Now that the big day is over, it’s time to address any wedding debt that you may have. Taking action quickly is a key factor in knocking out debt. Follow these steps if you need help with debts from your wedding.
Road to Recover from Wedding Debt
Between feeding hundreds of people, hiring the right photographer and making sure the bride looks stunning, many couples find themselves drowning in debt after getting hitched.
Since you are now married, make sure that you and your partner are on the same team with debt repayment. Don’t point fingers; at this point it’ll be much more productive to truly accept that the debt is shared between you both as a couple.
Stay positive, because you can make it out from underneath it all! Try and do these steps together so that everyone can see where the overspending happened as well as the plan to get rid of the debt.
Here are a few simple steps to start eliminating wedding debt and getting your finances back on track.
Step 1: Take an Account of All Wedding Debt
The very first step is to account for any and all wedding debt. If you have any existing credit card debt, be sure to incorporate it into your plan too.
- Collect your credit card and bank statements
- Start a running list of all your debts or utilize your budgeting software to help with this
- Have a total amount of debt, plus the interest rates and any other important repayment information, like minimum payment amounts.
- Note if there are any outstanding debts still owed to your wedding vendors.
Step 2: Analyze Your Wedding Debt
Based on outstanding debts, interest rates and other factors, you can start to prioritize debts. This will help you in the next step when deciding on a debt elimination plan.
The next thing you should do is to calculate your repayment timelines and budgets. Use this Debt Payoff Calculator to get some specific calculations going. Take a hard look at your household budget. You may have to make some deep cuts to many areas.
It’s really important to be aggressive, and knock out this debt quickly. You will not only save more money, but you won’t have to sacrifice your other financial goals for too long.
Step 3: Decide on a Debt Elimination Plan
Finally, now that your wedding debt picture is crystal clear, it’s time to strategize! There are many debt elimination options to choose from, so here are three tried and true methods.
The Debt Snowball method pays off debts from smallest amount owed to the largest amount owed. While paying the minimum balance on everything else, focus on paying off one balance at a time starting with the lowest balance. Each time a debt is paid off, that extra money is then moved to the next lowest debt.
The Debt Snowball works well if…
- You are the type of person who needs to see immediate results for motivation
- Your debts aren’t carrying high interest rates
- If you have lots of debts spread around multiple credit cards
The Debt Avalanche method works by paying off your wedding debt in order of highest interest rate first. While paying the minimum balance on everything else, focus on paying off one balance at a time, starting with the balance that has the highest interest rate. Once the debt at the top of the list is paid off, move on to the next debt on the list. Mathematically, this method will allow you to payoff credit card debt off faster and pay less interest.
The Debt Avalanche works well if…
- You have debt with high interest rates
- Most concerned about saving as much money on interest as possible
- Want to knock out debt as quicker than the Debt Snowball method
Debt Management Plan or DMP is another debt elimination strategy. If you find yourself overwhelmed by the amount of the wedding debt as well as managing repayment, a DMP might be the best option for you. Through a DMP, you might receive discounted interest rates and lower monthly payments on your debts. It takes up to 60 months to complete the program.
Move Forward Debt Free
Hopefully, you won’t need to recreate another wedding in your lifetime. However, if you find yourself heading back to the altar, remember to use a budget and only spend what you have in liquid assets to avoid getting into hot water again.
To speak to a credit counselor today about budgeting and managing your finances, call ACCC at 800-769-3571.