- You are not alone
- Face up to it
- Make a plan
- Follow through with your plan
- Avoid further debt
For many people living life after divorce can mean dealing with debt. Here are some tips for not letting it run (or ruin) your life.
You are not aloneEven those who are not divorced are dealing with more and more debt. Many people are having trouble living within their means. Major life events such as losing your job, divorce etc result in financial upheaval. This is a very emotional issue for many people. Get professional help if you feel you cannot tackle it along. Let bygones be bygones. What you did in the past cannot be changed but what you do from now on will affect how you deal with debt. Focus on that.
Face up to itSometimes this can be the hardest part. We are very good at putting off anything unpleasant, of finding excuses to do other things. The problem is that the issue grows in the back of your mind, sapping your energy and perhaps keeping you up at night. Worse the debt is likely growing too.
Here's how to face up to it
- Get piece of paper and divide into two columns
- On the left side, list all your sources of income
- On the right side, list all your debts
- Start with essentials first: electricity, phone ...
- Next list monthly payments: loans, credit cards...
- Lastly list things you can survive without but tend to indulge in
Make sure the first two categories (essentials) are covered before you buy that ticket to the space station (indulgence). You can now use a treat to reward yourself if you have paid all the essentials. Do not go overboard though.
Credit card debt
You can get into trouble very quickly these days if you miss payments. Rates can skyrocket very easily. However start making payments on time again and after a few payments
- Give the credit card company a call and ask for a rate reduction
- Often they will tell you immediately that they cannot do that
- Tell them that you have an offer of a lower rate from another company (it is best if this is true so you can be specific)
- Tell them you would like to continue business with them but only if they can match this rate
Avoid credit card impulse purchases by
- Leave the credit cards at home until really needed
- Cut them up. Keep one for emergencies
- Freeze them in a block of ice. During the time it takes to thaw, its no longer an impulse
Almost everyone has a loan at some point of their life. Know how to manage them
- Shop around for a loan
- Make sure there is no prepayment penalty
- Refinance only if the savings from the lower rate and cost of the refi is truly cheaper than the cost of your current loan