Financial troubles can put serious strain on any relationship. In fact, 35 percent of respondents to one survey named money as the primary cause of friction in their partnership. Furthermore, one in five Americans in a relationship admit they’ve spent $500 or more without telling their partner. It’s not hard to imagine, after reading statistics like these, that serious enough financial problems can actually lead to divorce.
Even when couples divorce for reasons besides financial stressors or money-related disagreements, the proceedings can still be expensive for both parties. For people already in debt, divorce can exacerbate money woes—leaving people feeling helpless to take the reins on their individual financial lives. At bare minimum, divorce costs a few hundred dollars, plus the cost of establishing new living arrangements. But divorce through a lawyer tends to cost thousands, which means people begin their new lives further than ever “in the hole.” Hence, you must take your time looking for a good divorce attorney to ensure that the legal fees you’ll pay will be worth it.
Add to the equation the fact that the average U.S. household already carries $16,883 in credit card debt alone and $137,063 in overall debt. This debt doesn’t just disappear when a marriage ends; people are still responsible for figuring out how to beat debt, even after a bad divorce.
Assess Your Own Financial Health
A divorce is the end of one shared journey. But another way to look at it is an opportunity to start fresh by making some life changes and improvements. Divorce can empower individuals to “make lemonade from lemons.” For example, it’s a prime opportunity to address any debt that may have accumulated over the previous months or years.
One contributor to Divorce Magazine with firsthand experience recommends asking honest questions in the wake of divorce:
- Have I made a realistic assessment about my earning vs. spending?
- Does my financial plan cover emergencies?
- Can I afford “non-essentials” like travel or big-ticket purchases?
- Am I prepared to calculate my taxes differently?
- Am I expecting any other life changes that will impact finances?
Start by sitting down and taking an honest look at your finances as an individual. If you’re in the military, know that military divorce has more flexibility in court.
Focus on Eliminating Debt
There’s virtually no way to establish financial health when you’re bogged down by debt. Next, assess the type and amount of your debts. You can rely only on yourself to pay them off.
For substantial credit card debt, you may be able to use a debt settlement plan with a reputable agency. For instance, Freedom Debt Relief reviews are generally pretty positive. The basic premise is this: Consumers pay into a designated account until they’ve accumulated the funds to negotiate with creditors to lower the amount owed.
Other divorcees decide to tackle debt on their own—which is doable but requires willpower and proper planning. It’s important to make the minimum payment on all debts, but which ones you prioritize from there is up to you. Some opt to “snowball” debts in ascending order; others “avalanche” debts by always focusing on the highest interest rate.
Financial Implications of Divorce: The Bottom Line
The silver lining is that divorce can provide an opportunity to revisit financial priorities. As U.S. News & World Report notes, the adjustments that ultimately come with divorce can actually be beneficial for finances in the long run—like downsizing an expensive family home to a more modest living situation. Essentially, divorce can serve as a wake-up call to realign finances with individual life goals. It also helps if you work with experienced divorce lawyers for any aspect of your divorce.
The same goes with beating debt after a bad divorce. Though the process can look daunting from the starting line, the end result is true independence. Whether your debt stemmed primarily from your divorce or started accumulating before proceedings, there’s no better time than right now to take ownership of your financial destiny and work with a reliable divorce attorney who can help you make better decisions.