Divorces can do a number on your finances. They can make you go from a dual-income to a single-income, change your tax and insurance situation or even add on unexpected debt and expenses. You may have to create new financial goals or even rebuild your credit. On top of that, you will have to be doing this all while juggling putting the pieces of your life back together. The key here is to be proactive and start working on getting your finances in order after a divorce as soon as you can.
How-to Get Your Finances in Order After a Divorce: Steps to Take
The first step to take to get your finances in order after a divorce is to evaluate your budget. The divorce could have resulted in a change in your household income, or you may have different expenses now. Whatever the current situation is, it will be helpful to look over your budget. If you do not have a budget already put together, now is a great time to create one. You need to be honest with yourself and build a budget that fits with your current circumstances. If your finances have changed but you continue to live your previous lifestyle, you will be headed towards financial trouble. You may have to end up needing to downsize your house or get a cheaper vehicle. Also, you may have to make other changes to your habits in order to set yourself up for financial success.
You will also want to work on building credit if you do not have a good credit score or your own credit history. If you did not have credit cards or a loan in your own name while you were married, start working on building your credit history ASAP. To qualify for a loan or rent a place to live, you will need to have a good credit score.
Keep in mind that you will often need credit to get credit. If you are unable to get a qualify for a traditional credit card on your own, there’ another option. Instead, you can apply for a secured credit card. These require you to deposit money that’s equal to your line of credit. Use this card to make small purchases and pay off the card on time each month. This will allow you build a good payment history and help your credit score. Be sure to remove your ex from any shared credit cards. Also, refinance your house so that only the person who is responsible for the payments is on the loan. This will prevent your ex from forgetting to make a payment or going into credit card debt and hurting your credit score.
By taking a few small steps, you can proactively get your finances in order after a divorce. Bt making an honest budget and sticking to it, plus building a strong credit history, you will be on the right track.