Dear Readers,

The COVID pandemic has forced us to take a very uncomfortable look at our finances. In the US, images of people waiting hours in incredibly long food lines, have been distressing. No one dreamt it would take such a devastating toll on multiple areas of our lives. There is a new sense of urgency to be better prepared for the next crisis. The average person would not survive a financial apocalypse of sorts when emergency funds disappear. As someone who works with the homeless, I see it all day, every day. Millions are just one or two paychecks away from being homeless. Over the next few months, expect posts surrounding, money, credit, remote working etc, all valuable lessons I have learned over the years, or from people around me.

I believe in ripping the bandaid off in one fell swoop, instead of suffering bit by bit. Let’s face it, divorces happen every day. I watched a recent news report, showing how much divorce rates have skyrocketed since COVID. All of a sudden, husbands and wives have to work from home, all day, every day. Throw 24/7 kid care and chores into the mix. If the marriage was already shaky before, the pandemic pushed many over the ledge. A divorce can dramatically change your socio-economic circumstances, but, like everything else in life, requires us to take an inventory of our lives.

Are you going through a marital breakup? If so, you might feel like you’re in a whirlwind. You’re worried. Will you be okay financially? Take a look at the following points to recognize you’ll likely make it through, with a few adjustments here and there.

1. Do the math. Figure out if you can support yourself financially with the dollars you now earn. Remember to include other funds that will be coming in, such as child support, alimony, or stock dividends.
2. Act now. If you’re going to need a new or different job or additional income, start doing something about it now. If you begin bringing in additional dollars right away, it’ll take some of the pressure off later.
3. Determine monthly expenses. How much are your monthly outgoing expenditures? Can you count your basic expenditures on one hand: mortgage or rent, car payment, utility bill, food costs, and phone/internet charges?
4. On the other hand, you’ll have insurance, entertainment, and savings. If you have a lot of monthly payments like 2 or 3 credit cards and more than one car payment, it’s time to consider spending cuts.
5. Don’t panic. If you need to make some reductions, decide what you’ll cut out. Maybe you can sell one of the cars to eliminate a car payment and reduce your car insurance. Perhaps you’ll decrease cell phone charges or cut out paying for your phone landline.
6. Maybe you can combine your 2 or 3 credit card payments all onto one card for 1 monthly payment for everything you owe. If you must, cancel your Netflix account or whatever extra accounts you can do without, at least for now.
7. Once you have your expenses under control and know how your money situation will be, you can add back services you want.
   
8. Take an honest look. Are you living equal to or below your means financially? Do you and your child really need to live in a 2,700 square foot home? Or could you be perfectly happy in a home that’s half the size? Consider this: you’d be paying half the electric bill (you now pay) every month plus lower rent.
9. Once you get some time as a single person under your belt, you can upgrade your standards later.
10. The point is to ensure you’re not living right up to the edge of what you make. If you are, it can make for a rather nerve-wracking life. With some planning, you might be able to reduce your expenses and still live a financially comfortable life.

• Heads up regarding your tax return (if living in the US). If you’re not yet divorced as of the last day of the year (12/31), you can still file jointly if you both agree to do so. Also, if you’ll have custody of your children the most, ensure your attorney declares in your divorce decree that you can claim them as dependents.
  If you’re paying alimony, have your attorney include that in your decree. This way, you can claim the amount you pay as a tax deduction.
• Take care when splitting up retirement funds. This issue gets sticky. Talk with your attorney about the best way to handle such funds because, depending on your age and how you do it, you might have to pay early withdrawal fees plus taxes on the withdrawn amount. There are ways to do it without paying these penalties.

When it comes to making it through a divorce financially, recognize millions of people have survived it and you can, too. Can you recall the toughest financial times you’ve had? The smarts you possess got you through. If you follow the above suggestions, you’ll be well on your way to successfully surviving the financial consequences of a divorce. You will be okay!

Until the next post,
Best,
Juan