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Credit Card Debt Calculator”

When should you talk about finances in a relationship?

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Would you dump your girlfriend if you found out she had $80,000 in debt?

What if it was student-loan debt? That’s what happened to this guy.

Or…what if you found out it was credit-card debt? How does that change things?

My guy friends and I talked about this. Most of them agreed — finding out someone we’re dating had $80K in debt would be a red flag, but if it was for student loans, that would be one thing. If it was CC debt for frivolous purchases, that’s an entirely different thing.

This simple question is a lot more complicated than it looks:

  • How does it change if you’re a woman and it’s the man who has the $80K in debt?
  • It’s easy to say you would walk away from someone who’s run up tens of thousands of dollars of debt, but by the time you find this out, aren’t you already in love? Are you putting a price on love?

Not surprisingly, the typical personal-finance “expert” has a pre-prepared piece of advice handy: “Always talk to your partner about their finances! You don’t want to be surprised!”

Uh, yeah, that’s a nice theory, but most people don’t talk to their partners about money for months, if not years.

Data I recently collected. I actually suspect most of the respondents are lying about how soon they have a serious discussion with their partners about money.

So now you have a Catch-22: If you talk about money too early, you come across as a weirdo/gold-digger/controlling freak.

If you wait too long, you’re already embroiled in the relationship. How are you going to walk away from the love of your life if you find out he has $40K of CC debt? It’s easier to rationalize that “we’ll try harder” and “things will get better” than to pack up and walk away. That’s human nature.

So, what would you do?

QUESTIONS:

  1. When would you talk to your partner about money in a new relationship? Be honest and don’t say what you “think” you should do, say what you ACTUALLY did in your last relationship.
  2. Is there a certain number (e.g., $80K of debt) that would make you seriously reconsider the relationship? If not, what would?

 

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85 Comments

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  1. I knew my girlfriend would have a ton of student loan debt when she graduated and it was actually close to $80k. A year after she graduated she’s already paid 15k down so I am pretty proud of her. We’ll pay it off even quicker once we eventually get married. So would I dump her? NOPE! However, I did know what I was getting into in the first place. If the bomb got dropped a year in I’d be pretty pissed.

    • You two had a very upfront relationship in the beginning.

      Personally, I will only discuss about money when I know I’m in a serious relationship. For me, talking about money would have to be between 6-11 months. I’ve been asked why not 12months? Because after one year in the relationship, I’m making a personal decision if I still want to be with this person or not.

  2. I told my husband on the third date that I was chronically ill and that no one expected I would be able to work after I finished school. I wanted him to have an “out,” in case he didn’t want to date someone who would end up a dependent. He stuck with me, which I wasn’t expecting, and I later experienced a remission.

    I knew fairly early on that his family was relatively well off in their home country, that he would need me to sponsor him for citizenship. He knew my family was broke and that I had a “small amount” of student loan debt. It was $13k when we married, and I think the actual number came up in discussions only after marriage. We discussed within the first few months that we both expected to help support our parents in their old age.

    If I were to end up widowed and back on the dating scene, I’m not sure how I’d approach money. It’s so much easier when you’re teenagers without real assets. We are researching life insurance options right now, and I’m not sure I’d want a guy to know on the first few dates that I had a $1 or 2 million in assets.

  3. Credit card debt is hugely different than school loans when you are looking at a relationship. Credit card debt is more of a lifestyle or habit. Meanwhile school loans are more of a one time purchase. Even 5k in credit card debt would concern me as I think about this person’s future habits. I’m not interested in a relationship where the other person is sucking away all my money for unnecessary purchases that we can’t immediately pay for.

    • I think it’s hard to tell, actually. I know plenty of people who used student loans to pay off debt they acquired prior to grad school. For one friend, it was one of the main reasons she wanted to do a PhD – she had so much consumer debt it would take that long to gradually “transform” it to student loan debt via the twice-yearly disbursements. In retrospect maybe she should’ve declared bankruptcy, but there you have it.

    • Honey Smith, transforming consumer debt into student loan debt is one of the stupidest moves I’ve ever heard!

    • Well, yes, Barbara, I agree. People still do it, though. That’s all I am saying.

    • Yeah, there is a huge difference.

      Someone with even 5-10k of CC debt could be an issue. Something like a one-time total emergency 15k charge (maybe some sort of medical bill that they paid with a CC instead of negotiating a payment plan with the hospital) is not a big deal if they have been dutifully paying it off. If that same debt was worked up buying clothes and vacations and drinking at bars…there is probably a systematic problem that is NOT going to just go away. Odds are good that they are going to blow that number up at some point…or only avoid blowing it up by spending all of your money.

      A pile of student loan debt isn’t going to get bigger (at least if you keep paying it). The average numbers coming out of undergrad aren’t a huge deal and so I assume that a lot of the huge numbers–80k, 100k, 120k–are coming from people who who finished some sort of terminal graduate degree. Someone who just finished law/business/medical school (or a really expensive masters) is probably not looking to head back to school and probably has a reasonable means by which to keep paying down the debt.

      I mean…would you ditch someone with a pile of mortgage debt? They might have 200k in debt but they’ve got a house for it (even if its a little bit underwater). The student loan is the same way…They took on a one-time debt in exchange for an education that is going to stay with them forever.

  4. 1) I would talk about money when I decided I may want to spend a lot more of my life with this person. I talked with my wife about finances perhaps a year before I proposed to her, which would have been maybe 2 years into our relationship.

    2) I don’t think it’s a specific number that would’ve caused me to have issues with the debt. I think instead that it would have been more of the ratio of debt to earnings, or, the likelihood that this person could and would be paying this debt off responsibly and quickly. If they took on some debt but also managed to use that debt to fuel a better earnings trajectory for themselves, well that’s the kind of debt I don’t mind seeing.

  5. I’ve been dating this girl for a pretty short time, two weeks, (we “talked” for awhile) and we’ve already talked about money. She is going to a cheap school to be a nurse practitioner. I’m not sure she has a solid iwty “focus on whats most important” but she has aspirations. But it definitely is a weight off my shoulders not wondering about money.

  6. I’m female.

    I’ve probably talked finances once things were serious, but it may have been 6-12 months in. I’ve never had debt so I’ve never been an issue (I have good savings). Previous relationships haven’t had debt.

    The guy I’m currently dating does, and it bothers me. His debt goes up and down, but it’s always there, and it’s been a combination of spending and bad luck.

    I can’t say a number that worries me, but it’s more a pattern. Bad things sometimes happen to people, it’s how they respond to those things that matters.

  7. Harry @ PF Pro Link to this comment

    I think 80k in cc debt is just as bad as 80k in student loans if you went to an expensive school and got a worthless major. IMO, it’s not quite as bad as cc debt, but I don’t want to marry someone who went 80k into debt to be an art history major…

    • I don’t know why people are so “on talking point” about majors. I know bio and chem majors making $10/hr. as vet techs and art majors making $100K as packagers or designers or Web developers. And far, far more people whose career has no apparent connection to their major.

      No major is de facto “useless.” No major is automatically going to get you a good job either. Just ask an unemployed lawyers.

  8. I think this is an issue most people try to avoid in their relationships. I haven’t spelled it out in any of my previous relationships (but I’m young and they weren’t really serious relationships).

    I think most people will drop hints about it so their partner will get the general idea. However, it seems like a lot of people don’t like looking at the exact numbers for their own financial situation, let alone sharing it with their partner.

    I think you should probably talk about it before you get married. Probably sometime between getting engaged and actually getting married. I’ve heard that many churches have ‘pre-marriage counseling’ where you would go through this kind of stuff with a priest or whatever before you get married. I think that it’s good to do it that way- to have a third party help guide the discussion.

    However, i also am not sure that it’s entirely necessary for people to know the whole financial situation to have a fulfilling relationship. i’ve heard stories of housewives who got divorced where they really didn’t have any idea what the exact money situation was until they got divorced- the husband took care of that (this happened to my grandmother). But she was happy in the relationship regardless until she got unhappy for non-financial reasons- the finances where just something her husband handled. I don’t think this is necessarily how I’d handle my relationships, but it is possible- they were married for at least 10 years.

  9. First marriage: not in any reasonable way for first 3 years. Ended in divorce. She was *horrible* with money in every conceivable way, and that was one of the major stresses in the relationship.

    Second marriage: first 6 months. After things were serious. I knew from the previous mistake that financial responsibility would be a make-or-break kind of thing for me. Very happily we were on the same page (she’s responsible and savvy) and share everything.

  10. I suspect you would get different answers if you asked “when did you have a serious discussion with your partner about money” instead of “when did you talk to your partner about money?” Something simple such as finding out your partner’s salary could qualify for the latter but not the former.

    1. I would have a serious discussion with my partner about money when it looks like engagement is in the picture but I haven’t gotten to that stage yet. However, in past relationships, we knew a lot about each other’s finances after about a year (approximate income, assets, debt). In my experience, the big facts are not hard to spot early on, not just with partners but with friends as well. You know what their jobs are, see how they spend money, talk about money casually, and various other behaviors.

    2. Not determined by debt alone. It depends on current and future income, assets, and debt. For example, $60K student loans is fine if the person has $200K in savings/investments, makes $100K, expects to make more, and the interest rate on the student loans is less than 3% so it’s actually profitable to carry the loan. Generally, I think the person should be able to pay off the loan a few years out of school even if he doesn’t. I did once break up with someone on the surface about money, but really it was correlated with other behaviors and attitudes. (He had no loans but made $115K adjusted for inflation but only managed to save $15K over 2 years while driving a junky car that someone gave him and living in a cheap room.)

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