Post-Divorce Boot Camp
So you want to look like a hot divorcée—you might as well act like one, too. You may still be getting used to your life as a single lady, but that doesn’t excuse you from being smart about your new life and your money. Here are 8 steps you should take to whip your financial booty back in shape post-D-word:
Step 1: Close it up. Closing joint credit card accounts is your first order of business. Get your name off joint credit card accounts as soon as humanly possible. You don’t want to pay for half of his charges. Also, if your work direct deposit goes into a joint account, change that ASAP.
Step 2: Show your budget some love. Sit down and have a face-to-face talk with your budget and remove all signs of him. Figure out how your spending is going to change now that you’re the only one supporting yourself. Maybe you had a cleaning service, but now you don’t need one for a smaller apartment. Maybe you are getting in earlier so you can make yourself dinner instead of going out. Take the surplus and dump it into savings. Then follow this basic breakdown moving forward: 70% of your budget should go to Essentials, like housing, transportation, and groceries; 15% to your Endgame, which includes savings and investments for down the road; and 15% to Extras, the fun stuff like your gym membership or monthly mani/pedi. You have to factor in some fun stuff, even if divorce is not fun. You are going to try to do something for yourself to make you feel better, but a financial diet is like a real diet—if you allow yourself a little piece of chocolate, you won’t binge on the chocolate cake later on. So, factor it in—but only 10 to 15%—for whatever guilty pleasure and small indulgence you want. Kick it old-school here: take that fun money out in cash so when the cash is out the party is over.
Step 3: Make your own home sweet home. If you’re looking to downsize or move into a place of your own, the first thing to do is to do some homework on finding deals on rent. Look at places close to an elevator, on a lower floor, facing another building…with proximity to public transportation or with free parking. You don’t want to spend your money on transportation when you are trying to save on rent. “Location, Location, Location” to the necessities in life, like the grocery store or your office. It’s not what your broker will say, but what the money lady will say.
Step 4: Get rid of him. And it’s a cathartic experience to get rid of the stuff you shared or purchased together. That extra furniture, the sectional, a formal dining table, a king-size bed, or a pair of bikes—it’s outta there. That’s just too much stuff taking up too much space for one person. Post it on Craigslist, and try for the 1st or 15th of every month; those are the dates when people are moving into new places and so are scouring the site for stuff like that.
Step 5: Sell your engagement ring. Just. Do. It. I love IDoNowIDont.com. It’s where you can sell your engagement ring and your wedding band. You get rid of the baggage, you get money, you might get it to someone else who really needs it…it’s a three-in-one.
Step 6: Set up a system to track all the paperwork. First make copies of your divorce decree and store them in a safe place. Then, make a system for yourself to keep track of all child support payments or alimony payments.
Step 7: Make sure he’s gone for good. It’s tough, but it makes for a fresh start. Triple-check that his name is off everything and that your address and the appropriate designee are updated on your:
- Bank and investment accounts
- Driver’s license, title, registration, and insurance
- Employer’s records (or professional licenses)
- Title to property/utility bills
- Insurance beneficiary information: life, health, homeowners, disability insurance
- IRA and retirement accounts
- Medical directive, will, and living will
Step 8: Do damage control. Take control of the aftermath by taming your credit score. When’s the last time you checked it? You need to do it once every year—and maybe more often while you are in the weeds separating assets. There are two scenarios here: either your name wasn’t on the accounts or the bills were under your name. If your name wasn’t on the accounts, you weren’t accruing any credit during the marriage, so you have to build it up. If everything was under your name, and he didn’t pay the bills, then you need to fix your credit score. The easiest thing to do is open up a credit card if you don’t have one. Keep one recurring bill on each card so you are only at about 10% of the max, and then set it on auto-pay so that you’re paying on time every single month without having to think twice about it. This will show creditors that you are consistent and your credit score will start ramping up.