10 Debt Management Strategies
When managing debt, one can either deal with the debt that has already accrued or set it aside, avoiding it. In many cases, divorce can only add to one's debt or impact the way it is managed. These 10 debt management strategies post-divorce give you the tools you need for sound financial management, no matter what your current divorce situation may be.
Keep up with personal finances - Budgets are only effective if you stick to them. Make it part of your routine to record your income and spending, at least two or three times weekly. Doing so will give you a clearer picture of how your spending is looking and what you are spending your money on. If you find you are spending too much in one area but are lacking in a different area that is more important, your spending notes will demonstrate this to you. Moving forward, you can adjust your spending to fit your needs accordingly.
Track shared spending - As a co-parent, there may be certain child-related costs that you share with your child's other parent. For the sake of your child and to promoting debt management and financial soundness in both homes, do your best to track these shared expenses and any reimbursements that go between you and your co-parent. Knowing where you stand together on parenting costs will help both of you manage your overall expenses better which is good for your whole family, kids included.
Categorize - When tracking your personal and shared expenses, assign each to a category. Decide on a handful of categories that can help you organize your expenses without overcomplicating it. You may also consider assigning spending limits to certain expense categories. For instance, you may not limit the spending you do for your child's schooling as much as you might choose to limit your spending on personal entertainment.
Watch your credit (or build credit if you have none) - Keeping an eye on your credit is an important element in debt management. Paying off credit cards in order to manage debt is important, as is building and maintaining good credit. If you don't have any credit, consider building it by opening a credit card. Building credit will help you when you want to rent an apartment, buy a home, and make other large purchases. For divorced parents, credit often comes up as a concern. Getting divorced isn't necessarily bad for your credit, but it can have an indirect impact. Review this article for more information about how divorce can have an impact on your credit.
Start saving - While this strategy might sound easier said than done, you can build yourself a workable plan to help you save more money. By committing even just $5.00 or $10.00 each month to your saving account, you are building a balance. Increase if you can once you are comfortable with your system of saving.
Pay off debt with high interest rates first - Getting our expensive debts paid off is important, yet getting to the ones with high interest rates first could be a good strategy. Paying those debts off could help you to save money by preventing you from paying so much in interest.
Stop impulse buying - Resist the urge to grab that quick snack at the convenience store or running through the drive-through at the coffee shop. The money you save from not indulging in these urges can be spent on more important things like your children's extracurricular activities or be saved for a special family vacation.
Cut corners where you can - There are many things you can do to save money on utilities like electricity, gas, or water at home. Take up energy-saving practices to help you save money while doing good for the environment. Moreover, you can cut corners on spending by becoming a savvy shopper. Look for deals each week at the grocery store, or check on sales at your favorite stories. These little things can help you save overall.
Talk to a professional - If you have doubts or questions about how best to manage your expenses post-divorce or separation, consider reaching out to a financial professional who specializes in divorce. A CDFA can be an excellent resource to help you manage your personal and shared expenses and manage debt after divorce or separation.
Use tools to support shared parenting expense management - Apart from seeing help from a finance expert, using the right tools to help you manage your shared parenting expenses can help to support your personal debt management as well as financial stability for your child in both of their homes. Check out the tools available in the OurFamilyWizard Expense Log to see how they can help you and your co-parent streamline the task of sharing financial responsibility for your child in separate homes.
By following these strategies, you are working to avoid financial pitfalls and promote financial stability for your family.