Your wedding day is a big moment in your life, but it can have an even bigger impact on your financial future. Even if you start with a conservative budget, it’s easy to find yourself incurring debt to afford the wedding day of your dreams.
In fact, according to The Wedding Report Inc., the average couple spent between $19,323 and $32,205 on their wedding day in 2017. If you happen to put these wedding costs on credit cards, the interest charged may increase your debt even further – but it’s not all bad news.
Confronting joint debt is a great opportunity for you and your spouse to work together toward a common goal, debt freedom. If you’re ready to get rid of your wedding day debt, here are the steps to take to help you pay off your big day.
Step 1: Create a “Barebones” Budget
Developing a budget helps you determine the money you have coming in and going out. If you’re unsure of the financial resources you’re working with, it may be impossible to pay off your wedding debt. Creating a “barebones” budget can help you pay off your wedding debt in a timely manner.
First, review your credit card and bank statements from the past few months. This will help you evaluate your fixed and variable expenses. Make separate lists for your fixed monthly expenses and your variable monthly expenses. Your fixed monthly expenses are necessities that can include costs such as your mortgage, health insurance and groceries. Your variable expenses are wants and can include costs such as dining out, shopping and hobbies.
Then determine which expenses you absolutely have to pay for every month, no matter what. Adding up these expenses will help you determine your “barebones” budget. If you’re drowning in debt, consider using this budget for a few months. In doing so, it can help you get a better handle on your financial situation. By only spending money on the expenses you absolutely need, you can free up extra cash to put toward your debt repayment.
If you feel your “barebones” budget may be a little extreme, try starting by only eliminating a few expenses. By eliminating a few expenses, you can still free up some extra cash to put toward your debt. For example, you may want to put your gym membership on hold and work out at home for a few months.
Step 2: Cut Your Expenses
Now that you have created a “barebones” budget, you know exactly how much you need to spend every month. That doesn’t mean you have to eliminate all expenses that bring you joy. Instead of getting rid of them completely, consider ways to cut your costs. For example, you may want to contact your cable company and ask for a lower service rate.
There are plenty of ways to minimize your spending. Simply get creative and find less expensive alternative options that bring you just as much joy as their more expensive counterpart.
Step 3: Become a Savvy Shopper
You can’t stop spending money altogether, concedes Natasha Rachel Smith, the personal finance expert at TopCashback, a cash back and coupon site. However, 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.
Taking steps toward becoming a savvy shopper can help you eliminate your wedding day debt. So, before you make your next purchase, be sure to compare prices and the quality of each item.
Step 4: Increase Your Cash Flow
One of the best ways to pay off debt is to increase your cash flow. By putting your talents and skills to good use, you can start earning extra cash in no time.
Of course, as a newlywed, you don’t want to become so busy that you don’t see your spouse. So talk about ways you can work together to bring in extra cash. For example, try starting your own dog-sitting service on weekends. You can use an app like Rover to help you find pet owners in need of your services.
There are plenty of ways you and your new spouse can make extra money while spending time together. Get creative and use your talents to start making money today.
Step 5: Analyze Your Revolving Debt Balances
Not all debts are equal. Sit down with your partner and analyze exactly what you owe and under what terms. For instance, if you have some credit card debt, make sure you know the interest rates for each card. If you have invoices from vendors, make note of the due dates.
Creating a list of your debt will help you stay organized and keep track of your debt repayment progress.
Step 6: Select a Debt Repayment Strategy
Identifying exactly how much you owe will help you select the best debt repayment strategy. There are a few common strategies consumers use to pay off debt. Some consumers choose to start with the lowest balances while others pay off their highest interest debt first.
Depending on the nature of your debts and your budget, you might find that implementing the avalanche method is the best way for you to pay off your debt. By using this method, you’ll make payments on the debts with the largest interest rate first while continuing to make minimum payments on your other debt balances. Once you’ve paid those 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 not be the most cost- effective option in the long run.
Step 7: Get Professional Help
Even after slashing expenses and increasing earnings, some couples find themselves continuing to drown in debt. At this point, it may be wise to enlist the help of a professional. Partnering with someone like a financial planner, can help you create the ultimate financial plan. They are experts in their industry and understand how to help you achieve your financial goals and objectives.
A financial planner will be able to guide you through difficult financial situations and help you get on the right path toward financial security. They can also help you determine if you need to consider debt consolidation or credit counseling.
Step 8: Build Positive Money Habits
Want a new car? Need money to pay for a new addition to your home? Well, try creating new, positive money habits. Your money habits will determine your financial security and set you up for a prosperous financial future. Some positive money habits you may want to implement include:
- Setting up automatic savings contributions
- Opening different savings accounts for different money goals
- Applying the 24-hour purchase rule, which involves waiting at least 24 hours before you make a purchase
- Budget for unexpected expenses by contributing to an emergency fund
- Building strong financial habits that will help you avoid future debt and boost your money confidence
Debt can be a never-ending cycle if you don’t focus on building positive money habits. Don’t purchase any items that your future self will have to pay for. By prioritizing purchases, budgeting and saving, you can break the debt cycle for you and your new spouse.
Step 9: Review and Make Adjustments
Just like most things in life, debt repayment isn’t a perfect science. Just because one of your friends used a certain technique or strategy and it worked for them doesn’t mean it will work for you. That’s why it’s important to review your progress and make adjustments regularly.
Not only will reviewing your progress help you evaluate what works and what doesn’t work, it will encourage you to keep going. By seeing how far you’ve come in a short amount of time, you’ll gain confidence and hope for the future. You’ll take pride in what you can accomplish with your spouse.
The Bottom Line
Paying off your wedding day debt may not happen overnight. Creating a budget, increasing your income and developing a debt repayment strategy will help you become debt-free before you know it. By using these simple steps, you can create a prosperous marriage and financial future.
What are some of the tips you use to pay off debt? We want to hear from you. Please leave your suggestions in the comments below.
If so, subscribe now for tips on home, money, and life delivered straight to your inbox.