Think about this for a moment: when you’re dating (or in any relationship), what were some of the important things you sought in a significant other? A good sense of humor? Mutual interests? A warm smile? A good listener?
Now, conversely, take a moment to think about what are (or were) your dating deal breakers. Tardiness? Lack of ambition? Bad habits? Debt?
While we seemingly always focus on looks or personality when asked about the things that attract us to a potential spouse, debt and credit scores are becoming two factors of increasing importance among single Americans.
A Bigger Problem Than You Think…
According to Self Lender, credit card debt is the fourth-highest dating “red flag,” ranking only behind excessive alcohol consumption, poor manners, and an unkempt living space. Self Lender polled 2,000 adults as part of a recent survey when it comes to their spending habits and dating life. The survey also revealed that about 30 percent of Americans have lied while dating about their salary, and that more than 25 percent have lied about their spending habits. Additionally, close to 30 percent have lied to a new partner about how much they’re in debt.
Now, it’s worth noting that the average American waits about six months before talking money and their detailed financial situation with a partner, yet this information is further evidence that in order for a successful long-term relationship, transparency when it comes to debt and money is crucial. And for good reason, as a dire financial situation or too low of a credit score, and you’re likely not going to be able to realize the goals you want to accomplish as a couple.
Yes, debt can be a real relationship deal breaker. Let’s take a closer look at why:
Debt in America
Almost everyone has debt, but there’s a difference between good and bad debt. Student loan debt, for instance, is something that is becoming increasingly accepted. It’s estimated that 70 percent of all college seniors graduate with student loan debt, with balances averaging about $30,000 per borrower.
The bad type of debt is credit card debt. Not only is this expensive to pay off in time thanks to high interest rates on carry-over balances, but too high of a debt-to-credit ratio can negatively impact your credit score. Too low of a credit score, and you’ll be paying higher interest rates on any loans you’re approved for — that is, if you’re approved for a loan at all.
Sure, if you’re with someone with excessive credit card debt and your finances are in order, there’s always the option of financing everything yourself. But this could be a problem for a few reasons: One, together you’re always stronger than you are by yourself. Think of it like this: If you’re just financing a mortgage under one person, then you may only be able to afford about half the house as you would if you were financing it together. And secondly, even if you’re content with financing everything yourself, your partner is still going to have to pay back their credit card debt over time.
Honest and Open is Key
It’s estimated that in about 40 percent of all couples, at least one spouse lies to the other about their financial situation. About 75 percent of those polled estimated that this dishonesty has negatively impacted their relationship.
So, what’s the key to a happy and healthy financial future with your partner? We’d suggest having serious money conversations as things start to get really serious. We’re talking before you move in together, discuss marriage, or co-own anything. If your partner hems and haws about it, beware. But if they’re open and honest about things, and have a plan in place to get out of any debt that they’re in, that’s good.
How much of a deal breaker is credit card debt in a would-be partner? Is it a dating no-no? Or would you be willing to help work through any issues with someone you care about? The decision is yours, but studies show debt is becoming an increasingly important factor in relationships and dating.
Regards,
Ethan Warrick
Editor
Wealth Authority
