to do that.
I hadn’t gotten onto my personal finance kick yet when I started working . I didn’t know what a 401(k) was or what was an asset allocation. The only thing I did know was that I had a lot of debt and from everything I had read in the news, student loan debt was bad (especially for lawyers) and I needed to get rid of it quickly. I thought it made sense to try to pay it off as fast as I could.
Ms. Panther knew I had this one goal to pay off the debt. We discussed what I made. What she expected to make. What our assets were and what our liabilities were. She understood my plan to pay off my debt and I understood her plan to pay off her debt. Once your relationship is serious, it makes sense to be open with your partner about your finances and what you want to achieve. You don’t want to be surprised later on. Ms. Panther and I were open books with each other. I don’t think we’ll be surprised with what we bring to the table once we’re married.
2. We’ve Stayed On the Same Financial Page
Our financial goals are good to have, but it couldn’t work if we weren’t also on the same page to reach those goals. The only way to be able to pay my student loans off FAST was to not live like your typical young lawyer. We couldn’t live in the hippest neighborhood or in an awesome apartment (not at full price anyway). We had to live like regular people our age.
That wasn’t such a big deal for her actually. She was still in dental school, so for her, living like a student was the normal course of action. Of course, you do have a lot of dental students living in the luxury apartments as well. Either they have rich parents or they take out a lot of student loans. I guess I don’t really know how they afford it. But I digress.
Ms. Panther made sure to keep us both on the same page. We moved three times in the past three years (for a number of reasons, we like to check out new neighborhoods and grab rent deals when we see them). There were a number of times when I suggested a more expensive apartment in a cooler neighborhood. Ms. Panther shot those down. She was right. If we wanted to reach our goals, we needed to make sure we were on the same page too. It’s a team sport! So far, it’s been working out.
3. We’ve Committed To Our Future Goals
I paid off my student loans last month and am coming into our marriage with a clean slate. Sweet!
Ms. Panther will be bringing in $130k of student loan debt. Bummer! That’s okay though. When Ms. Panther starts working, we expect she’ll make a high six figure salary, somewhere in the 200k range. We’ve committed to paying down her debt within 2 years at the most, although we hope to be able to do it even sooner than that.
How will we do it? We’ve gotten pretty used to living mainly on my salary. As long as we don’t let lifestyle creep take over, we should be able to keep living the way we do now (which is pretty well) and put almost all of her income into her student loans. That’s the only way we can do it. It’s a doable plan. We’ve discussed this goal and committed to it.
So as you can see, I’m not worried about this new $130k of debt! We’ve got our goal. We’ve got our plan. We’ve talked about it. We’re on the same page. No surprises in our partnership! If you’re in a serious relationship, make sure the two of you are on the same page even before you are married. It’ll really help you start off on the right foot.
What do you think? How do you handle discussing finances before marriage?
Dollar Engineer says
Good points here and I think the key is just being open and honest with each other the whole way. Another good point would be if either one of you doesn’t agree with a certain decision, be sure to speak up about this rather than just going along silently. Having open discussions is always a good idea and allows you to see someone else’s point of view.
Kevin @ The Financial Panther says
Definitely makes sense. We try to be as open as possible and so far haven’t had too many disagreements yet.
Sounds like you are off to a great start! Like you said, financial disagreements are a common cause for divorce and if you are talking opening about financial issues, that’s a good sign that you are talking openly about most things. Well done!
Lifestyle creep will be the concern to avoid and since you are already aware of this as a watch-out, you should be in good shape. Congrats on the upcoming wedding!
Kevin @ The Financial Panther says
Thanks Jon! Definitely keeping an eye out on the lifestyle creep.
Dividends Down Under says
It baffles my mind that people are getting married without totally being on board with each other on finances & money. Money flows into every area of our lives, finances are key to life and future goals. How can you NOT be on the same page?
So anyway, great job to you both for setting out what you’re doing. It really, really helps when you do this and you grow together.
Congrats on getting married, sounds like you 2 will have a great life together.