How to Fix Bad Credit with a Spendthrift Spouse?
Are you seriously considering hiding money from your spouse so he or she can’t spend it or so you can fix your bad credit situation in secret? If so, this article is for you.
Sometimes, the “let’s sit down and talk” method won’t work
First and foremost, this is not a relationship advice. It focuses on the strategies that we can do to make sure that we won’t go to the “hide my money” thing which can lead to trust issues. Good communication is also an indispensable factor to a successful relationship.
When your spouse bolts out of the room when you start talking about money and questions about bills usually lead to heated arguments, then talking in a personal way won’t work. So, that leads us to one particular strategy: depersonalise your conversation about money. Make it as factual as possible and avoid making sarcastic and hurtful comments that will make the other person angry.
Here are some practical tips to keep your financial planning conversation with a spendthrift spouse less-confrontational.
- Get a copy of your credit report.
By requesting a copy of your free credit report, you are taking a big step in rebuilding your bad credit and possibly maintaining good credit. Reviewing your credit report to check if it is still in good shape and if not, why you ended up with a bad credit score.
The report is also useful in helping you manage your personal finances—because it works like a bank statement. You can keep of track of your spending and check if you can make some changes in your money habits that could probably give you a breather so you can put aside savings for emergency and investment.
Now, get another sheet of paper and list the amount of money you can save if both of you didn’t make those purchases on the credit cards.
It is also particularly helpful for those who have been victims of identity theft. Check accounts and names which you don’t recognise, which isn’t yours. Checking your credit report also helps you correct inaccurate information that can seriously hurt your credit.
- Calculate your debt to income ratio
What is the percentage of your income that goes toward your housing expenses and monthly debt obligations? If your car loans, credit card bills, and any other debt exceed 50% of your income, lenders may question your ability to pay another loan. Let your spouse know about your current status so he or she will understand why you want to make some changes in your family budget.
For instance, you pay $2000 per month for all your housing and personal debts but your monthly income is only $3000, the credit provider will take into consideration if the remaining $1000 will be enough to meet your daily needs and the monthly payment for the new debt. Ideally, lenders look favorably on applicants with 36%-43% debt-to-income ratio. In the given example, a debt to income ratio of 66% is not a very encouraging figure for lenders.
- Set your financial goals.
Start with simple questions like: Where do you see yourself 5 years or 10 years from now? Don’t be shy to talk about your future plans also. You can list them and have your spouse list his or her plans too on a separate sheet.
Now, simplify it into-when do you want to pay off your mortgage, your car loan and other debts. Focus on the figures, and not the “how” you’re going to achieve it. By simply laying down your plans-both of you can proceed with the next step without arguing in anger.
- Create a budget spreadsheet
Divide it into several columns:
- Net income which is gross income minus outstanding debts you have to pay on a monthly basis like mortgage, car loan, credit card debts and the taxes withheld.
- Expenses worksheet which includes home maintenance, utilities, food, healthcare, transportation, family obligations (daycare and the likes), education, etc.
- Savings and investments
Create an ideal budget where both of you have to make simple sacrifices to make both ends meet and repay your loans. If you’re seriously considering debt consolidation, you can ask for a quote and include the said quote in the budget. How much can you save each month and how will you be able to repay it? And what will you do with the extra money you saved up?
Budgeting helps you decide what to do to have extra cash. Either you cut down on some expenses or look for an additional income. Look into your savings and investments column? Do you have any money set aside for a rainy day and for the future? Perhaps you can talk about how you can put more money into your retirement savings and put some into your investments.
- Automate bill payments
Ask your spouse if he or she is willing to automate payment. Discuss its benefits like it’s a time-saver, it reduces efforts because all you have to do is to set it up with your company or your credit card, and most of all you won’t forget to pay your bills so you’ll save money by not paying late penalties.
Learn more how to fix bad credit while keeping your marriage together, by calling www.debtconsolidationn.com.au. We will give you specific details about our debt consolidation program to help you and your spouse achieve financial freedom together.