Working out love, money and debt together
Between most couples, the big elephant in the room is on dividing financial responsibility and handling debts. In fact, this can be a large stress point between couples, often leading to breakups and divorces. If you are caught in a quagmire, have a look some of these financial tips for couples seeking debt financial assistance.
Be Debt Free
Wipe out your debt as quickly as possible. Focus on eliminating any non-tax-deductible debt, including student loans or lines of credit. Make it your foremost priority. Keep an account of the debts having the highest financing costs, such as your credit card bills? If you’re carrying large sums on credit cards, consolidate the debts into a lower-interest loan and then concentrate on erasing that single loan. A recommended approach is to have the bank automatically take a specified sums from your account on payday and apply it towards paying down a consolidated loan so that you get used to how much disposable income you have available and don’t have to struggle to save up money for lump-sum payments.
Working out a budget, methodically allows you to fulfill your couple debt payment obligations. Pay close attention to irregular costs, including one-off purchases as your small impulse buys can add up over time and eat away at your disposable income. A budget will keep a lid on spending and form the foundation for good fiscal habits for life. Doing so will help you narrow down your debts and utilize your disposable income for a major future investment like a vehicle or home.
Invest in your home and retirement
Couples need not abandon their retirement planning at the cost of purchasing their dream home— they can do both at once. Under the government’s Home Buyers’ Plan, buyers can withdraw up to $25,000 for a down payment as long as they return the money over a number of years. So, contributing to a Registered Retirement Savings Plan (RRSP) early can provide an immediate tax benefit, and also help with a house purchase. Once a home has been purchased, down payment becomes the main focus for most couples. You should look at investing your disposable income in either a registered retirement savings plan or a tax-free savings account, rather than being held up in a simple investing account. Alternatively, money can be put into a tax-free savings account (TFSA), where the growth is sheltered from tax. The money in a TFSA can be put towards emergency expenses if necessary, or held as a long-term retirement nest egg. Either way, getting money into a savings plan early can yield big savings over the course of the couple’s next 40 years thanks to compound interest.
Two incomes, but act as one
Couples can reap rewards by treating their finances as a combined resource. Spousal contributions to RRSPs, for instance, are one way to transfer immediate tax benefits to a partner, since the initial investment results in up-front tax savings.
A key aspect of a couple’s financial development involves being upfront and open about their future plans and knowing where each partner stands in terms of income and debt. Having such a reality check dialogue will keep the couple grounded and stick to their financial goals.
Apply these financial tips for couples and work towards settling your couple debt payment. For more detailed debt financial assistance and debt consulting, visit 4 Pillars and stay financially healthy.