Don’t Borrow for a Wedding

Check out this problem a reader wrote to CNN Money about: When we got married, my husband and I decided to have a big wedding that cost $40,000. To pay for it, we took out a personal loan for $20,000 at a 10% interest rate and put the rest on a credit card that initially had a 0% rate but now charges 12%. We thought that, with both our salaries, we’d be able to pay off this debt in a short period of time. But my husband was laid off and is no longer receiving unemployment. We also have a house payment and a car payment, but beyond that no other debt. How did this go wrong? Let us count the ways: Problem #1: “decided to have a big wedding” Problem #2: “cost $40,000″ Problem #3: “took out a personal loan” Problem #4: “$20,000 at a 10% interest rate” Problem #5: “put the rest on a credit card” Problem #6: “now charges 12%” Problem #7: “my husband was laid off” Problem #8: “also have a house payment and a car payment” This situation is, what we call in my family, “brutal.” After a series of bad decisions (IMO), a layoff happens and now things are out of control. This is the way it is when you live life on the edge of your financial limits — everything has to go perfect to keep the ship upright. But when it doesn’t (and it usually doesn’t, “real life” seems to happen along the way) then you start taking on water. This is what’s happening to this couple. Here are my suggestions for those of you about to get married: Learn from this couple. Do NOT spend a huge amount on your wedding if you can avoid it. Instead, control your wedding costs and start your marriage out on a solid financial foundation. Of course it’s your life and you can do whatever you want. I’m just saying this is my recommendation — keep the wedding costs reasonable. If you “must” spend big on your wedding, at least do not borrow a huge amount for it. Pay in cash (or charge the expenses and then pay them off when the credit card bill comes due.) Remember saving up for big expenses? It’s a good idea. If you “must” borrow (ugh), then at least do it smartly. 10% and 12%? Double ugh. And for the rest of us, remember that this is what an emergency fund is for — something like a job loss. The post doesn’t say whether or not they had one, but based on the other financial decisions they made, I’m guessing they didn’t. For some reason, the thought of borrowing for a wedding never really crossed my mind (not sure why not.) Is there anyone out there who borrowed for a wedding (or someone you know did)?

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Don’t Borrow for a Wedding