Recently, a reader wrote to me with what would have been a stellar reader mailbag question except for the fact that it was full of personal details. I attempted to edit the email down to something that could be shared without identity concerns (as I never want material readers send me to ever come back and haunt them in any way), but I found that when I took out everything of concern, there wasn’t much left.
So, I’m just going to summarize his story.
Jeff told me that he had been dating a woman for about two years. Jeff is in his mid-twenties, as is his girlfriend, and both had been graduated from college for at least three years.
The relationship was getting serious and Jeff was considering proposing to her. As with most serious couples, there was some limited discussion of their future together and their individual challenges. In the course of those discussions, Jeff learned that his partner was holding onto almost $200,000 in student loan debt.
He knew that his girlfriend had gone to an expensive school and had attended for five years, but he had thought that much of the cost came from scholarships and student loans.
With that revelation, Jeff is now rather afraid to continue his relationship with this woman. He does not want to join their finances and have to deal with the weight of this debt.
I should point out that I have read similar stories in the past. Jeff is certainly not alone in feeling very nervous about joining his life to someone who is buried under significant debt.
So, what should Jeff do?
First of all, you need to look at values. Yes, the person you’re looking at might have a significant debt load, but how are they acting with regards to that debt load? Are they making positive moves toward getting rid of it? Are they being careful to not add additional debt to their situation?
A person who has the right mindset about debt and is actively making moves to overcome that debt is going to eventually get rid of that debt. That person subscribes to the idea of spending less than he/she earns and eventually that will bring about strong finances.
I would far rather accept a partner with a mountain of student debt who is making steady extra payments to eliminate it than a partner with no debt who isn’t saving for the future. It is far more important to subscribe to “spend less than you earn.”
Second, you need to look at a full financial picture. That number might be frightening, but how bad is it really? How quickly can that debt go away if you’re combining forces to eliminate it?
Sit down and make a combined financial picture for the two of you. Combine your incomes, debts, and assets. Look at which assets might be sold if you combine your lives (like a residence or a car). Look at how many expenses go away if you co-habitate (like a second rent check and utilities). Your financial picture together might not be as bleak as you think it is.
Third, look at the other attributes of the situation. Aside from the financial considerations above, is this the person you want to join your life with?
Most people in a long-term committed relationship eventually begin to realize how compatible they are with each other. You may simply be scared of the debt, or it may just be one sign of problems among many. Take a deeper look and ask yourself whether you’re just stressed about the debt or if there are other problems.
(Obviously, you’re going to want someone with similar financial values, but that’s why you should be focused on how they’re handling the debt, not the fact that they have it. Their behavior in response to a situation reveals their values.)
If you’re finding yourself struggling with the financial situation of the person you’re thinking of marrying, step back and look at the broader picture. What are their values? What would the shared financial picture be like? Those are the real clues as to whether this situation will work out.