Two can live more cheaply than one. It's true. And never is this fact more evident than when you go from being a member of a couple to being on your own. Solely responsible for putting a roof over your head, gas in the car, and food on the table-all while trying to save for your future.
If you're marriage status has recently went from Mrs. to Ms., you will likely need to make some major changes when it comes to finances. Here are a few tips to get you on the right track and prevent you from drowning in debt.
1. Look after number one. That's you!
Naturally, you will strive to protect your children and put their needs first. This is understandable; however, you need to serve your children's interests without getting sucked in to a powerful vortex of debt. And, for many women, this "vortex" comes in the form of the marital home.
You may want to spare your children from further upheaval by hanging on to your house. For some women--particularly those with a high income and pension plan--this is doable, but for many it is not. The family home can become an expensive noose wrapped about their necks--demanding funds for maintenance, insurance, and property taxes--not to mention the hefty mortgage payments. What was manageable on two incomes will become burdensome on one.
Selling the family home; however, can provide you with a sizeable nest egg--enabling you to buy a smaller home and put the rest aside for a rainy day or retirement.
2. If it's joint, it's gone.
While this part may be difficult, it can also be very liberating. Either way, it's necessary. You need to make sure that your credit and his are completely separate.
• Check your credit report. Make sure that everything listed on your credit report actually belongs to you and not your ex.
• Bank accounts. Close any joint bank accounts and open a checking and savings account in your own name--preferably at a different financial institution than the one that you dealt with as a couple.
• Credit. If you're not responsible for a debt, make sure your name is removed from all paperwork. If you had joint credit cards, make sure that these accounts are closed.
• Spread the word. Make sure to inform your banks, credit card companies, insurance provider, and utilities of your split.
3. Become a "budgeter"
You will need to devise a budget A.S.A.P. It will be your guide to paying down debts, developing a financial cushion, and curbing spending. Your budget will also help you identify areas that can be trimmed like data plans on your cell phone, extra packages on your satellite TV, or call-waiting on your land line.
• Make sure that you make savings a priority. Your immediate savings goal is to accumulate an emergency fund. Ideally, this should equal enough to pay six months of your living expenses.
• Paying down your debt is priority number two. If you have any extra money left over at the end of the month, apply this to the debt that has the smallest monthly payment. This will enable you to pay it off quicker and apply those funds to tackling another debt. Eventually, you will be debt-free and able to increase your savings amounts.
For more financial advice, check out Seven Must-do Steps for Women who Want Financial Stability Post-divorce..