Debt is one of those things that we are all trying to avoid. Unfortunately, some circumstances make it much easier to fall deeper into debt instead of climbing out of it. Separation and divorce can easily land you here. I can speak to how hard it is to get out of debt when you suddenly find yourself caring for children on your own without any financial assistance from your former spouse. It can be extremely daunting and, if you don’t have a game plan, it can cause the debt to snowball at a massive rate. This is where creating a budget comes into play.
On average, 1 out of 5 women, fall into poverty after divorce here in the US. I was one of those 1 out of 5, and I can tell you that it is extremely uncomfortable and a bit bewildering to find yourself in that position. Sometimes, it takes something like this to wake you up and realize how you have to change things if you want to live comfortably in this life. Getting separated certainly woke me up and taught me how to be resourceful to keep a roof over our heads and food on our table.
The first step in any situation is to sit down and take a good, hard, cold look at ALL of your finances. This means that you must gather up every single piece of debt that you owe and put it in a spreadsheet so that you can really see what you are working with. I personally use the Personal Capital app to import all of my debts and assets so that I can regularly see where I am at and how fast I am paying things off, as well as how fast my retirement accounts are growing.
Once you have a good idea of all of your debts, then it is time to take stock of anything and everything that you bring in for income. This can include food stamps, child support (if you are getting any), alimony (same scenario) and any other regular assistance (even if it is just cash from your parents).
The Game Plan
Once you have a clearer idea of where you stand between your current debt and current income, then you can make an attack plan for your budget. In a lot of cases, the amount you bring in is going to be significantly less than the amount you owe and that is where the trouble comes in. If this is where you find yourself, then as much as you may dislike the idea, looking into financial assistance, temporarily, may be the way you need to go to make ends meet until you can get back on your feet.
The average income increase that you will need to maintain the same lifestyle that you had prior to separation/divorce is 30%. This is not something that most of us can easily come up with out of the blue, so until that point some things will just have to give.
A few of the places that can easily be cut are:
- Cable – it is not necessary for survival and can cost you an arm and a leg. If you still want that form of entertainment, then switch to something much more affordable, such as Netflix or Hulu Plus.
- Cell Phone Carrier – If you are part of one of the Big 4 (AT&T, Verizon, Sprint, T-Mobile), then chances are you are getting KILLED on your monthly cell phone bill. There are so many other carriers out there that don’t break your wallet and some of them give you even better service with no contract. I personally use Google Project Fi and pay anywhere from $35 – $42 per month for everything. I have even used my phone in other countries for no extra charges! I know that Grayson has used Republic Wireless and speaks very highly of them as well.
- Groceries – This one is the hardest because we all have to eat. But remembering the difference between needs and wants is extremely important in this category. Finding ways to save on your regular purchases by using apps like ibotta app, Honey App, Ebates and Target Cartwheel can really help rack up the savings and keep you within your budget.
If you are still having trouble getting things to balance during this time of transition, there are plenty of resources out there to help. There are so many, in fact, that it makes it hard to weed through. Here are a few of the sites that I regularly go to for advice and camaraderie (besides this one, of course!):
- Financially Blonde
- The Busy Budgeter
- Making Sense of Cents
- Living on the Cheap
- Shoeaholic No More
Of course, there are many, many more that are fantastic, but these are the places that I search first. The takeaway here is to use ALL of the resources available to you so that you can keep yourself out of more debt in this transitional period. This period of time will end, as all things do, but you don’t want to come out of it with more debt.
I was able to make it work, albeit it was a point in my life that I really detested and was wondering when it would ever end. Eventually, I came out of it and was better off for the experience. It reminded me to live more frugally so that I could breathe and enjoy my life in the new platform that I was presented with.
So just remember to breathe and that this, like everything else, is only temporary. But the lessons you take with you out of this period of time will last a lifetime.
What are some ways that you ensured not accruing more debt for yourself after separation and divorce? What are some of your favorite websites for financial advice?
This Free Tool Helped Me Pay Off $75,000
Sometimes all you need is free! I opened a free Personal Capital account back when I was in debt and it helped me get control of my financial lifestyle. Since paying off $75,000, I’ve been able to save over $180,000 and I couldn’t have done it without Personal Capital.