If you are married to someone that is in debt, then you may feel that you want to help them repay that debt. You have no legal obligation to repay them though, but it could reflect badly on your credit record if you have joint accounts and it could harm your household financial situation. It can be quite a difficult dilemma as they may not take kindly to being helped out in this way.
No one likes to see their loved ones in debt and so if we can help, by paying off those debts, then we may feel that we would like to. It could help to improve your relationship with them and they could have lower stress levels as a result of you helping them. It may also help to reduce your stress if you worry about them being in debt. It will also help to save them a lot of money in interest payments, money which they might be able to then use to help both of you.
Paying off the debt could also improve their credit rating, which will help you both if you want to borrow money in a joint capacity, perhaps for a mortgage. It could even mean that you will be able to borrow at a lower rate of interest because you will be seen as less of a risk to lend to. If you hold joint accounts or bills in joint names, your credit rating could be lower as an effect of you being associated with them so helping them out could help you out as well.
Having both of you out of debt could mean that you have a more stable financial situation as a household. If you have children this can be particularly important as it will mean that they can feel secure and there will be less financial stress. It can also mean that you will be able to afford more things as you will not have interest and debt repayments to worry about.
Your spouse may feel that it is their job to pay off their debts and not yours. They may rather that you keep out of their financial business and let them manage it as they see fit. They may feel you are interfering and trying to tell them what to do and it could cause rows between you.
If they like to spend money then paying off their debt could be a waste of time. For example, if they have maxed out a credit card and you repay it, they may then decide to spend on that credit card and max it out again. Some people think that a credit card is money available for them to spend and so until they have maxed it out they do not feel that they have made proper use of it. This will not only mean that you have wasted your time repaying the debt, but is likely to cause rows between you because of the fact that you have done this and they have not seemed to appreciate it.
They may also feel that it does not matter if they get into debt as you will pay it off for them so they could end up borrowing more and more money because they do not have to take any responsibility for it. This could end up with you finding that you do not have enough to keep repaying the debt. You may also find this very frustrating, if you are trying to balance the books and they do not seem to care.
Debt can be a very difficult thing to discuss in any relationship especially a marriage. Sadly, finances are one of the main reasons that couples divorce. This means that you need to be really careful about how you approach this situation. Make it clear that you are trying to help but that you are not prepared to keep bailing them out if they keep getting into debt. Also explain that you are trying to help the situation rather than take over. You will know whether approaching your spouse is a good idea or not and what sort of approach might work in starting a conversation about money and trying to help them. It can be difficult not to get cross with them if they do not accept help or they get into debt again so you will need to be very careful.
If they are irresponsible with money and can accept that then you could gently suggest that you manage the money and set budgets and then they will know how much they are able to spend. This could help some people but others may not like someone controlling them in this way. Hopefully you will already know them well enough to know what might work best for them.
There are many parents of teenagers, teenagers and students that worry about student debt. For those in a position where they can afford to pay for their course without a loan or are considering waiting and saving up for a course, it is worth them thinking about the pros and cons of a loan.
How a Student Loan Works
Student loans are different to loans from a bank and it is worth understanding how they work before you worry too much about taking them out. For a start, repayments will not start until you graduate and then they only come in if you are earning over a certain threshold. This means that if you are out of work or not well paid, there will be no pressure with regards to making the loan repayments. The other big difference is that the loan will be written off after thirty years. This means that if you do not manage to repay the loan, then you will never have to. This reduces the pressure somewhat and has led to about three quarters of graduates not repaying their loans.
Advantages of a Student Loan
This means that if you think that you are unlikely to repay all of your loan, then it could be well worth getting one as you will not pay back as much as you would if you paid for your course. It can be hard to predict though, whether this will be the case for you. It can depend on what sort of career you think that your qualification will lead to and how well-paid jobs tend to be in that area. You may also predict that you might take a break in your career, perhaps to raise a family or to look after parents which will have an impact on your repayments.
The loan will have no impact on your credit rating and you will never forget repayments as they come out before you get paid; through your tax code.
Disadvantages of a Student Loan
Although a student loan has many advantages over normal loans it is still worth thinking hard about it. If you do end up paying it all off, then it will be more expensive than it would have been to pay for the course yourself. This means that you need to consider whether you feel you will repay it all or a majority of it and therefore spend more money. You will also need to be making repayments for thirty years which although will not be much, will still be reducing the amount of money that you will have available to spend.
The advantage of the money coming out of your tax code does not apply if you are self-employed. You will have to make your loan repayments when you are paying any money you owe for tax and National Insurance, once or twice a year after completing your self-assessment tax return. This means that you will have to be careful that you are putting enough money aside, along with the tax and national insurance, so that you have enough to cover what you owe. Some people are not good at doing this and could therefore get themselves into trouble if they are doing things this way.
Some people worry that when someone so young gets into debt it will encourage them to continue being in debt for the rest of their lives. Of course, it is possible to counter that argument by saying that as they have experienced debt, they will be less likely to get into debt in the future. It really comes down to the individual’s personality and whether they see the student loan as a stressor or a great thing and how much they worry about their responsibility to repay it.
Most students do not have to make this decision as they will not have the money available to pay for their course. However, if you do, then you need to think carefully about whether a loan will still be a better choice for you. It can be a tricky decision as you cannot predict what your employment status will be in the future.
Some people will feel that the course should be paid for if they can afford it. They may feel that they would morally feel better if they paid for it all in advance and they are willing to risk the fact that they may not have had to repay it all if they had taken the loan. Others feel like everyone else has the chance of not having to repay it all so they should be allowed that chance as well. It is a very personal decision and will only have to be made by those fortunate few who have the money available to pay for their course.