In December, a Reddit user asked the personal finance community this question: “Paying my boyfriend’s credit card debt: How stupid of an idea is this?”
While there are plenty of ways such an idea could become disastrous, helping a significant other out of debt can be a good thing. It’s all about evaluating your own financial situation and theirs.
Every Situation Is Different
Helping someone else tackle their debt will be tough, because as much as you want to see them in a better financial situation, you don’t want to risk your own financial well-being.
“Especially if this is the person you plan to be together with for the rest of your life, you want to help,” said Gerri Detweiler, Credit.com’s director of consumer education. “It’s natural, but it can also be a huge mistake.”
Consider the scenario: You’re helping someone pay down their debt, and they turn around and spend money in ways you don’t approve. If the debt load isn’t decreasing the way you want, what can you do?
In the Reddit post, the user wrote it’s possible the two will marry in the future, and the plan is to give the boyfriend small, interest-free loans to help pay down his estimated $10,000 to $15,000 in credit card debt. Basically, the Reddit user can’t bear to watch the boyfriend pay so much in interest and wants to help tackle the sum (the boyfriend is also paying the debt down with his own money).
The big question to ask in this situation is “How will this impact my finances?” If giving money to someone else will inhibit your ability to meet your own financial and debt obligations, it’s probably not a good idea, no matter how much you want to help.
Whose Credit Are You Helping?
If you decide to assist someone as they confront their pile of debt, minimize your exposure to risk. Co-signing a loan or taking on someone else’s loan will impact your credit (and, most likely, someone with a lot of debt isn’t a great person with whom to intertwine your credit).
Helping with payments or working together on a budget could double as financial education and a debt-management plan. Perhaps you could offer to take on one of their expenses, as long as they work with a credit counseling agency. Having them work for assistance may keep them accountable. It’s also not a bad idea to go over your credit together, whether or not you decide to give them financial assistance. Check your annual credit reports, which you can get for free from each of the major credit reporting agencies, and monitor your credit scores regularly, which you can do for free using a tool like Credit.com’s Credit Report Card. By doing that, you both can identify which areas of your credit you need to work on, come up with goals and make a plan to meet them.
“It’s a tough situation. You have to use your judgment,” Detweiler said. “Just keep in mind if you take on the loan, if you co-sign, if you refinance in your name, you’re on the hook, and people have definitely ended up picking up the tab for someone who’s long gone. It’s not always the case, but you know, it’s a tricky one with a lot of risk.
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