Your big day life can have an even bigger impact on your financial future.
A survey done by the popular wedding-planning website The Knot found that in 2016, the average American wedding cost a staggering $35,329, and that number rises every year. If you’re putting wedding costs on credit cards, interest charges can send you even further into debt – but it’s not all bad news. Confronting joint debt is a great opportunity for you and your spouse to work together toward a big goal.
Cut Back on Spending
The more of your earnings that you keep, the more you can put toward your debt.
That’s a lesson that Amanda Gillam, a personal finance blogger, took to heart while paying off the $40,000 debt she accrued for her wedding.
“Grocery shopping is one of the easiest areas to save, just by shopping around and buying cheaper produce,” she says. “Set a target amount to save each month and use that to pay extra off your wedding debt.”
Negotiate Your Bills
Again, freeing up more money will help you tackle those hefty wedding bills.
“There are often obvious ways to save money on phone bills, electricity bills and fuel bills that we ignore,” says Gillam.
Research the plans at competing companies, then call your providers and ask if they can match their competitors’ prices.
“Even a regular gym membership can be obtained cheaper, especially if you threaten to go elsewhere – that worked for me,” adds Gillam.
Become a Smarter Shopper
You can’t stop spending money altogether, concedes Natasha Rachel Smith, the personal finance expert at TopCashback, a cash back and coupon site, but you can save money by being a more deliberate shopper.
“Question the cost of products and services. Ask yourself if what you need or want has to cost that much. There are many instances where you can haggle the price of items or get things thrown in free, from groceries to beauty treatments to furniture,” says Smith.
Boost Your Earnings
“The best way to get extra cash is to put your skills and property to use,” according to Smith. “If you have an extra room available, consider renting it on Airbnb. If you have an empty garage, find someone to lease it to for a monthly fee. If you have a car, sign up to become an Uber or Lyft driver on the weekends!”
Of course, as a newlywed, you don’t want to become too busy to see your spouse. So talk about ways you can work together to bring in extra money, like by starting your own dog-sitting service on weekends.
Analyze Your Debts
Not all debts are created equal. Sit down with your partner to analyze exactly what you owe and under what terms. For instance, if some of your debts are on credit cards, make sure you know the interest rates for each card, and if you have invoices from vendors, make note of the due dates. This allows you to see exactly how much you owe to whom and in what order the payments are due.
Choose a Repayment Strategy
Depending on the nature of your debts and your budget, you might find that the avalanche method is the best way for you to pay down what you owe. Using this method, you’ll make payments on the debts with the largest interest rate first. Once those are paid off, you’ll start making payments on the debt with the second-highest interest rate, and so on.
Another option is the snowball method, in which you pay off the smallest balances first. However, larger balances will continue to accrue interest, so it may be the costlier option in the long run.
Get Professional Help
Even after slashing expenses and increasing earnings, some couples find themselves drowning in debt. Kevin Gallegos, VP of operations at the consumer credit services provider Freedom Financial Network, lays out a number of options for people who are struggling to stay on top of debt.
“Credit counseling agencies set consumers up with a debt management plan that reduces the monthly payment,” he says. “They can do this because they have pre-arranged agreements with credit card companies to lower interest rates. This may not be the best option for people with large amount of debt, as lowering interest rates just isn’t going to help that much.”
“’Debt consolidation’ simply means combining debts to have one interest rate and one payment,” says Gallegos. “Some people borrow from a friend, a bank or a loan service, obtain a loan from an online lender, or get a home equity loan or a vehicle title loan … Alternatively, a debt consolidation service can turn many bills into one bill payment.”
But, he warns, you have to think carefully about the terms required by a consolidation service. Some have high fees, and failing to make payments on time will damage your credit score.
“For those who have serious debt (think $10,000 or more) and cannot make required minimum payments, debt negotiation may be of help,” Gallegos explains.
“These businesses work on a consumer’s behalf to lower the principal balances they owe. It can be a long process that hurts credit scores further, and is best suited to people who would otherwise need to consider credit counseling or bankruptcy.”
It takes some hard work, but getting out of debt is possible, and Quicken Loans can help you with a cash-out debt consolidation. When that last debt is paid off, pull out your wedding champagne flutes and celebrate with a toast!
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