Rental Property Investor · TX · Member since 2019 · 303 posts · 364 votes
I just read "Walking the Tightrope between Debt and Leverage" by @Anthony Gayden where he talks about an impressive dig out from crushing debt. What I found interesting was that when he married his wife, she brought $30,000 in debt into their marriage.
@Matt Millard also posted where he married into $120k in student loan and credit card debt.
My own brother married into $50k in student loan and credit card debt.
I got divorced after 20+ years of marriage and gave up half of all my assets, and then married into debt! (My new wife has a 2 year old, and owes $150k in child support over the next 16 years)
So I'm curious about all of you other married investors (or soon to be investors)... Did you marry into debt? (obviously I mean "bad" debt here.)
I'd like to hear from the women too, because it seems (so far) that it's the men who are the stupid ones!
Yeah, "stupid" is a strong word, but consider this: would you buy a property for $180k with rehab costs of $20k and your ARV is 150k ( market rent: $600 / month)? If someone on BP posts that they just did that, wouldn't we call them stupid?
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
7y
I got engaged to my now wife , she had a good bit of debt . Told her we would get married when she was debt free . I took over her finances , gave her an allowance and 7 months later she was there . The wedding was 4 months later . Now I never told her she was out of debt , I invested her money and after 1 year she needed a car . Her jaw dropped when she saw her balance . Over 15 K , which is a bundle since she had never had over 2 grand in the bank . I taught her one thing they dont teach in school , basic fiscal management .
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
7y
@Amy Leonard, in a way @Joe Splitrock is right and in a way he is wrong, it is not an open and shut matter. Rules can vary from state to state, but in my state you put both incomes together and add all the kids up and come up with an amount of support that should be made. Then you split the cost between both parties based upon the ratio of income between the 2 parties. It gets more complicated on cases where custody is not equal. Then you have to balance using the percent of custody time. The biggest factor is clearly who makes the most money. If the joint income of both is $5K per month and child support is set at $1,000 then is one parent is making $4K per month and one is making $1K per m onth one would make $800 per month in paymnts and one would make $200 per m onth. If the person making $1K per month had primary custody, then they would get $800 per month from the other parent, if the one making $4K per month had custody they would get $200 per month from the other. If it was 50/50 custody then the $4K parent would pay $400. It varies from state to state.
@Steve Hall I really don't think that @Matt M. was calling you out or implying you are a bad person. He was simply trying to post a different view, it happens a LOT here. He was in part pointing out that if your wife had custody of a child there would also be costs and would you call that a debt? An interesting concept. The same is true about deciding to have children, wow what an amazing amount of debt, but probably the best investment we will ever make.
As to my views on marrying debt I have been very blessed. I was pathetically poor when I met and married my wife. Still the most debt I ever had was the amount of the used car loan or trailer house loan of the property I was buying. I even managed to avoid student loans until I hit law school. Working 3 part time jobs kept my debt to under $8K for law school, and that includes having 2 children in the home.
You get what you pay for. it may be nice to buy a great 4 plex for $100K and fix it up for $50K and get rents of $4,000 per month, but even if you had to pay $300K to buy it, it is still a good deal. While debt is important, you have to make the biggest investment, your entire life be on the best property or person you can find. When I only had $5 to buy my young son a birthday present my wife never complained about money, never once. It doesn't matter if she had come with debt, she would have been worth it. Now she will complain to me if I spend too much on a consumer item, despite that we can afford it. The right person will work hard to pay off their debt, or yours, because they love you and want to do everything they can to make your life better. The same had better be true for you, or they are making the bad investment despite you not having debt. So in my long winded way , no I don't think marrying someone with debt of any kind is a bad thing if it is the right person. If they are not the right person, well life is gonna suck.
Good thread. Brought back lots of memories of some pretty hard times, makes me realize how lucky I was even then.
Investor · Tampa, FL · Member since 2017 · 123 posts · 109 votes
7y
Great post, and one I tend to see over at the forums at MyFico.com haha.
Question to all - what would be worse, marrying someone with a high income and high unsecured debt,
Or
Marrying someone with low to moderate income and jacked up credit (repo, bankruptcy, foreclosure, charge off)?
I am so glad I was given Dave Ramseys total money makeover a few years back. Theres no way I could envision getting into RE investing with car payments and credit card debt. Back then I always could justify why I bought things or carried payments, and tried to out earn my stupidity. Times change.
Financial Advisor · Virginia Beach, VA · Member since 2017 · 502 posts · 508 votes
7y
In a related vein...
If your spouse has bad debt that the IRS will collect on (typically govt backed student loans in default or unpaid child support) there is a way to protect yourself without filing separately. It is called "Injured Spouse Relief". (A terrible name, I think, but I didn't choose it!)
Essentially, if your tax refund is going to be (or has been) garnished by the IRS to pay off a bad debt, you can file for Injured Spouse Relief to protect your part of the refund. You still file jointly, but the IRS calculates the amount of the refund that would be owed to the non-indebted spouse and refunds it.
You could also file separately, but filing separately often negates many tax deductions and credits resulting in a lower refund. Injured Spouse Relief is usually the better deal.
Steve, to answer your question...I married my husband with $264k of future child support and a $70k car loan.
It is kind of hard to convince the judge to knock down child support, when you are driving a high end luxury car. Just some food for thought.
Yeah, no doubt! Luckily with my influence, he sold his Land Rover and I got rid of the $1500 a month car payment. First thing I changed after we got married and merged finances.