My fiancé has around $7500 in credit card debt that we’re trying to tackle. We looked into 0% APR balance transfer cards, but after the fees and all that, it seems simpler for me to just pay off the balance and have him pay me back over time, interest-free.
How should we handle this to avoid any extra taxes or fees? Should we create a promissory note, wire the money, and he repays me monthly? Could that trigger income tax for him or gift tax for me?
Or maybe I should pay off his credit card with my own card and pay it off myself while he repays me? Not sure if that’s best.
I know that after a certain amount, Venmo would send a 1099, so would cash payments or wire transfers work better?
Our wedding is a year and a half away, so otherwise, I’d just wait until we’re married and avoid all this hassle.
For clarity, I’d definitely suggest putting together a contract for the loan. It keeps everything clear and in writing.
For taxes, you don’t need to charge interest on loans under $10,000, so no need to worry there. Just avoid using anything like Venmo’s business option that might generate a 1099-K. No point in adding extra paperwork!
I get why you want to help him pay it off, especially since it’ll affect both of you down the road. But I don’t recommend taking on his debt yourself. If he moves it to a personal loan, he’d still pay interest, but at a much lower rate.
Taking this on could lead to some emotional complications you might not see coming. Even if it makes financial sense to save on interest now, sometimes men struggle with feelings of inadequacy if they’re not handling their own finances. I’m assuming there’s a good reason behind this debt, which is why you’re okay covering it. But it might still be better for him to have his own loan. You could try helping him with small monthly payments to chip away at it, rather than taking it all on yourself. Just something to consider!
@Blair
Did some quick research, and a personal loan might be a good option! His credit score is solid, so he should get a decent rate. This would keep our wedding and house funds available. Thanks for suggesting it!
And yeah, I get what you’re saying about potential tension. He feels confident it wouldn’t happen, but better to be careful.
I wouldn’t pay off his debt before marriage. Mixing finances while engaged is risky. And out of curiosity, why wait a year and a half to get married? Seems like a long time.
Devon said:
I wouldn’t pay off his debt before marriage. Mixing finances while engaged is risky. And out of curiosity, why wait a year and a half to get married? Seems like a long time.
For a lot of couples I know, 1.5 years is the norm. Weddings take a lot of planning these days.
@Rey
> For a lot of couples I know, 1.5 years is the norm. Weddings take a lot of planning these days.
I think it’s also cultural. If everyone expects year-long engagements, venues and vendors get booked up way in advance. Where I live, a six-month engagement would seem long, so things book up differently here.
Devon said:
I wouldn’t pay off his debt before marriage. Mixing finances while engaged is risky. And out of curiosity, why wait a year and a half to get married? Seems like a long time.
If you do go ahead with this, consider a prenuptial. You’ll thank yourself later.
Devon said:
I wouldn’t pay off his debt before marriage. Mixing finances while engaged is risky. And out of curiosity, why wait a year and a half to get married? Seems like a long time.
My husband and I lived together for NINE years before we got married. We shared finances for all that time. Been together 37 years now, so it’s definitely possible. But I get why people say not to mix money before marriage.
@Kingsley
Just because it worked out doesn’t mean it’s always a good idea. It’s like co-signing a loan; sometimes it goes fine, but it’s still a risky move.
If you’re paying off someone’s debt, make sure it’s for a spouse, not a fiancé. Once you’re married, then it’s “our debt,” and you can handle it together. But keep things separate until then if you want a smooth start.
@Cruz
Once we’re married, we’ll definitely combine things! That’s why I’m eager to help now, even though we’re still engaged. If we work as a team, it should be easier for us both.
Keller said: @Cruz
Once we’re married, we’ll definitely combine things! That’s why I’m eager to help now, even though we’re still engaged. If we work as a team, it should be easier for us both.
No, his debts are still his until you’re married. I know it feels right to help, but this is a big red flag.