Sense & Centsibility Blog
Couple working on finances together

How to work with your partner to reduce debt

Financial health can play a significant role in having a successful romantic partnership. If a couple struggles to manage their finances together, it can create tension in the relationship and possibly even a break-up. Managing debt is one area where major challenges can arise. According to Fidelity Investments’ Couples and Money Study, more than half of married couples carried debt into their relationship; forty percent of those who carried debt into the relationship said it had a negative impact.

Strategies for Discussing Money Matters

Money is not an easy subject to talk about even during the best of times in a relationship, and conversations can be even tougher when there are financial problems. Here are some general strategies for couples to address money-related issues.

  • Make money discussions a priority before you start living together. You’ll need to address all aspects of your finances together, from budgeting to day-to-day expenses to debt. Take time to strategize, make adjustments and most importantly, celebrate successes!
  • Stay calm and supportive as you identify strengths, potential problems and create a shared vision. Keep these “no-penalty conversations” free from blame so that you can continue honest discussions throughout your relationship.

Gaining a mutual understanding of your finances will help you both develop a game plan to ultimately succeed at whatever issue or challenge you face, including creating a plan for dealing with debt.

Five Steps to Reduce Debt

1) Make a list of all the debts each of you holds, and calculate the total.

Again, being honest and making the conversation a “no-penalty” discussion is essential. According to the 2020 blog “Bridging Debt into Marriage,” here are questions to ask each other:

  • How many credit cards do each of you have, and what are the balances?
  • How successful have you been at paying your bills on time?
  • Do you have collection debts?
  • How long do you expect it to take to settle outstanding debts?
  • What are your spending habits, and how much money do you save (or plan to save) each month?
  • Are there any financial obligations from a previous marriage such as alimony or child support

2) Check your credit.

This is especially important if you aren’t sure about all of the debts you owe. You can receive free reports once a week from all three credit reporting bureaus (Experian, TransUnion and Equifax) at

3) Develop a family budget and debt payment schedule.

Each partner should share how much they earn (both gross and net) and expenses each has. The fixed, essential expenses (e.g. rent/mortgage, groceries, utilities, transportation, insurance) are easy to remember. However, don’t forget about the flexible, discretionary spending (e.g, dining out, entertainment, personal care) to avoid spending “leaks.”

4) Track your monthly expenses.

Take each receipt, regardless of how large or small the total bill is, and write down the amount in the appropriate spending category. Create categories based on the expenses you have identified above.

There are numerous expense tracking tools:

  • LSS Financial Counseling has forms to tally expenses on a weekly and monthly basis.
  • There are many apps available for your smart device, such as and You Need a Budget. Be sure to find the right one for you and watch out for any hidden fees.
  • Create a spreadsheet.
  • Use a low-tech solution. The old school pen and paper method works just as well as high-tech options.

Once you have tallied a month’s worth of spending, identify categories where you and your partner can reduce spending. One way is to determine a maximum monthly limit you will spend in each category and stick to it. If you find that you need to cut spending, but are having trouble, determine what your spending priorities are, and cut out or reduce the lowest priorities or non-necessities. The Consumer Financial Protection Bureau has a list of questions you can ask yourselves to help determine your priorities together.

We all have areas of spending that we’re not willing to give up. When cutting expenses, be sure to respect each other’s non-negotiables. At the same time, if you’re spending more than you make, some compromises might be needed to make your budget work. Just be sure to keep the conversation moving in a positive direction.

Reducing spending will not only free up money to pay down your debts; it will also allow you to build savings, which is a necessity.

5) Develop a list of short-term, shared goals.

Start with small, realistic goals that you can work toward immediately.

  • Build an emergency savings fund. If you’re just starting out, a good goal is $1,000. This fund will make you less dependent on credit cards or other debt when unexpected expenses pop up. Aim to save at least $25 each month or $25 per pay period. If your budget allows, save even more.

         Ideas to increase savings include:

** Set up automatic deposits into a savings account from your paycheck. If you get an annual raise, act like you didn’t get it and increase your monthly savings deposit.

** Pay yourself first by treating savings like a bill that you “pay” monthly.

** Save your loose change. Watch it add up and periodically deposit it.

** If you get an annual bonus or tax refund, save all or part of that cash windfall.

  • Pay off high interest debts (with an interest rate greater than 8%). If you make only minimum payments towards your debts, it will take years to pay off. Depending on what your budget allows, try to make more than the minimum payment.

If you are able, the “Power Pay Method” is a great way to pay down debts faster. If you want to free up a monthly payment faster, start by paying more on smaller debts. Once a debt is paid off, take the amount you paid on that debt (or a portion of it) and add it to another monthly debt payment, and so on until you pay off all debts.

If you want to pay less in interest overall, start making extra payments toward a debt with the highest interest. Once that high interest debt is paid off, you’d add that payment to the debt with the next highest interest. This will create a “snowball effect,” reducing the total interest charges paid over time – not to mention eliminate the debts quicker than making only the minimum payment due. LSS Financial Counseling has a Snowball Debt Elimination Calculator to help you determine how long it will take to pay off these balances.

  • Check into a Debt Management Plan (DMP) with a trusted non-profit. LSS Financial Counseling offers the DMP, which allows you to pay off your debt much faster and save money in interest charges. This option is appealing for many individuals and families because you work with your financial counselor to create a realistic budget and then make one monthly payment on your credit cards and other unsecured (non-student loan) debts. And you’ll continue to have support from LSS while you’re on this debt-free journey.
  • Tackle medical/collections debt. Contact collection agencies, and work out either a 12- to 18-month payment plan or propose a settlement amount, whichever is affordable for you. If you decide on a settlement, expect to pay at least 50% of the debt and in one lump sum. Any unpaid/unforgiven amounts more than $600 will count as 1099 income, for which you will be taxed. Try to get any settlement or payment plan in writing, and only agree to it if it’s affordable. Once you successfully pay off this debt, get a written confirmation (i.e., satisfaction of debt) from the debt collector or creditor and keep it for your records for the next seven years. Also, be sure to check your credit report to verify that the debt is shown as satisfied.

6) Develop a list of long-term shared goals.

After setting your short-term goals, it’s important to work together to establish financial stability. Long-term goals can help decrease your chances of falling back into the debt cycle and will help you keep expenses affordable, while building up savings. Here are some suggested goals:

  • Save three to six months’ worth of household expenses. Now that you have started saving, it’s time to increase your goal amount. Work to have a savings “cushion” to cover living expenses in case of job loss, major medical expenses, disability or other challenging life events. Since you have settled your higher interest debts, increase your monthly savings amount to equal approximately 5% of your monthly net income. Experts suggest saving at least three to six months’ worth of expenses.
  • Chip away at lower-interest, longer-term debts. Your ultimate goal should be to have very little to no debt. If you’ve taken care of your unsecured, higher-interest debts, such as credit cards, now it’s time to focus on longer-term debts. These types of debts may include mortgages, vehicle loans and student loans. To pay them off faster, aim to make just ONE extra payment each year.  On a 30-year fixed mortgage, that extra annual payment could take six years off the loan length. If you can afford to make more than one extra payment, you’ll pay off your mortgage or other loan even faster.

Speak to an LSS Financial Counselor for Extra Support

If any of this seems overwhelming or you’re not sure where to start, LSS Financial Counseling is here to help. We have experienced, certified financial counselors to guide you through all these steps and provide realistic options and steps to take to reach your financial goals together.

To schedule a free, confidential appointment, call LSS at 888.577.2227, or get all your support online.

Ray McCoy


Author Ray McCoy is a Certified Financial Counselor for LSS Financial Counseling