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How to Rebuild Your Finances After a Divorce

Posted by : Premraj | Posted on : Monday, December 21, 2015

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Divorce is hard on everyone. It takes a spiritual, emotional and even sometimes a physical toll on everyone involved. It also takes a financial toll. Getting divorced can be an incredibly expensive process. It can also be costly in that where you might have been sharing incomes before, now you only have your own and maybe some spousal support on which to rely. Figuring out how to live after you’ve severed your finances can be very difficult for many people. Here are some tips to help you navigate that process.

Setting Up New Accounts

If you and your spouse had joint accounts for your money and investments, your first step towards financial control (and its subsequent success) is to set up your own accounts. Spend some time shopping around for a bank or credit union with good rates and fees, also look for an investment broker who can help you manage your portion of your previously joint portfolio. According to 24Option’s blog (here’s a link to the parent site) make sure that, in addition to educating yourself about how trading works, you choose a brokerage that will set you up with a personal account manager (instead of letting you work with whoever happens to answer the phone or be available to meet that day). You want to work with financial institutions that will help you make sure that the income and investments you have, and will have in the future are in safe hands.

Budgeting

Hopefully you and your ex-partner managed your joint finances together so you already know the ins and outs of budgeting, what things cost, etc (or that you were in charge of keeping the books). If you were left out of the financial loop in your relationship, you need to familiarize yourself with these skills quickly.

The first thing you need to do is set up a monthly budget for your income. There are a lot of worksheets that can help you do this. Then you need to spend some time researching what life on your own will really cost. What is the rental market like in your area? How much do utilities cost? Etc. Reconcile yourself to the fact that money might be tight for a long time.

Finding More Money

If money is uncomfortably tight–to the point where you’re having trouble keeping even your basic expenses covered, try to stay calm. There are a few different avenues you can take to help you get up and on your feet:

Sell large assets. If you were granted the house in your divorce, consider selling it and moving into a rental for a while until you can get yourself back on track. There are a few reasons that renting is better than buying when you’re on a limited budget. The same goes for your car. Sell your car and take transit or ride a bike instead. If that isn’t an option, sell your current car and consider purchasing a cheaper used model and then putting the leftover money into your savings account.

Sell small assets. Go through your belongings and get rid of anything that you won’t absolutely need in the next few months (and that don’t have tremendous sentimental value). Sell it on Craigslist or eBay.

Consider a side gig. We live in the “gig economy” now. Setting up a flexible side gig is much easier than it used to be. You could, for example, drive for Uber or do some freelance writing or consulting.

Reducing Your Expenses

We’ve already talked about how switching to a rental (a small rental, preferably) can help you save a lot of money. Here are some other steps you can take to reducing your overhead.

Learn how to keep your utility bills low by saving energy and water.

Bundle your services so that they will be cheaper.

Cancel your subscriptions. You don’t need subscriptions to every magazine and every streaming service. You don’t need those shopping services. You can read your favorite magazines at the library and you can get by with just one or two media streaming services.

Borrow instead of Buy. Start going to the library instead of the bookstore. Start a “stuff exchange” with your friends. Join a Buy Nothing group.

Adjusting to life on one income and learning how to save for your own future is going to be difficult, but you can do it. Start with the tips we’ve listed here and remember: just keep swimming. You’ll get there!

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