Divorce is always a stressful process, resulting in many challenges for ex-spouses. After many years of marriage, they need to recover both mentally and financially. Why are individuals struggling financially after divorce?
This question is becoming increasingly popular among young and old people. In the article, you can explore how to deal with financial stress and solve financial problems after divorce.
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How Much Does A Divorce Cost?
Divorce is a costly process regardless of your income. As a rule, people spend $7,000-$10,000 on divorce procedures. These costs typically include the following expenses:
- Court expenses;
- Attorney fees;
- Divorce forms;
- Accountant or tax advisor;
- Child support payment;
- Refinancing costs for your home;
- Record deed fees for your home.
11 Tips For Surviving Financially After Divorce
People’s financial life changes significantly after divorce, and it is important to understand that your financial situation may never be the same as it was. Many individuals face divorce debt and other financial difficulties. Therefore, it is essential to adapt to a new life without your ex-spouse and cope with all the financial challenges that have occurred.
When you try to recover financially after a divorce, even a small amount of money can save your life. One of the ways to get financing is to borrow 500 dollars with monthly payments.
When applying for a loan from online lenders, it is not even necessary to have a good credit history, as they approve all individuals with a stable income despite their credit rating. Here, you can see 11 tips for surviving financially after divorce:
1. Create A Post-Divorce Budget
Creating a post-divorce budget is one of the most important steps that you need to take after signing a divorce agreement. It will help you survive after breaking up with your former husband or wife and start a happy new life. The more carefully you assess your post-divorce financial situation and your post-divorce income, the better you can deal with all the difficulties.
If you struggle with money and cannot send funds to retirement savings and cover essential expenses, it may be a sign that you need to look for additional financing. You can use government benefits, financial assistance programs, and other resources. Start planning your financial future and prepare for the financial strain without your ex-spouse.
Divorce typically means spending more money with less income. Ex-spouses often face new obligations, such as alimony, child support, and other divorce-related payments. Earlier creation of your post-divorce budget can help you avoid numerous financial difficulties and remain financially stable.
2. Make A Repayment Plan For Your Debt
Many individuals need to repay their credit card debt, and student loan debt, and cope with other obligations alone. Therefore, it is crucial to make a repayment plan for your debts as soon as possible. It will help you manage your finances correctly, set priorities, and find the right solution to repaying your loans.
For these purposes, many people use assistance from a certified divorce financial analyst or a financial planner. They help people not only create a plan but also make better financial decisions.
3. Think About Additional Income
If you need to consolidate your credit card debt or other debts, it may be necessary to consider taking a second job or a side hustle, selling unnecessary items on eBay or other platforms, or using other ways to get additional income.
Developing new skills is the right way to obtain extra cash, which is especially critical after separation from your former spouse. For instance, you can learn a new skill and find a remote job or explore freelance opportunities, such as copywriting, virtual assistance, web design, or even start your own blog.
4. Set Your Financial Goals
Setting new financial goals is one of the best financial decisions after a divorce decree. All your plans for the marriage are not relevant already, making it important to deal with many money issues. For instance, it is essential to remember that child support payments end when children reach a specific age.
It is essential to care about your financial security not only at the moment but also in the future. Therefore, opening savings accounts or investment accounts are excellent ways to save money for your future goals.
5. Start Your Own Retirement Plan
One of the most important elements of your financial life after divorce is saving for retirement. If you had a common plan with your ex-spouse, it is crucial to establish your own. For example, you can set up an Individual Retirement Account (IRA). Opening such an account can benefit in tax-deferred growth, an income tax reduction from contributions.
6. Solve House Issues
The question of what to do with your house after signing a divorce agreement is crucial for you and your former spouse. It can significantly affect many financial aspects of your post-divorce life and, in several cases, may become a financial burden.
One of the most often chosen options after divorce is a buyout occurs when one spouse refuses to dispute a marital home in return for a certain amount. However, in this case, your ex-spouse must have no interest in retaining the home.
Another way to solve your house issue is to sell the property and split the profits. With the money for your house, you can purchase a cheaper property. However, it may be complicated if you have children, as moving to another place with them is often challenging.
7. Consolidate Credit Cards With Lower Interest Rates
Consolidating your credit card debts is one of the main steps to recover financially after divorce. Consider using lower-interest-rate credit cards, which can help you save money and pay less for your debts.
Furthermore, when consolidating your credit card debt, we recommend paying down high-interest debt first. It can save a significant amount of your personal finances and improve the quality of your life.
Additionally, paying off your outstanding debt can help improve your credit score. By reporting your on-time payments to the three major credit bureaus (Experian, TransUnion, or Equifax), you can rebuild your credit, which will help you obtain loans on better terms in the future.
8. Downsize
After divorce, it is often necessary to downsize. It means that you may need to reduce your living expenses, such as rent, meals, etc. For example, people often move to a more affordable, smaller house in a cheaper neighborhood to save on rent and utilities payments. Moreover, people sell belongings they no longer need to earn additional money.
Furthermore, it is essential to change your spending habits after divorce. We recommend analyzing all your expenses during marriage and determining which are more and less important.
For example, you can save money on paying for restaurants and have lunch or dinner at home. Unfortunately, it may be necessary to forget about luxury vacations after divorce for a specific time to save enough money to pay for all your expenses.
9. Separate Your Finances
Most families have a common budget and joint accounts during their marriage. Unfortunately, situations when one spouse runs a large balance on a joint credit card and doesn’t pay still occur, leading to the decrease of another former spouse’s credit score.
Therefore, one of the first steps you need to take after divorce is to separate your bank accounts from your ex-husband or ex-wife and open new accounts in your own name.
10. Manage Your Legal Fees
Divorce always comes with many legal problems. As a result, former spouses need to work with a lawyer or a divorce financial specialist to solve all the issues and ensure the financial arrangements are fair. However, legal assistance costs are often too high, and people need financial support to pay for it. If such a situation occurs, you can solve it using the following options:
- Apply for a personal loan. People with good credit scores can cover their legal expenses through a personal loan. You can apply for this financing option through a traditional bank, credit union, or an online lender. Unlike other types of loans, personal loans have lower interest rates and convenient loan terms.
- Ask your lawyer about a payment plan. As the cost of a lawyer is typically expensive, many offer payment plans. As a rule, lawyers require clients to pay the initial retainer and cover the rest of expenses in equal monthly payments.
- Borrow from your family or friends. If you are in a difficult financial situation, it may be necessary to ask your family or friends for help. While it is one of the cheapest and safest ways to cover legal costs. However, it is not always possible, as many individuals’ expenses for a good lawyer are always unaffordable.
11. Explore Health Insurance Options
If your ex-spouse paid for your health insurance, the divorce is the time to explore all the insurance options independently. Statistics show that one in four women needs to care about their health insurance after divorce. While good insurance can be costly, it can help you avoid paying costly medical bills and applying for high-interest loans.
How Does Divorce Impact Women’s Finances?
Divorce is a stressful procedure for all spouses, but it especially impacts women, which typically become the primary caregivers. According to a U.S. Census Bureau Report from 2013, only one of every six custodial parents were fathers (17,5%). Although they typically pay alimony, women still lack funds for child care, as their household income drops by an average of 41%.
Bottom Line
Divorce is a stressful process, both mentally and financially. It always comes with more expenses and problems than expected and results in increased costs with lower income, home issues, bank account separation, etc.
Recovering from struggling after divorce is the main task for all individuals, requiring much effort and time. However, you can still manage all the payments even if you are solely responsible for them. If you have recently experienced divorce, it is crucial to act correctly, care about your finances, start saving for retirement, and increase your income.
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