By: Tess Worrell
Once the dust of divorce settles and the separate identities begin–many assume life will take on a peaceful, rosy future. Then, the bills arrive.
If you are struggling financially after divorce, you might have discovered that all the negotiations about how to split the assets and debts failed to address one significant point–“How do I live?”
There is hope. By implementing a few key steps, you can take control of your finances.
- Create a budget
Use a notebook, an Excel worksheet, or a stone tablet and chisel but put in black and white the exact amounts for money coming in and money going out. This gives you a concrete picture for where you stand. If expenses exceed income, the overall budget offers insights on where to start cutting.
Financial websites offer worksheets that suggest the percent of income to spend on specific budget categories. These can provide target goals for helping align expenses with income–such as revising how much to spend on groceries or reaching the utility percentage by cutting cell phones. Once you have your targets, begin implementing the changes–starting with the smallest and easiest first. As financial guru Dave Ramsey puts it, “Find out what you have and then give every dollar a job.” As you put your dollars to work to achieve the easier goals, you gain momentum for the tougher.
- Pay yourself first
The category you shouldn’t cut–savings. Pay yourself 10% of whatever income you have. The key difference between people who have and people who don’t–the habit of saving. Start by saving for emergencies. Build an emergency fund that covers monthly expenses for three to four months. Then, when the tire blows or the washer leaks, you have cash to cover the expense rather than putting it on credit–and yourself in a deeper hole.
- Alleviate debt
Once people create a budget, they often find they could live on their income but for one line item–debt. How do you get out from under?
Financial advisers recommend using a debt snowball. Pay the minimum on all debts but the smallest. Eat rice and beans, live in dim light, cancel all cable and magazines and apply every penny you can to the smallest debt. Once that one is paid, combine the money the money you spent on that debt with the money you were spending on the minimum for the next smallest and begin paying that one. As debts go away, you have larger amounts to apply to the next highest until they are all gone. Now, you can live on your income. Plus, you can use the money you were paying others to treat yourself once again.
Financial strain after divorce is real. But, you can take charge of your finances. Find resources. Create a support network. And start small. As you make small gains, you lay the foundation for a secure future.