In a recent post, I wrote about how to come up with your wedding budget. I mentioned that my partner and I ended up taking on wedding debt to pay for some of our wedding expenses. Today, I’m writing all about why we made that decision and how it all worked out for us.
Let me start off by saying that I’m a personal finance nerd and I avoid debt as much as I can. Needless to say, I thought long and hard before I finally agreed to take on wedding debt.
What Others Say About Wedding Debt
As you know, I’m a total personal finance junkie. So, of course, I did my homework. I did some research and I found that lots of personal finance experts disagree with me on my views about wedding debt.
Many of them argue that couples shouldn’t begin their marriage with debt, that it’s best to start the married life with a clean slate, without the burden of debt, etc.
I think there’s something admirable about that. And there’s absolutely nothing wrong with that advice. But that’s not the whole story …
My Take on Wedding Debt
Debt is a tool. When used properly, it can help you reach your goals – but ONLY when you’re responsible about it. Taking on wedding debt blindly is a bad idea – that’s just irresponsible.
That said, I have some very strong opinions about wedding debt – here they are:
Wedding debt is absolutely fine – if it meets these two conditions:
- You have a solid plan to pay off the debt in a reasonable amount of time
- You and your partner are fully committed to the debt-payoff plan
For our wedding, Luis and I borrowed only what we could pay off in a reasonable time-frame. We committed to the debt payoff plan, we worked as a team, and when we finally paid off our wedding debt – we felt SO proud of ourselves for reaching our first shared financial goal!
Types of Wedding Debt
You can take on debt in so many different ways:
- Use credit cards to pay for wedding expenses. I wouldn’t recommend this route because credit card interest rates can be pretty high, especially over the long-term.
- Borrow from family/friends. This can be a good option, but I’ve seen things get weird between folks when borrowing money from friends/family. Plus, there’s a chance that the lender might want to be involved in the wedding planning process. This option can be a little tricky.
- Take a personal loan from a bank or credit union. This can be a really great option if you can get a low interest rate.
- Credit card balance transfer. This is my favorite option because it’s interest-free for a specified time-frame. This is what Luis and I used for our wedding. I think this is the best option, so I’ll go into more detail about this type of debt.
What is a Credit Card Balance Transfer Offer?
A balance transfer is when you transfer debt from one or more sources to a specific credit card. Many credit cards offer this service for a small fee and they offer promotions all the time. In general, you need to have a decent credit score to qualify.
Hint: If you have credit cards, you probably have access to balance transfer offers! If you’re not sure, just call your credit card companies and ask about it. If you don’t have any balance transfer offers on any of your current credit cards, you can apply for a new credit card with a balance transfer promotion.
Here’s the balance transfer offer that we used for our wedding debt:
- I was offered a total of $18,000
- The fee was 2% of the balance transfer amount
- I had 0% interest for 15 months
- After 15 months, the remaining balance would be subject to the regular interest rate of that credit card (which was already pretty low for a credit card: 9.99%)
How Much Wedding Debt Should You Incur?
As I mentioned above, you should have a debt payoff plan BEFORE you take on any debt. So if you’re trying to figure out how much you should borrow, refer back to your wedding budget.
Use your monthly contribution amounts, plus the length of your promotional period for your balance transfer offer – thEse two pieces of information will help determine how much you’ll need to borrow.
Here’s what it looked like for us as we planned out how much to borrow:
- Our wedding budget was $24k total
- We planned to save up half of that ($12k) before the wedding day
- We planned to borrow the other half ($12k) and pay it off within one year after the wedding day
- So we decided that we wouldn’t borrow more than $12k
I’d like to point out that even though we had access to $18k, we decided to stick to our budget and our debt payoff plan. Of course, it would have been nice to borrow the extra $6k and max out our balance transfer – we could have had a bigger wedding, taken a more extravagant honeymoon, etc. But we agreed to borrow only what we needed.
When Should You Borrow?
I have a short answer for this: don’t borrow the funds until you need them.
For example, we held off on our wedding debt as long as possible to allow us the longest repayment period. We could have taken the balance transfer option as soon as we got engaged, but we both knew we wouldn’t need the money until much later. So we didn’t take the balance transfer offer (which was 0% interest for 15 months) until a few weeks before our wedding – that way we’d have a full 15 months from our wedding day to pay off our debt.
Even though we were planning to pay off our debt within 12 months after the wedding, we still wanted to take full advantage of the 15-month promotional period with 0% interest … just in case!
Bottom line: hold out for as long as possible to give yourself cushion time to start paying it off.
How to Use a Balance Transfer Offer
The process of using a balance transfer offer was incredibly easy. I called up my credit card company, I told them that I want to take advantage of a balance transfer offer, told them how much I wanted – and that was it! (Seriously, I couldn’t believe it was that easy to get access to that much money with a quick phone call.) It took about a week for the funds to make it into my account, and after that we were all set.
Paying Off the Wedding Debt
When you use a balance transfer, you’re billed monthly and your minimum payment is teeny tiny. It might be tempting to pay only the minimum payment, because, well, you have a 0% interest rate for quite some time. But I highly recommend that you stick to your plan.
Continue making your regular monthly contributions – except instead of accumulating those funds in a bank account, you’re sending them off to your credit card company. This will help you stay get out of wedding debt as planned.
No Debt is Better Than Wedding Debt
I still think that couples should avoid wedding debt if possible – but if the no-debt wedding budget is not sufficient, I think wedding debt offers a great solution. Again, wedding debt can be great – if used strategically and responsibly 🙂