Financial Independence After Divorce: You Can Go Your Own Way
Divorce is troubling for many reasons, but financial worries are 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 lets your spouse handle all money matters, divorce — and the financial independence that comes with it — can be especially scary.
It can be difficult to be successful on one income once you get used to being half of a dual income partnership. Or if you’ve been a stay-at-home parent and suddenly find yourself forced back into the workforce, that’s also a challenge. But neither of these scenarios is insurmountable. You just need to know a few things, and financial independence will be yours to celebrate.
1. Make a new budget
Get a good idea of what your monthly financial picture looks like. What have you got to come? What do you have to pay? If your new financial reality shows more expenses than income, figure out where you can cut back.
2. Figure out what you can give up
Maybe you don’t need the country club membership. Some clubs will allow you to temporarily suspend your membership. You won’t be able to use the golf course or pool, but you won’t pay expensive monthly dues either. A country club membership is an obvious “nice to have” that you might be able to give up – at least for a while.
You may decide that you don’t need to send the kids to private school at $50,000 a year. While this is an option for people with good public schools in their area, it’s admittedly not for everyone. If private school is essential for your children, consider discussing a payment plan with the school’s financial aid office until you are back on your feet. Or a scholarship could be an option.
If you are funding a child’s college education, find out about financial aid. Or consider talking to your child about a work-study program or getting a student loan.
Other things you might be able to ditch: the expensive mortgage. (Consider downsizing.) A fancy (and expensive) vacation. Instead, a vacation where you become a tourist in your own town is an alternative. A series of day trips to interesting attractions near you may not be Disney World, but they can be informative, fun…and economical.
3. Acknowledge that even amicable divorce stinks
Give yourself time to mourn the loss of your marriage. Process the loss. Then you can more easily move on.
A friend recently made an offer on a house she really wanted. The house and its yard were truly the new life she imagined and hoped to achieve for herself. She had even imagined her dogs enjoying the fenced and landscaped yard. Alas, she outbid the house. She told me she was grieving the loss of this home and the life she thought it would provide.
All the loss deserves to be recognized and felt. Only then can we continue to live.
4. Give yourself the credit you deserve
The death of a loved one and divorce are two of the worst moments in life we can endure. If you’re on the verge of a divorce and you’re still working, raising your kids, and engaging in life, then give yourself a pat on the back. You are going through a traumatic time. Life will be beautiful again, but it’s a difficult time. Be gentle with yourself.
Part of the merit is maintaining your integrity during what can be a brutal process. Imagine the life you want for yourself when this is all over. (And that will be be finished.) Hold on to your dignity and self-respect. do well by you.
5. Speaking of credit, make a plan to rebuild your own credit
A first step is to resolve joint debts with your ex-spouse. Determine who will pay what. Close accounts. Make sure you don’t miss payments on joint credit cards. This will help bring down your credit score.
In fact, never miss a payment on any of your bills – cell phone, utilities, insurance. Paying your bills on time is the first thing you can do to protect your credit score.
If you don’t have your own credit history, now is the time to start building one. Let’s say you were an “authorized user” on your ex’s credit card. You need your name removed from this line of credit and you need a card – and a credit history – in your name. Look for a credit card that has no annual fee and offers 1% or 2% cash back on purchases.
Try to keep your credit usage to a minimum. After payment history, credit usage — the percentage of total credit you use — is the most important factor in your credit score. Experts recommend keeping credit utilization below 30%.
Don’t let personal finance worries keep you from living your best life, whether you’re married or not. This is financial independence.
Founder, GraserSmith, LLC
Tonya Graser Smith is a Certified Family Law Specialist, North Carolina Licensed Attorney, and Founder of GraserSmith, LLCin Charlotte, North Carolina. She focuses her practice on divorce, child custody, child support, spousal support, equitable distribution, prenuptial agreements and other family law matters.