One of the most challenging aspects of living in a post-divorce world is being able to get your finances back on track. While you may have primarily been concerned with the emotional in relational impacts of your divorce on your life while the case was ongoing I think that it bears mentioning just how important it is for you to have your financial life in order as a result of the changes inherent in a divorce. While your life may never be the same after a divorce there are changes that you can manage if you do so little by little.
In my opinion, there are a handful of financially related moves that you can make about your life that could stand to benefit you and your family in the long run. I would like to discuss those financially related if she’s with you today so that you can get a head start on planning for your post-divorce life. Even if you have spent a great deal of time being as intentional as possible when it comes to planning for your post-divorce life however you need to be focused on those areas that are most critical for you and your family. I think the financial decisions that you make regarding budgeting, paying off debt, determining what your life will look like from an income perspective, and then determining whether or not credit will play a role in your life after the divorce is among the most important decisions that you can make.
Getting on a budget after a divorce
Of all the things that I think you can do to become successful in your post-divorce life, getting on a budget is among the most important. Just hearing about a budget may be enough to make you set up and take note of the challenges that you may encounter after a divorce. For one, you are two-income household will likely be a one-income household for some time after your divorce. They should cause some degree of change in your spending and saving habits given the changes in your income. Not only that, the household bills that you will be paying will likely change to some extent after your divorce as compared to when you were married.
A budget doesn’t constrain your ability to spin money. Many people that I have worked with over the years will tell me that they believe budgeting is a difficult thing to follow because not only do you have to become organized but you also need to focus on limiting can feel constraining or may cause you to believe that your life is not as free as it once was. However, I believe that you will find your life becomes more open and free once you fully adopt the principles that go into budgeting.
For one, when you’re facing uncertain situation facts become your friends. Rather than speculating about what you can and cannot afford a budget removes those sort of questions. You can create a fairly simple budget that can provide you with a great deal of clarity when it comes to your spending habits. Simply knowing what your income is can change your life. Then determining what your “out-go” or spending is can be the other key to your becoming financially stable. This is the basis for a budget that can help guide your household.
If you are curious about how detailed or complex your budget must become I am here to tell you that this is completely up to you. As I was alluding to a moment ago a budget can be as simple or as complex as you would like.
Grabbing a legal pad and a pen is one way to go about the creation of a budget. On the other hand, a complex excel spreadsheet created on the computer is quite alright as well. The time you put into your budget is more a personal matter of choice than anything else. There are no requirements to overly detail. However, you do need to make sure you have a basic level of competency and thoroughness so that you can at least know how much money you have coming in each month and how much money you have gone out each month. The degree to which you are running a deficit or surplus in your budget will determine household spending in many areas.
Preferably you will begin the process of shaping your budget even before the end of your divorce. Doing so will help you to make decisions regarding subjects like requesting spousal maintenance or deciding what sort of job to take. If you have been out of the workforce for an extended period then choosing a job may be one of the most crucial decisions you make in your entire divorce. Wouldn’t it be nice to know what sort of income you’ll need to make sure your bills are paid each month? A budget will help you figure this out.
A budget for your household also is helpful when it comes to requesting and negotiating contractual alimony in mediation. Going into mediation and asking for contractual alimony but not having the numbers 2% tier spouse that justify your request can very much damage your case. Rather, you should come prepared chill show why you are asking for contractual alimony and why your request is justified. Put yourself in your spouse’s position. If he or she came to you at the same request how willing would you be to negotiate if you weren’t sure of their actual need for the contractual alimony?
Almost without fail, people that engage in their first budget creation at the end of a divorce discover that there is some area of their life that needs tightening up when it comes to their finances. He may find, for example, that the money you spend on streaming services and subscriptions each month is it even bigger part of your total budget than you had ever guest. Sometimes relatively small charges adding up over time can get away from you and put you in a position where you are struggling financially as a result.
By cutting down on various costs you may also be able to give yourself more time during the day. This is especially important because time is a resource that is limited in nature. Keep in mind that you cannot go to the corner store and pick up more time. If you can create a budget that inadvertently helps you keep track of your finances better you are killing two birds with one stone. Budgeting is not necessarily fun but it can be enlightening. You can use your budgeting experiences to benefit yourself I had to move into a post of work towards.
Finally, I will offer you my personal experiences that I have come into contact with very few people who are successful from a financial perspective who do not budget consistently. Rather, I found that the most common characteristic that successful financial persons is for density to budget every month. We tend to think of successful people as very turn. However, it doesn’t take a large salary to become wealthy or financially stable. What it does take is a willingness to put in the work towards essential acts like budgeting. If you can manage to budget well and can discipline yourself to do so then you will be ahead of the game man can’t change financial success.
What is your relationship with debt?
One of the most underappreciated and infrequently discussed subjects when it comes to divorce is debt. Being able to build wealth means that you need to be able to harness your income towards saving and investing rather than paying creditors and financial institutions. Debt also equals risk. Death works well only when everything goes according to plan. However, and even one small part of your life as a pick-up your plans involving debt can often turn into difficult circumstances for you and your family. Let’s spend some time discussing death and its role in your life.
Most everyone reading this blog posts he’s in debt to one extent or another. Home mortgages, student loans, credit card debt, and medical bills are some of the most frequently discussed topics about a divorce. I’ve found that that is also a topic that most people do not get all that concerned over when it comes to a divorce. I think the reason for that is our generation is much more comfortable with that and even our parent’s generation was. Whereas our parent’s generation perhaps had one credit card in a small home loan our generation oftentimes has multiple credit card bills and more substantial home loans among other debts.
Path not even to begin to discuss the humongous issues that many of us suffer from in regards to student loan payments and debt. Many of us took out loans to go to college or Graduate School can turn into good. However, I am sure that many of you reading this blog post took student loans for an education that did not even wind up earning you a degree. Additionally, some of you earned degrees that did not allow you to land a job in your preferred field. As a result, you may find yourself unemployed or underemployed.
As I mentioned a moment ago, that only works when everything lines up well in terms of your life and your choices. When you take out student loans for a particular degree but Canada earns a living with your degree the death he took out becomes even more burdensome. We can apply similar rules too associated with your home, credit card, or even your business. What seemed like good decisions at the time may end up backfiring on you if problems arise or if circumstances change. Certainly, getting a divorce is an example of a sort of change that may have caused you to reassess your life.
As debt is a big part of many of our lives, you may be reassessing the role that debt has played in your own life and even in your divorce. Identifying your relationship with debt and your willingness to take on additional sums of debt after a divorce will inform your willingness to rebuild your credit, as well. For now, I would simply recommend you take a look at your credit report before, during, and after your divorce. Doing so will help you identify what debt is in existence with your name on it so that you are aware of how much debt you are in.
For instance, you do not want to get to the end of divorce only to find that there are debts in your name that you are unaware of. Rather, you want the divorce to take into consideration all the debts you have so that they can be properly divided. This is not to say that your student loans can become the responsibility of your spouse. What it does mean is that if your spouse took out debts in your name without your knowledge that you may be able to learn about them ahead of time and place them into the column of debts that your spouse becomes responsible for.
Finally, you need to also be aware of the impact that debt has on the direction of your post-divorce life. The more debt you have the fewer options you have when it comes to things like employment, housing, and things of that nature. For example, if you have relatively little debt then the world opens up for you in terms of your ability to live where you want, work when you want, and take on additional responsibilities for your family. Not having a home mortgage, for example, puts you in a position where you will never have trouble selling your house. You do not have to wait for the perfect offer to move for a better job or family reasons.
What is the benefit of rebuilding credit after a divorce?
To close out today’s blog post I wanted to discuss with you what it means to want to rebuild your credit. Rebuilding credit and having good credit is seen as one of the most important financial steps a person can take. Having good credit is seen as a ticket to a better life. What’s more, credit is seen as essential in our daily lives. But for having credit how could we afford things like cars and homes?
The reality is that by having credit you are only guaranteeing yourself people can borrow more money. From there, you will borrow more money thus ensuring your ability to borrow more money. This circle goes around and around and this cycle never ends clear ascent Lee, what you are saying when you display a desire to increase your credit score you wish to become more creditworthy so you can borrow more money. That will ensure that you can become more creditworthy and borrow more money. Around and around it goes.
It may surprise you that your credit score is not a score that your wealth is determined off of. The higher your credit score is is not necessarily meaning that your well has increased. If you get on the vicious cycle that I was just describing making sure that your overall wealth is decreased given that you have borrowed more money than you have accumulated in wealth. This is a self-fulfilling prophecy and can be extremely detrimental to your overall financial well-being especially after a divorce.
I realized that what I just mentioned here may run counter to what most of you are familiar with in terms of your daily life and your interaction with money in debt. The question is what after divorce before your divorce to break the cycle of debt and increase your financial well-being? My advice would be to look away from debt and do everything you can not be beholden to creditors and banks. Rather, once you have developed a budget for yourself I would recommend throwing as much money at your debts as possible each month. How you do so is up to you. I have seen I’ve seen people pay off debts by or do any debts from smallest to largest and paying off the smallest first. I’ve also seen people pay off their debts by paying off the debts with the highest interest rate 1st and working their way down. You should choose whichever method makes the most sense for you. Financial Wellness and financial independence can begin with this discussion. It is up to you to determine whether or not you want to have a relationship with debt and with credit after a divorce.
Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained in today’s blog post please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free of charge consultation six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law as well as to learn what your family’s circumstances may look like in the event you become involved in a child custody or divorce case.