It's been said that love is blind. Unfortunately, sometimes love is also broke.
Relationships can be tricky enough without the issue of one partner having large-scale debt. Is debt a deal-breaker in a relationship for you? Should it be?
A recent survey conducted by SoFi finds that millennials consider debt to be the second-largest deal-breaker in a potential relationship partner. At 20.9% of respondents, serious debt was slightly edged out as a romantic deal-breaker by workaholic tendencies at 21.4%.
However, the survey finds that romance is not completely dead – 36.1% of respondents said that no level of debt would stop them from committing to a potential life partner. Almost one-quarter of respondents can tolerate up to $100,000 in debt, while 16.7% would balk at $10,000 to $50,000 of debt. When asked if they would dump someone over their debt, 55.4% of respondents said no, while another 39% said that it depends on how much debt is involved.
However, few people want to be upfront about their debts with their potential partners. The majority of respondents (57.6%) wouldn't tell their partner about debt until they are sharing household expenses, a bit too late to be straightforward. Certified Financial Planner® and Life Coach Leisa Peterson suggests that empathy and trust are underlying issues. Peterson advises that, in relationships, people should be "…putting themselves in other people's shoes and really connecting to the deeper thing that's going on with the money. Most of the time, it's not about the money – it's actually about something else."
It seems imprudent to lead with your debt situation on your first date. However, when things become serious enough to become exclusive and/or you are planning big things together, anywhere from joint vacations to cohabitation, you need to be upfront about your debt situation to establish the trust necessary for a solid relationship.
While the survey showed a general aversion to debt, we believe it missed one important element – what type of debt is it and how was it acquired? Student loan debt is one thing (especially if it was acquired to gain future earning potential), and medical debts may be beyond your control – but debts that are indicative of overspending and an inability or unwillingness to budget should be cause for concern. It should be an enormous red flag if a partner is unwilling to open up about the source of the debt at all.
Keep in mind that you have a credit history independent of your partner, and you will retain that history unless and until you apply for joint credit such as a mortgage loan. Rod Griffin, the Director of Public Education at Experian, points out that it's a myth that credit histories of married couples or partners will be merged. The credit expert reminds us that, "…if you apply for joint credit, both of those credit histories are going to be considered, and as a result, your bad credit history could drag down your ability to qualify for joint accounts." You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.
By being upfront, you can plan the best way to deal with a partner's debt and delay joint accounts and joint credit until the lesser partner's credit is brought back into shape. Many happy couples keep elements of their finances separate if they don't agree on spending habits, but they are not secretive about it. It's important to outline "together" expenses versus "separate" expenses in that case and make sure both partners understand their obligations.
If you find love to be blind and broke, we suggest being cautious and straightforward about debts and expectations. It's better to find out sooner than later that your views about debt and money management are incompatible within a relationship. It certainly isn't going to get any cheaper when divorce is involved.
If you want to reduce your interest payments and lower your debt, try the free Debt Optimizer by MoneyTips.