Couples divorce for many different reasons. No matter the specifics, it is always best to separate when a relationship has become damaging or toxic to those involved. While it is a positive move in most respects, it can also make a person feel like he or she is totally lost at sea. Marriage has a way of getting a person set in certain patterns. Once divorce arrives, these habits are thrown out the window and can cause feelings of stress and anxiety. This is especially true when it comes to all financial matters, including starting over with your own finances after divorce.
Since couples tend to merge their finances in almost all ways after tying the knot, unraveling the strings during a divorce can prove quite challenging. To make your life more manageable, it can be useful to gain some insight on the matter. Review these suggestions and learn how you can make it through this complicated period. Starting over with your finances after divorce can be complicated, but it doesn’t have to be.
5 Tips on How to Handle Your Finances After Divorce
Consider All Income Sources and Assets
Perhaps the most difficult part of this endeavor is taking stock of everything at once. The shared finances between you and your partner include far more than a bank account. You may have multiple accounts, stocks, investment properties, and other assets that need to be sorted out as you divorce. A majority of couples will work with attorneys and other specialists in order to maintain tabs on all involved finances. However, there are circumstances where no legal professionals are involved. In such a case, you both need to stay on top of each source of income.
Note and Plan for Your Debts
Along with shared assets and accounts, you may also have some significant debt with your partner. From mortgages to car loans, to credit debt, you may owe a hefty chunk of change to various agencies. When splitting assets, you will also be splitting these debts. You want to make sure you make note of every debtor involved in your lives. Failing to note all of your debt means that you could get stuck with having a number of bills in your name. This would ruin your personal credit score in the process.
Once you’ve gotten a feel for how much money you will be responsible for paying back, it is time to create a plan of action. Though your personal life may be changing, your professional life is likely remaining somewhat stable. Weigh your monthly income against the money you owe. Determine how much you can afford to apply to your debts. Try to pay back more than the minimum each month. This will make it easier for you to tackle more than just the interest payments on each of your loans.
Strategize for the Future
Though you may find yourself living in entirely new circumstances, there is a sense of excitement that comes from divorce. You have an opportunity to be your own person again and make decisions entirely on your own. When it comes to finances, this is your chance to change the way you go about saving and spending. If you’re worried about accruing more debt and want to explore new financing opportunities, a secured credit card can make for an excellent way to exhibit more control over your budget.
Credit cards are always best as a “just in case” source of financial assistance. Experts in the world of finance advise consumers to use credit only when they absolutely have to and to pay back the full balance as fast as possible. Credit scores are based on various factors and how much a person puts on a card each month is a huge qualifier. The less you put on credit, the better your score will look. Learn to strike a healthy balance of spending and paying down what you owe to keep your score stable.
Consider New Sources of Income
When your relationship status changes, so does your ability to maintain the lifestyle you’re used to. If you’re accustomed to a two-income household, then you may need to scale back on some of the products and services you spend money on each month. However, you also can keep up with your habits by pursuing new sources of income. With this change to your personal life comes the chance to strike out and explore horizons you may have otherwise ignored. Take a second job or commit time to a skill you’ve always wanted to hone.
Breaking out of your comfort zone and taking on another job can also be useful for staying active. Divorce can be hard on some people and increase the odds of depression and anxiety. By throwing yourself into work, you reduce the odds of getting overcome with feelings of being lost or directionless.
Trust Your Gut When Starting Over With Finances After Divorce
Though there are plenty of big changes that come along with divorce, there are some easy steps to getting through it all. Create a plan for your finances as early as possible and it can go a long way to making your separation as simple as can be.