Exploring various Key aspects of Dealing with Debt in the Family

 

For many out there, dealing with debts is a kind of family affair. This is more so if you face any major events of life as getting married, going through a separation, expecting a baby, or grieving with a death in the family. Along with all these, kid’s education and aging parents may all need your help to manage their financial needs. In this article, we may try to walk you through some major aspects of debt management in the family.

 

#1. Debt and marriage

Marriage is a divine contract. In this, two separate individuals start to live together to form a new institution called family. Each involved person gets involved in totality into this new arrangement and all the good and bad qualities they have become a part of this deal.

In light of our topic, debt is one major problem an individual may bring into the marriage. Money is on top of the list when the causes of divorce are being assessed. Financial problems like debt may bring in increased stress in relations and ultimately a marital discord. A study shows that almost 7/10 Americans get into matrimony while owing some kind of debt like a student loan or credit card debts.

One thing to remember is that your debt becomes a shared responsibility once you enter into a marriage. So, be honest to your would-be partner about your debt. The most crucial thing to do to avoid any financial fights in marriage is to disclose all your debt before the wedding. Consider the below things to be discussed or asked your future partner.

  • How many credit cards each of you own and the balances?
  • Do you pay bills on time or have any outstanding payments?
  • How long you think it will take for you to clear the outstanding debts?
  • What is your current credit situation?
  • What is your spending habit and how much money you have in savings or capable of saving each month?
  • Are there any kind of financial obligations left if there was the previous matrimony as alimony or child support etc.?

Once you enter into marriage, the couple needs to make mutually agreeable financial arrangements. If you or the partner have a preexisting debt, then plan to move forward together and work on it.

 

#2. Debt and Divorce

There is no doubt that divorce will be a painful process. Both the sides may dig in deeply when it comes to dividing up the assets and debts, and most of the times require the support of a divorce attorney to handle it. It is essential to analyze the personal financial situation of the couple and make a smart plan. Here are some tips.

 

  • Guard your credit

Get online and get a detailed credit report alongside your other divorce preparations. There may be hidden debts or financial implications in your marriage, which you need to reconcile before moving legally.

  • Separate account

You should also try and separate the revolving accounts by making sure that these only in your name. If your spouse resists it, you may have to get the assistance of an attorney, but never accept any accounts after divorce settlement which is in shared ownership.

Likewise, any joint investments like stocks or bonds, or saving accounts needed to be separated. If you also fear that these funds may get appropriated by the other before settling the accounts, its best to close the account and create one in your name only.

It is also advisable to open a new credit card account. If you have an adult child or if you are a custodial parent, then you can add them too as authorized users. Also, with many of the divorces citing financial discords as we can see at debt consolidation reviews, the creditors also work hard to deal with the delinquent accounts. If you find it difficult to cope up with the procedures, consider taking the support of a qualified professional.

 

#3. Debt and children

It is important to teach kids about proper financial managementfrom early childhood onwards.  Even though financial habits don’t get inherited, children often find their parents as finance management models and tend to follow them. The lesson may be good or bad, but this may set their pattern of life.

As we know, good debts are worthy investments. If you a buy a house, then you are purchasing shelter and also owning an asset which will grow in its value. You may also find getting a loan for your child’s education is also an investment, which will ultimately help them get a good career and succeed in life. However, a loan for a vacation or to buy an expensive car may not be net worth.

It is crucial to teach your children about the differences between the good and bad debts. You also should teach than on tips to save money for meeting any emergencies or planned big purchase etc. You also make them understand that debt is such an obligation which shouldn’t be taken lightly.

 

#4. Debt and aging parents

Retirement may be a difficult time, especially if you haven’t prepared well to face it. A large number of Americans who reach to their golden years now are troubled with unpaid debts and leave in despair instead of enjoying relaxed retired life.

Eliminating or reducing debt at old age may be an important step in terms of family debt. It is essential to crafting a viable and financially secured retirement, but still many people have a hard time to extract the red markings from their balance sheets. If your parents are trapped in debt during retirement, it is important to plan it well for the future. Your help could be critical if they already are struggling to cope up with their debts and confused about making financial decisions. The possibilities are:

  • Help to balance their fiancés by sending any payments if necessary.
  • Try to set up some appointments for any home repairs or help them with some big purchases like a car or so.
  • Offer them an opportunity to move in with you if they cannot afford an assisted living facility.
  • Educate them about the latest scams focusing on the elderly, which they may not be used to.

In any of the cases above, if you are finding it difficult to handle financial management all by your own, it is essential to find the right kind of financial professionals and maintain a trusted relationship with them over time.

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