Experts tell us how to protect our love lives from the financial effects of the credit downgrade.
The United States has faced its fair share of economic turmoil in recent years, but we often rely on our nation's reputation of world leadership and long-term stability to get us through the rough patches. Unfortunately, our nation's debt and conflict in Washington resulted in a historic blow to our country's financial status this week.
Though Congress eventually agreed to raise the debt ceiling, it was too little too late for Standard & Poor's. The credit rating company was unimpressed with how the U.S. government was handling its funds. As a result, just this past weekend the S&P downgraded the country's credit rating from an elite AAA to a lesser AA+. Economists can only predict the ripple effects from this historic measure—though wild swings on Wall Street and higher interest rates are likely. How The Recession Forever Changed Relationships
Since finances are a consistent form of tension among couples, we asked experts what the credit downgrade might mean for our love lives as we move through the rest of the year, and even further into the future.
"According to the financial experts, with the credit rating lowered, it has the very real possibility of making our government-backed bonds less expensive which causes interest rates to rise," YourTango Expert Dr. Paul Inselman says. "Bonds and interest rates are inversely proportional so as the value of the bonds decrease, the interest rate increases."
What does a higher interest rate mean for the average consumer's daily life? "This can cause mortgages, credit cards and car loans to all have higher rates of interest," Dr. Inselman says. "These higher rates of interest can preclude young or old lovers from buying their dream house, car or 10-carat engagement ring. When we can't have what we want, it automatically causes unwanted stress and strain that can spill over into the relationship." A Quick History Of Engagement Rings
YourTango Expert Nancy Rae Evans agrees that the credit downgrade might create tough decisions for couples looking to build their futures, and as a result, add more relationship stress into the mix.
"It's quite likely that the ripple effects will result in making it more difficult or expensive to buy things on credit—from rings, to cars, to your first home and its furnishings," she says. "Couples will have to re-examine what's really important to them."
So, if interest rates rise and couples have to reassess their spending, how do they work through it together? Evans suggests sitting down and separating "wants" from "needs" as a pair.
"The first question I teach my clients to ask themselves is, 'Is this a want or a need?'" Evans says. "Some other questions to ask when making a decision about a purchase: 'Is there a less expensive alternative that would meet my needs?', 'Do I really want this or is this about something else, and is there another way I could satisfy the underlying need?' and 'Does this align with my larger goals?'"
As couples strategize what to spend on and what to save up for, Evans warns against taking the "one-time splurge" approach. One fabulous, romantic getaway might be great for a week, but it could get you into long-term trouble for years. Community: Getting Out Of Debt Together
"It's easy to justify a 'just this once, this is my honeymoon' attitude when you're planning the trip of your lifetime," she says. "However, putting vacations and travel expenses on credit cards is one of the most common things I see driving people's debt. And once the debt cycle begins, it's much easier to continue the cycle than it is to break it."
And considering the unpredictable economic age in which we live, Evans even throws out an idea for couples about to walk down the aisle.
"If you are planning marriage vows, why not include a vow not to debt?" she asks. "Why subject yourself and your relationship to additional stress and frustration by adding a layer of fog and confusion that comes with the burden of carrying debt from credit cards and lines of credit?"
Even if you don't have a wedding to plan and vows to write, putting sentiment into your financial strategy will work wonders if you can't buy the bigger house. To keep couples from focusing on what they can't currently afford, Dr. Inselman teaches his clients at his coaching business "the gratitude exercise," so they will learn to see what they do have instead of what don't have in the present moment. Is Gratitude The Key To A Good Relationship?
"If you are in a relationship, you must guard against the potential damaging effects of the added stress [of feeling like you don't have enough]. All of us often take the little things for granted," Dr. Inselman said. "Gratitude gives you altitude, so it is very important to acknowledge what you have gratitude for. To do the exercise, every night individually and then with your significant other, say out loud and proud all of the things that you are thankful for. For example, 'I am grateful for my eyesight, my children and wife's health, my friends.'"
Dr. Inselman acknowledges that it sounds trivial, but it truly works if you take the time to think about all the good things in your life and relationship.
"If you couldn't do any of those tasks, you would see how monumental the loss is," he said. "The same goes for our finances. While the credit downgrade may affect your borrowing power and cause you to delay your dream house, or engagement ring purchase, those problems are far better than having to go for chemotherapy, or losing your eyesight. Don't Let Debt Ruin Your Love Life
"At all times, have gratitude for the good things in your life," he says. "Then, the little blips that life throws at you will stay little blips."