The Reality: Debt & Relationships
The more I work with people, the more I recognize a disturbing trend related to money and relationships. Every day in our office we deal we clients who are mopping up a financial mess from a former relationship. When it comes to relationships, we tend to spend “emotional” money, therefore we don’t think twice about signing jointly for a new debt and merging our finances.

Emotions can keep us from asking “What happens if this doesn’t work out?”
Many times we can split up and move our separate ways physically, but from a money perspective we could be tied up for years.

Traditionally, we think about merging monies and credit upon marriage, but the trend we are seeing is short term relationships that have long term joint debts. The fallout of these debts going wrong is emotionally and financially draining. Nobody wants to “pay” if the relationship is over, especially if it requires both incomes.

The Strategy: Don’t Be a Statistic
Financial issues are one of the leading reasons relationships end in break up. You can beat the odds by proactively discussing your individual financial philosophies and financial goals once your relationship starts to become serious. By discussing this upfront, it can eliminate any later stress.Sometimes couples try to hide the dirty details of their finances. However, dealing with it openly and honestly is the key to a healthy relationship – and can prevent resentment down the road.

Another trend is costly weddings, funded with credit. Couples are spending over $10,000 for engagement rings and even more for the wedding. If you do not have a conversation about your approach to finances, you will quickly run into problems after the honeymoon.

The Checklist: Have a Plan
Encourage a meeting between both parties, with an understanding that this affects the future of your relationship. This is to be done with the mindset of not placing blame or keeping tallies. Instead, focus on daily goals of spending and saving.

Understand how credit affects a relationship and how it can be leveraged as a benefit, such as a mortgage in the future. A big misconception is “ALL” Credit is bad. When indeed, there is a huge difference between credit and debt. Don’t hide credit card debt from each other, as this is a relationship time-bomb.

Watch out for small collections because they are credit score killers. Medical collections are an example of a “passive” collection that really harms credit scores. Many times these collections are not considered as important debt because they were not acquired by active spending. A couple of medical collections can drive down the score 100 points or more.

ScoreCrafters specializes in credit strategy. Make no mistake, there is a business component to a relationship. Without a plan, you can be experimenting with your future. We can be the voice of logic that helps your relationship stay prepared and strong.

Harry Snedden
ScoreCrafters LLC

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