So….. It’s Christmas. You know what happens at Christmas? People give gifts…..really nice gifts. You know what comes after Christmas? New Years. You know what people do on New Years? They make commitments for the coming year. Big commitments. Maybe you have that special someone in your life who is waiting for the “really nice gift” full of “big commitment”. Yeah, you know what I’m talking about. It’s time….. to pop….”THE QUESTION”.
If this is you, let me be the first to congratulate you. Now that that’s out of the way, let’s talk turkey. No, not the turkey your mom is serving on Christmas Day. I’m talking about history that can be a real ‘turkey’ when it comes to plans for your future. I’m talking credit.
Researchers are finding that more and more, as adults are getting serious in their relationships, credit history and debt is becoming a qualifying conversation. Maybe it won’t totally rule out “the big commitment”. But it might change some things in the future. If you are looking to get married, you should probably have ‘the talk’ with your significant other before things get too out of hand.
I recently had a client in my office who admitted, somewhat embarrassed, that she had talked about debt and credit while on a first date. She thought it might be a bit nuts. I thought it was perfect. It wasn’t a deep discussion with all of the hard numbers, but it did give each of them an idea of the other’s values and habits.
I know, it’s not exactly a romantic discussion for most people. There are, however, a few reasons you should be having “the talk”.
Debt Payments – You may join your finances when you get hitched, and there are good reasons for doing that. If the other person is paying a large percentage of their income to debt payments, they may not really be contributing that much to household expenses. You may be OK with that and if so, then so am I. But you do need to know ahead of time.
Joint Credit – Quite often the next big step after marriage is buying a house. We have a number of clients come through class where only one spouse is on the loan. The other person’s credit is so bad, they wouldn’t even be able to get a loan. But with most mortgages, this means you will also only be able to use the one person’s income for qualifying if they are the only one on the loan. You will qualify for less of a mortgage and that big, beautiful house you’ve dreamed of as a couple just became much, much smaller.
Dream Jobs – Particularly in jobs where you are dealing with other people’s money or information, your employer might do a credit check on you before hiring you. They want to know if you have things at home that may tempt you to help yourself out at work. Often times, they won’t just check the potential employee’s credit report, but the spouse’s credit report as well. That’s right; their bad credit could keep you from landing your dream job.
Identity Access – Do you know who is most likely to steal your identity? That’s right, it’s family. They already know all of your information and don’t have to go scrounging through the internet to find it. Poor credit history may be a sign of deeper issues like gambling or spending addictions. To fund their behaviors, they take out loans. When they can’t do anything else in their name, they move on to the next easiest source of money. This isn’t pleasant and I truly hope it doesn’t happen to you. Unfortunately it does happen. It doesn’t even mean you can’t marry that person. You just need to be more careful and set some pretty specific boundaries.
I don’t think anyone gets married with preconceived notions of divorce. But it happens. A recent study put divorce rates for first marriages at about 41%. But a quick search had The Today Show, The Institute for Divorce Financial Analysts, Huffington Post, and Marriage.com all reporting that finances were a leading cause of divorce. In fact, 2 of them had money as the #2 reason right behind infidelity.
I’m all for getting married if things are right with the world. I can’t judge you and say who should or shouldn’t be getting married. Hopefully you are being a little more intentional about it than “they’re super cute”. Finances need to be an important part of that discussion before you tie the knot.
If you have some financial things you want to work through before or after the big day, the counselors at the Center for Financial Resources are happy to help. You can schedule an appointment online or by calling us at 605-330-2700.
written by Breck Miller
images courtesy freedigitalphotos.net