How much debt is too much?

Danielle in New York:
"We make good incomes, roughly $50,000.00 each, and have no children, no mortgage, and no large credit card debts (not more than $5000.00 combined). We plan to be married sometime later this year and are planning the wedding now.
How much debt should we take on for our wedding and honeymoon? How much is too much?"

Danielle, first you need to consider what kind of wedding and reception you want and what it may cost. The average formal church wedding and reception costs approximately $20,000.00. If, in fact, you have no children, no mortgage, and no additional outstanding debt, pay off that $5000.00 as soon as possible. Then start saving. If you plan on an August wedding, you should save $1700.00 a month, based on your income and information, and you would have over half of your wedding paid for up front. If you must use credit for the rest, then consider the monthly payment. The average interest rate on credit cards varies greatly, but at 9.0% on $10,000.00, your payment could be between $75.00 and $150.00 a month. If you pay only the minimum payment, it will take you over twenty years to pay off this debt. Only you can decide what's acceptable.

I would advise that since you make a good income and have minimal obligations, saving for your wedding and paying cash for at least 80% will be a great way to start out in your lives together. This plan also provides you with the opportunity to create an ongoing 'savings' habit.

Don't forget to take into consideration your one, five, and ten-year plans. Do you plan to buy a house soon? Have children? All these things cost money and can dramatically change your life. Will you continue working if you do have children? How will the burden of debt influence your future decisions?

Only the two of you can decide what's acceptable. Take into consideration what your wants and needs are currently, and try to project what they will be in the future. If you make the decision to use credit to finance your one wedding day, then understand the potential impact on your financial future.

Building these skills now will provide you with a solid foundation for joint decision-making, and a healthy partnership in the future.

Only you can decide how much debt is too much. But, have a plan, know your goals, and understand that most debt is a choice. Make your choices wisely because they will frame your future.