Newlyweds Paying Down Debt
Newlyweds Paying Down Debt
When my husband and I first got married, we had a lot of credit card debt from moving him off base and unexpected expenses (car troubles, pet troubles, etc.). We agreed that although savings are nice, the interest rate on the credit card is almost always much higher than what most banks offer for a savings account. Because of this, we’d be losing money by not putting at least a portion of what we could save toward the credit card.
We used our wedding gifts to pay the debt down in half, and while my husband is on deployment 50% of his checks will go to the credit card as we don’t need as much money when he is not home (less food, less gas, less utilities, etc.) We also applied for a zero-interest introductory APR credit card and transferred all the debt to that. As long as we pay it back in 12 months, we will accrue no more interest, resulting in a savings of over $1,000.
MilSpouse Money
Mission Response:
Looks like a beautiful wedding! Marriage is certainly a major life event that impacts money management. Open communication and working together are key in managing finances as a couple. Moving off base can also create some unexpected expenses, no doubt. You’re smart to pay down your highest interest rate debt first since this approach can save you the most money. While banks may not offer comparable savings rates, it’s still important to set aside some savings, like $1,000, to cover emergencies. Then, if another major expense comes up, you don’t have to add to your high interest rate card. It’s a balance! Samantha is doing her homework by reviewing expenses and developing a plan to pay down debt. For other newly married couples, check out the Financial Planning Considerations under the Marriage section in MilLife Milestones for more information to help you get started. As Samantha mentioned, unexpected expenses happen and it is not a matter of if, but when.
Two great options to pay off debt are the avalanche and snowball methods. Click the links for calculators to help you get started. Check out our Debt Destroyer video series for more on debt payoff strategies. Also be sure to carefully review and make sure you understand the terms of any debt you take on. Sometimes, credit cards with low introductory rates can go up later and cost you more in the long run.
