10 Tips for Couples Dealing With Debt

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NEW YORK (TheStreet) -- Wedding season is in full bloom, and many newlyweds are dreaming of a happy life together. Agreement over finances and paying off debt are important preparations for a long-lasting union.

According to the study "Bank on It: Thrifty Couples Are the Happiest," conflict over money predicts divorce better than any other type of disagreement. Couples who disagree about finances once a week were over 30% more likely to divorce over time than couples who only disagree about finances a few times per month.

The study also says that perception about how well one's spouse handles money is also a factor in shaping family life. If an individual feels the spouse spends money foolishly, they report lower levels of marital happiness. It increased the likelihood of divorce 45% for men and women. Only alcohol and drug abuse, and extramarital affairs were stronger predictors of divorce.

Before you get married, know how your future spouse will treat money. Don't assume he or she shares your beliefs about money. Even if your future spouse is kind and respectful to you, he or she may treat money differently. Spending and saving habits may surprise you. A free spender before marriage will probably be a free spender after marriage.

To avoid surprises, have an honest discussion about money before the wedding day. This talk may be difficult to do, but it is necessary before joining life and finances together. If one partner has large debt or difficulties managing money, address these issues before the marriage. Debt can not only affect your financial future together, it can also severely damage your credit score.

Here are some financial tips for newlyweds:

1. Before the wedding, show all of your cards. Be honest about your income, debts and money problems. Bring out your bank statements from the past 12 months to show what you did with your money. Explain how your parents raised you to handle money and your strengths and weaknesses with money. Acknowledge if you are a spender or a saver.

2. Each of you should get a copy of your credit reports from the three credit bureaus. This will give you a clear picture of credit accounts, debts and how creditors will judge you. Aim to get your scores over 750 to receive the lowest interest rates for your first mortgage and other loans.

3. Have a wedding you can afford. Do not start a life together by using a credit card to pay for a wedding that is out of your budget.

4. Avoid credit card debt. The best rule of thumb is: "If you can't pay for something with cash, you can't afford it."

5. Get one or two credit cards and stick with them. Use them for several purchase each month and pay them off immediately. Building a long-term payment history with one or two credit cards is an important factor in your credit score.

6. Each spouse should hold a credit card in his or her own name to build an individual credit score.

7. Pay as much on credit card balances as you can over the minimum each month. If you receive gift money, a bonus, a second job or a tax refund, use this to pay off debt. The faster you pay it off, the quicker you can focus on saving and getting ahead. You can even make micropayments multiple times during the month to pay off your balance faster. Eat a meal at home and immediately apply the money you saved to your credit-card balance.

8. Make a plan for paying bills before they arrive and decide who will pay them. If you have separate accounts, know which account pays each bill.

9. Reduce your debt-to-credit limit ratio. This will help improve your credit score. Your monthly debt, including your mortgage, should not exceed 35% of your gross income.

10. Differentiate between wants and needs. Then simplify your wants. It is easy to get caught in the trap of wanting more than what you have, trying to "keep up with the Joneses" and looking to material things for happiness. But this will put you on the fast track to increasing your debt. Savings and assets help build financial security and increase the odds of a strong, happy marriage that lasts.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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