You’ve said those two beautiful words: “I do!” Your separate lives have been joined together as one, and you’re basking in the glory of wedded bliss. What was yours and mine is now ours—but that includes your debt, too.
Did you know 86% of couples who got married in the last five years started out in debt? That’s no way to begin your new life together.
You might not think that’s a big deal. You might think: Everyone has a car payment, right? Everyone carries student debt with them for years. That’s just how things are! Sorry guys, that’s just not true. You don’t have to live that way. You can live completely debt-free.
What could you do with your money if it wasn’t going toward monthly payments over and over again? Think about all the extra cash you’d have that would actually be yours.
You and your spouse could begin saving to buy your first home together, max out your retirement accounts, or even get a jump on stockpiling cash for when you want to start a family. The possibilities are endless! That’s what having zero debt does—it gives you freedom.
Why Should You and Your Spouse Become Debt-Free?
Sure, traveling across Europe might sound more romantic and appealing than paying off your combined debt. But keep this in mind: If you live like no one else now, later you can live like no one else . . . and go to Europe anytime you want (and pay cash for it!).
Still not quite convinced you should dump your debt? Consider this:
- Debt steals your income.
- Debt makes it harder to build wealth.
- Debt prevents you from being able to pursue your goals and dreams together.
So, are you ready to ditch your debt? Awesome! First things first: You and your spouse need to be on the same page. This will help you work as a team and achieve your financial goals that much faster!
How to Pay Off Debt
Whether it’s student loans, credit cards, or a car payment weighing you down (or all three!), these simple steps can help you become completely debt-free.
ONE | Make a budget—and stick to it!
I know, I know. . . it’s everyone’s least favorite word. Budget. But the truth is, you need a budget. Everyone does! If you have no idea where your money is going every month, then it’s pretty hard to make sure you’re putting that money toward things that matter—like getting out of debt.
When you’re creating your monthly budget, make sure your basic needs are taken care of first—food, housing, utilities, transportation. Then pay off as much debt as possible. Your budget will help you see how much extra you can put toward that debt each month.
TWO | Pay off your debt using the debt snowball method.
The what? Here’s what you do: List your debts from smallest to largest—regardless of the interest rate. Put them all out there. I’m talking personal loans, payday loans, credit cards, medical bills, car payments, and yes, even those student loans if you have them. Include everything but your mortgage (you’ll tackle that one later).
Once you have your list, pay the minimum payment on everything except the smallest debt. I want you to attack that one. Throw everything you can at it until it’s gone.
Now you may be thinking: But Rachel, shouldn’t I pay off my debt with the largest interest rate first?
That may make sense mathematically, but we aren’t really doing math here—we’re making behavioral changes. And to keep that behavioral change going, you need to experience small wins to help you stay motivated. The best way to do that is to start with the smallest debt.
When that first debt is completely paid off, take the money you were putting toward it and add that to the payment on the next smallest debt. This is where the snowball part comes in. As you continue to pay off debt, you build a snowball of money and gain momentum!
THREE | Make extra cash!
As you look at your budget and your debt payoff goals, you may realize you need to bring in some extra cash. But don’t worry! You don’t have to do anything too crazy. Have a garage sale (you probably have two blenders now anyway, right?), start driving for Uber or Lyft, or sell all those duplicate DVDs the two of you have—whatever you can think of to bring in extra cash.
You might even consider making some temporary lifestyle sacrifices, like cutting the cable or ditching that daily latte. But here’s the thing: It’s temporary. And while those changes might seem small, they can add up before you know it!
FOUR | Live a Life You Love
As newlyweds, you’re just starting to build a life together. And I want it to be a life you both love—a life where you’re not buried under debt, stress and worry.
So, as a couple, be intentional with your money and make getting rid of debt a priority. Becoming debt-free early on in your marriage will lay the groundwork for the rest of your married life. In a few years, you’ll be amazed at how much your bank account and your marriage will thank you.
At Southern Bride we’ve just been soaking up all the great financial advice Rachel Cruze has been giving to our brides this year. In case you missed it, check out 10 Ways To Plan A Wedding On A Budget & 5 Questions To Ask Yourself Before Marriage.
About Rachel Cruze
As a #1 New York Times best-selling author and host of The Rachel Cruze Show, Rachel helps people learn the proper ways to handle money and stay out of debt. She’s authored three best-selling books, including Love Your Life, Not Theirs and Smart Money Smart Kids, which she co-wrote with her father, Dave Ramsey. You can follow Cruze on Twitter and Instagram at @RachelCruze and online at rachelcruze.com, youtube.com/rachelcruze or facebook.com/rachelramseycruze.