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5 Ways to Recover Financially From Divorce

With the cost of divorce and related expenses, divorce debt is a common problem. To help you cope with these challenges, here are five ideas on how to get your personal finances back in order after divorce.

1. Create a post-divorce budget

After a divorce, you may find it difficult to adjust to your new financial situation. It’s possible that you will have less disposable income with which to pay for things. It’s also possible that you will have more expenses and debts to pay. Everyone’s situation is unique.

If you’re proactive and intentional about creating a new budget, you can recover financially and start moving forward with your life. Building a strong financial foundation now can help you can manage your future day-to-day expenses.

One of the first steps is to separate your finances from those of your former spouse. This may mean closing joint accounts, opening new bank accounts in your own name (and without your spouse’s name), and withdrawing or transferring any money or assets the two of you shared. Once this is done, you will need to carefully review your new budget, considering all of your ongoing expenses as well as any one-time or irregular expenses that may turn up in the coming months. As your finances allow, it's a good idea to put money away for a rainy day and unforeseen expenses.

Another important step is to prioritize paying off any marital debt. This could include credit card debt, student loan debt, and other types of debt you may have incurred for joint expenses like home repairs or medical bills.

In addition to managing your current financial situation, think about your future. Consider saving for retirement or investing in an IRA so you can start building up long-term wealth and security for yourself down the road.

2. Work with a CDFA

A certified divorce financial analyst, or CDFA, is an expert on the financial aspects of divorce. This professional can help you identify your most pressing financial needs and find creative solutions for meeting those needs. You might balk at the expense of hiring a financial adviser, but their expert help can translate to better financial decisions for you, making it worth every penny.

By assessing your income, debts, assets, and obligations, a CDFA can help you understand your current financial situation. With this information in hand, they will recommend strategies for getting back on your feet after divorce.

In addition to helping you understand your finances, a CDFA can help you with practical matters such as negotiating with your ex-spouse, refinancing your property, obtaining lower interest rates, and, if necessary, filing for bankruptcy. They can provide support and guidance as you adapt to your new life, helping you set realistic goals and navigate any financial challenges that arise along the way.

3. Get a side hustle

There are several ways to get back on your feet and boost your income. One option is to pursue a side hustle or an additional job. You can earn extra cash while exploring new interests or developing new skills.

Some potential side hustles include starting a blog or website, taking up freelance writing, or joining an online survey site — but there are many others. You might take a part-time job in an area that interests you and also benefits your career. Or, you might offer consulting services based on skills you already have. For more ideas, check job posting boards like Indeed, ZipRecruiter, and LinkedIn.

Another great way to generate additional income is by selling items online or taking advantage of secondhand marketplaces like Craigslist and eBay. Whether you have unwanted items from around your home or craft supplies you no longer use, these platforms provide an easy way to sell your items and get a little extra cash.

4. Consolidate credit cards with lower interest rates

Maybe you took on credit card debt to get through your divorce. Maybe you had pre-existing debt. Regardless of the circumstances, consolidating credit card debt can provide a bit of debt relief. One of the most effective options is to look for lower-interest-rate credit cards onto which you can transfer existing balances. This can help you save money on your monthly payments and reduce the overall amount you must pay back.

A tip for consumers who wish to consolidate credit card debt is to focus on paying down high-interest debt first. Credit card debt consolidation can help free up more of your monthly income, which you can then put toward any outstanding credit card accounts with lower interest rates.

While these strategies can help you manage your debt after divorce, it’s also important to think about improving your credit score. Take note of your credit report (through Experian, TransUnion, or Equifax), and monitor it through an agency that provides free credit report updates. By keeping up with monthly payments and paying off existing debts, you can gradually rebuild your financial standing.

5. Downsize

After a divorce, you might decide to downsize. This could mean moving into a smaller and more affordable home or even moving in with family to save money on rent and utilities.

Downsizing could also involve getting rid of excess belongings you no longer need or use. This can be hard, but you may find the financial benefit worth it. By decluttering your home and getting rid of unused or unwanted items, you can free up space and reduce expenses like storage fees and shipping costs.

In addition to downsizing your physical space, you might decide to cut back on your spending habits, scale back on luxuries like vacations or expensive meals out, or take on extra work to bring in more money.

FAQ about financial recovery after divorce

How can I start over after divorce with no money?

Even with no money in hand, there are strategies you can use to get back on your feet. These strategies include prioritizing your spending, cutting down on unnecessary expenses, evaluating your debt situation, seeking professional help if necessary, and reaching out to family and friends for support.

How can I afford to live on my own after divorce?

One of the most important things to do is assess your current financial situation. Where can you cut back? Where can you make changes? Some useful steps for managing your finances after divorce include creating and sticking to a budget, cutting back on “luxury” expenses that you might have gotten used to as a married couple, and taking advantage of available resources, such as government benefits or financial assistance programs.

How does debt work when you get divorced?

Debt accrued by a married couple is typically considered marital debt. This joint debt will likely be split between both parties in divorce, just as division of property is part of the divorce agreement.

If one person has been primarily responsible for paying off shared debts, they may have trouble making these payments on their own after the divorce. If this sounds like your situation, it may be necessary to negotiate a payment plan with your former spouse as part of your divorce decree.

Should I take out a personal loan?

A personal divorce loan is a good option for some people. These loans are typically easy to qualify for, especially if you have good credit or a stable income. A lender can provide much-needed cash in a time of need, helping you cover the costs of things like legal fees and living expenses while you adjust to your new circumstances.

Before you take out a personal loan, however, it's important to weigh all of your options. As a borrower, you would be paying back this debt with interest. Not everyone wants that burden. Do you have other potential sources of income that could help you get by? If not, try to negotiate a repayment plan with the best terms possible.

The decision to take out a personal loan is yours to make. If you think such a loan could help you get back on your feet after divorce, it may be worth considering. Before you sign a lender’s paperwork, however, do your research, and make sure that this is truly the right choice for you.

If you feel emotionally overwhelmed by your financial problems after divorce, you’re not alone. And you don’t have to do this alone. Consider booking a session with a certified divorce financial analyst. To read about Hello Divorce’s flat-rate 60-minute financial planning services, click here. If you’d like to schedule a free 15-minute call with one of our account managers instead, click here to view our calendar and set up a meeting.