Getting Out of Credit Card Debt After Divorce – Real Tips for Real Life
A Kansas State University study published in 2013 found that financial issues early in marriage are the most significant predictor of divorce. So when couples divorce, it’s no surprise that a newly-single person ends up in financial difficulty. Whether you’re already in credit card debt or trying to avoid the debt trap, these practical tips will help you get your head above water as you rebuild your life.
1. Change your lifestyle.
You no longer have someone to share expenses. You may have child support or alimony payments to make every month. The urge to splurge and celebrate your new freedom can put you in a deep financial hole. Now is the time to be level-headed and rational. Take a smaller apartment with cheaper furniture. Get the 32-inch TV instead of the 55-inch home theater. Hold off on that expensive vacation. Limit going out to eat and for drinks. The key at this point is to get out of debt so that you’ll be in a stronger financial position to live the lifestyle of your choice.
2. Make a budget.
Once you’re settled in, calculate your monthly expenses including utilities, food, car and gas expenses, student loans, cable and internet, phone, and clothing. See how much is left over to save, or pay down credit card debt. Stick to your budget until you’re out of credit card debt or have a savings cushion of at least two months of expenses.
3. Consolidate debt.
Most credit cards offer interest free balance transfers for a period of time, usually a year to 15 months. If you’re able, put all of your debt into one no-interest card. Then divide up the debt to be paid off before interest kicks in. This will save you hundreds of dollars in interest, and give you a predictable monthly payment to put in your budget.
If you’ve been a good customer, credit card companies will be willing to work with you to pay down existing credit card debt. You may be able to get a lower interest rate, increase in credit limit, or even reduced debt.
5. Put the credit cards and debit cards away.
Returning to a cash economy will force you to spend only what you have on hand. You will not accumulate credit card debt. If you want something beyond your cash on hand, save for it! But don’t abandon credit cards altogether. Emergencies come up from time to time.
Lots of great products and services are available to help you get on track and stay on track as you get out of credit card debt after divorce.