It doesn’t take an economic downturn to challenge the best financial wizards – it can be something as simple as the end of a relationship.
When two people separate, their financial lives separate as well. Each person assumes more financial obligations while each has to learn to live within his or her means again.
When I got divorced years ago, it was a shock to me how it took almost a year to feel financially stable again. I thought I was someone who was prepared for the realities of being a financial single, but the sheer cost of the changes took me by surprise and used up money I didn’t have.
First, last and deposit, oh my! Moving into a new place is enough worry, but the astonishing amount of money needed to secure some rental homes can be a shock. Many rentals require first and last months’ rent, and a deposit. If one wants to keep a pet, another deposit may be required.
Therefore, it’s wise to keep a significant amount of money set aside for the move. Even if your ex is the one who is moving, he or she may need that money to secure a new place too. And, don’t forget the moving truck rental costs!
Setting up another household can be costly. Besides the moving and new home expenses, there are often setup fees to start utilities. If you haven’t had a utility in your name before, you may be required to pay a deposit as security. Remember those technician fees too. For instance, if you need help setting up your modem, there could be an additional fee to have someone come to you home and do it for you. Consider asking knowledgeable friends to help with the technical issues. You could save a bundle.
You don’t earn as much as you did as a couple. Of course, your financial power as a single person can be less simply because you don’t earn as much as when you were part of a couple. Also, those earnings dwindle more quickly because there are more expenses for you to pay.
You may find it is harder to get credit as a single because your partner isn’t there to offer the stability of a second income. I remember having to defer buying a house because my income was too low as a single person.
On the other hand, if you go back to school to improve your job skills, you could qualify for more financial help with college expenses.
Your partner’s debt could bog you down too. Many states deem property from a marriage as jointly owned. Could that include your ex’s credit card debt from your marriage? Just in case, make sure your ex is paying his or her credit card debt, or encourage him or her to take advantage of free consumer credit counseling. A credit counseling service will talk to creditors to arrange for reasonable payments and interest rates and teach about budgeting and finance.
Childcare is expensive. If you have sole custody or share custody of your children with your ex, you may find you need to hire more childcare than you once did. Perhaps you and your ex might consider reducing this expense by working out a schedule so your children are with one parent or the other. Another innovative solution is to share the same nanny, as a friend and her ex have done.
You may incur some debt despite your best efforts. Even if you have money set aside for the above expenses, there are likely to be purchases you have to charge on the credit card. Keep steady and disciplined and pay the card down as soon as you can. Thanks to the newly reduced income, it seems like it takes an extra long time to pay down credit cards.
You need to revise your budget. Take the time and note your new income and all your expenses. It is worth the effort and will help you understand your financial situation. During the first year by yourself, it is wise to check your budget every month and address any changes. Some expenses will go away and new ones will crop up.
You will be OK. Despite the turmoil a separation can incur, your financial situation will settle down and you will become more comfortable in your new earning and spending powers.