As you go through a divorce or separation, it’s entirely normal to be very concerned about your finances. You will need to make financial decisions that may impact your life for years going forward. When it comes to managing debt, you can deal with it or ignore it, the latter of which will make the situation worse. Consider the six debt management strategies below to help you handle your debt in the wisest way possible.
Be Smart About Shared Assets
It’s very hard to let go of family assets you have an attachment to. However, some expenses–such as car or home loan payments–can be a much bigger burden than you are expecting. Be smart about the more expensive and substantial marital assets. If you don’t make enough to cover the mortgage on the family home, it doesn’t make sense to try to keep it as you will only cause yourself stress in the end and you will likely lose the home anyway. Instead, you can give up your share in the home in return for other assets, such as money in the bank account, that will help you in your post-divorce life.
Stay on Top of Your Personal Finances
A budget only works when you stick to it. Record your income and spending at least two to three times per week so you know exactly what money is coming in and how you are spending it. The information you learn from this will help you adjust your budget so you are always left with enough to cover your basic needs and bills.
Pay off High-Interest Debts First
The interest rates on your debts can have a significant impact on your ability to pay them off entirely. The higher the rate, the more you’ll end up paying when you are paying debts down over time. Pay down your more expensive debts first, and you’ll find it easier to pay off the debts with the lower interest rates down the line. You’ll also save yourself money overall.
Cut Some Corners If You Can
After divorce, you’ll likely want a lifestyle similar to your married life. However, debts and financial concerns may not make that possible immediately. Cut some corners on your home-related spending to save some money as you adjust to your new life. Consider, for example, refurbishing some older furniture instead of buying new pieces for your home. Use energy-saving tips to cut down utility bills, and start looking for deals when you shop if you didn’t do so previously.
Curb Impulse Spending
Impulse spending is what damages many budgets. Don’t give in to the urge to run through your favorite drive-through or grab a snack at the convenience store. Instead, start packing lunches and snacks at home. When you go shopping anywhere – whether it’s a grocery, retail or specialty store – have a list of what you need to buy and don’t deviate from it. Stores are designed to take advantage of impulse buying, so having a list can help you resist their lures.
Speak to a Professional
Your divorce can make your financial situation more complex than it was before. This can make it tough for you to decide how to handle any money-related challenges as you go through the divorce process. If you are unsure how to proceed or have questions or concerns, you can speak to a financial professional, preferably one who has experience in divorce situations. They will be able to provide you with advice on how to manage your shared and personal expenses after your divorce.
Divorce can and often does take a toll on a person’s finances, but preparing yourself ahead of time can help you keep your finances on track.