The process of getting back on my feet financially after a long and costly divorce was far from easy. I floundered for the first few months, unsure of how to make the most of my income as a single mom who wasn’t receiving much in the way of child support.
However, I was determined to learn to balance my budget, recover from the expense of the divorce, and repair the credit damage caused by my ex-spouse’s poor spending habits.
In order to achieve my goals, I decided to separate my finances from him entirely, seek expert advice, and find creative sources of income to help pay off my remaining marital debts.
Now I’m financially stable and able to maintain a modest yet comfortable lifestyle as the single mother of two boys – and I’m happy to help you avoid the same mistakes I encountered when learning how to handle my finances after my divorce. I hope my advice encourages you to make wise financial choices that will safeguard your future and allow you to provide for your kids once the dust of your divorce case has settled.
Here are the six most valuable steps I took to gain control of my finances after divorce:
1. I Canceled Our Joint Credit Cards
One of the first steps you need to take to protect your financial future is canceling any joint credit cards. Nothing is more dangerous than continuing to accumulate shared debt with your ex-spouse. Disentangling my finances from my ex was crucial – especially when it came to a high-interest credit card that could have allowed him to continue racking up expenses under both of our names.
Perhaps you and your ex are on friendly terms and have decided to retain a joint credit card for the purposes of paying off shared expenses, such as mortgage payments or the cost of extracurricular activities for your children.
However, closing all joint credit card accounts is advisable even in the most amicable divorce cases. You can still agree to share certain expenses, but it’s much wiser to use separate means of paying off your individual portions of those expenses.
The sooner you can separate your finances from your ex, the better. If for some reason you still share a joint credit card with your ex-spouse, cancel it now. After my divorce, I took matters into my own hands and called the credit card companies myself to make sure all joint debts had been paid and our joint cards were deactivated – who knows what kind of debt I would have been facing if I’d taken my ex’s word for it.
2. I Opened a New Bank Account
For the same reasons you shouldn’t share a credit card with your ex-spouse, you don’t want your new banking information to be linked to your ex in any way. Find a bank with low fees and fair interest rates where you can set up a brand new account.
During my marriage, my husband and I shared a joint bank account in which both of our paycheques were automatically deposited. When I was going through my divorce, I opened a completely new account at a different bank and ensured my spouse was not authorized to access it.
I updated my direct deposit information so that my income would be collected in my new individual account. I also spoke to my lawyer about how to prevent withdrawals from our joint account until the funds were divided in our divorce settlement. Once the shared balance was fairly divided, I permanently closed the joint account.
When choosing a new bank, ask around amongst your girlfriends to see who is particularly happy with their bank’s customer service and call up several banks to compare information about their account fees and options. Whether your ex had access to your old bank account or not, establishing a new account at a new institution gives you the chance to start over as a single woman with a clean slate.
3. I Sold My Wedding Rings, Jewelry and other Major Gifts from My Ex
Another way I was able to reduce the financial burden of my divorce and generate some much-needed cash right away was to sell jewelry and gifts from my ex that I no long want. I sold my wedding rings online and deposited the cash into my new bank account. I recommend trading your engagement diamond and wedding band in for cash as soon as you feel comfortable doing so. I stopped wearing my wedding ring after I realized my marriage was over, but I held on to them until after my divorce was finalized.
Even though I knew they were meaningless pieces of jewelry, I felt uncomfortably attached to both the diamond ring and wedding band. When I did finally decide to sell them – about two months after my divorce – I experienced an immediate and overwhelming sense of relief that only made me wish I’d sold them sooner.
Not only is getting rid of your rings a wise financial decision, it’s also a healthy choice from an emotional standpoint. In fact, parting with significant items that remind you of your ex-husband is often an important step in the divorce recovery process. I sold everything my ex bought on special occasions, that included a pair of earrings, a tennis bracelet, and the car.
4. I Started Building Good Credit
A common problem faced by many recently divorced women is a lack of credit history or, worse, the existence of poor credit caused by a vindictive or irresponsible spouse.
Whether your ex-husband made important payments from an account held in his name only or, as was the case in my situation, your credit reputation has been tarnished by the careless spending habits of your ex, there are several reasons you might not have a respectable credit score of your own. Whatever the cause of your poor credit, there is only one remedy: start building good credit today.
One simple way to establish good credit is to apply for a credit card – preferably one that offers cash back or other financial bonuses – and begin using it in the place of cash or debit. When I was single again, I started using a credit card for sensible everyday purchases that I knew I could afford to pay off immediately, such as groceries, which helped me cultivate a reputation as a safe and reliable financial bet for creditors.
Building good credit will benefit you in numerous ways as you begin your new life post-divorce. It helped me to secure a mortgage on my new bungalow, but having good credit is also important in landing a rental lease or getting approval for a car loan – so start rebuilding your credit reputation as soon as possible!
5. I Created a Monthly Budget
Figuring out how to manage your own finances requires learning how to budget accurately. This was a particularly steep learning curve for me, since my ex-husband was always in charge of the household budget during our marriage. However, going through the divorce required me to develop a more complete knowledge of our marital finances than I’d ever had before.
For the first time, I recognized our pattern of overspending that had made it impossible to save for the future – which gave me an excellent template of what not to do in balancing my own budget post-divorce.
Gaining an understanding of your marital spending habits can allow you to ensure your assets are divided accurately and fairly. Additionally, it’s important to hone a hands-on approach to managing your personal finances if you want to survive off of roughly half the resources you previously had access to.
Start by creating a realistic budget based on your current income – including spousal support if you’ll be receiving any. Consider all expenses associated with a divorce (don’t forget about your attorney’s fees!) and carefully budget your cash flow to ensure you can afford to maintain a comfortable lifestyle for your family, ideally while depositing a percentage of your paycheque into a savings account.
If you don’t have enough money coming in to cover all of your expenses, it’s time to rethink your budget. You can talk to your attorney about whether you might be eligible for spousal or child support, but the only guaranteed way you can balance your budget is to cut down on spending wherever possible and start applying to jobs that offer more income.
6. I Spoke with a Financial Advisor
If your first attempt at creating an effective budget is unsuccessful, there’s no shame in reaching out to someone with more financial knowledge than you. Unless you have a financially savvy relative or close friend you can trust for budgeting advice, it might be worth speaking with a financial advisor.
It’s easy to perceive hiring a professional as yet another expense, but the added value can outweigh the cost. Plus, many financial professionals will offer free or low-cost introductory meetings to help you decide if their services are right for you.
Seeking professional financial help is especially important if your husband typically dealt with the financial matters during your marriage, as was the case in my relationship. You have to remember that speaking to an expert today is truly a long-term investment in your financial future.
I plan to apply the professional advice I received in the months after my divorce to balancing my budget and avoiding unnecessary debt for the rest of my life.
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