Divorce is unsettling for many reasons, but financial worries are at or near the top of the list. Too many people might stay or be tempted to stay in unfulfilling – at best – or toxic marriages for fear of the financial fallout of going it alone.
If you’re the partner who let your spouse handle all the money matters, divorce – and the financial independence that goes with it – can be especially scary.
It can be hard to make it on one income after you’re used to being half of a dual-income partnership. Or if you’ve been a stay-at-home parent and suddenly find yourself having to go back into the workforce, that’s a challenge, too. But neither of those scenarios is insurmountable. You just need to know a few things, and financial independence will be yours to celebrate.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
1. Make a new budget
Get a good grasp on what your monthly financial picture looks like. What do you have coming in? What do you need to pay out? If your new financial reality shows more expenses than income, determine where you can cut back.
2. Figure out what you can let go of
Maybe you don’t need the country club membership. Some clubs will allow you to put your membership on hold temporarily. You won’t get to use the golf course or the swimming pool, but you won’t be paying pricey monthly dues, either. A country club membership is an obvious “nice to have” you may be able to let go of – at least for a time.
You may decide you don’t need to send the kids to $50,000-per-year private school. While this is an option for people with good public schools in their area, it’s admittedly not for everyone. If private school is a must for your children, consider talking to the school’s financial aid office about a payment plan until you’re back on your feet. Or a scholarship might be an option.
If you’re funding a child’s college education, look into financial aid. Or consider talking to your child about a work/study program or getting a student loan.
Other things you may be able to let go of: the expensive mortgage. (Consider downsizing.) Fancy (and expensive) vacations. Instead, a staycation where you become a tourist in your own town is one alternative. A series of day trips to interesting attractions near your home may not be Disney World, but it can be enlightening, fun ... and budget-friendly.
3. Acknowledge that divorce, even an amicable one, stinks
Give yourself time to grieve the loss of your marriage. Process the loss. Then, you can more readily move on.
A friend recently made an offer on a house she really wanted. The house and its yard really fit the new life she imagined and was hoping to achieve for herself. She had even pictured her dogs enjoying the fenced-in, landscaped backyard. Alas, she was outbid for the house. She told me she was grieving the loss of that house and the life she thought it would provide.
Every loss deserves to be acknowledged and felt. Only then can we get on with the business of living.
4. Give yourself the credit you deserve
The death of a loved one and divorce are two of the worst of life’s passages we can endure. If you’re going through a divorce and still making it to work, parenting your kids and engaging in life, then give yourself a pat on the back. You’re making it through a traumatic time. Life will be good again, but this is a rough patch. Be gentle with yourself.
Part of giving yourself credit is maintaining your integrity during what can be a brutal process. Imagine the life you want for yourself when all this is over. (And it will be over.) Hold on to your dignity and self-respect. Do right by you.
5. Speaking of credit, make a plan to build back your own credit
A first step is resolving joint debts with your estranged spouse. Figure out who will pay for what. Close accounts. Make sure you don’t miss payments on joint credit cards. That’ll contribute to your credit score taking a nose dive.
In fact, don’t miss a payment on any of your bills – cellphone, utilities, insurance. Paying your bills on time is the No. 1 thing you can do to protect your credit score.
If you don’t have your own credit history, now’s the time to start establishing one. Let’s say you were an “authorized user” on your ex’s credit card. You need your name removed from that credit line, and you need a card – and a credit history – in your own name. Look for a credit card with no annual fee and one that offers 1% or 2% cash back on purchases.
Try to keep your credit use to a minimum. After payment history, credit utilization – the percentage of total credit you’re using – is the most important factor of your credit score. Experts recommend keeping credit utilization to below 30%.
Don’t let personal finance worries hold you back from living your best life – married or not. That’s what financial independence is all about.
-
Stock Market Today: Have We Seen the Bottom for Stocks?Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
-
Social Security Is Taxable, But There Are WorkaroundsIf you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
-
Serious Medical Diagnosis? Four Financial Steps to TakeA serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
-
To Stay on Track for Retirement, Consider Doing ThisWriting down your retirement and income plan in an investment policy statement can help you resist letting a bear market upend your retirement.
-
How to Make Changing Interest Rates Work for Your RetirementHigher (or lower) rates can be painful in some ways and helpful in others. The key is being prepared to take advantage of the situation.
-
Within Five Years of Retirement? Five Things to Do NowIf you're retiring in the next five years, your to-do list should contain some financial planning and, according to current retirees, a few life goals, too.
-
The Home Stretch: Seven Essential Steps for Pre-RetireesThe decade before retirement is the home stretch in the race to quit work — but there are crucial financial decisions to make before you reach the finish line.
-
Three Options for Retirees With Concentrated Stock PositionsIf a significant chunk of your portfolio is tied up in a single stock, you'll need to make sure it won't disrupt your retirement and legacy goals. Here's how.
-
Four Reasons It May Be Time to Shop for New InsuranceYou may be unhappy with your insurance for any number of reasons, so once you've decided to shop, what is appropriate (or inappropriate) timing?
